Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 65-3

1965-1 C.B. 267

Sec. 856

IRS Headnote

Pension and profit-sharing trusts, which qualify under sections 401(a) and 501(a) of the Internal Revenue Code of 1954, are persons for the purposes of the one hundred person requirement of section 856(a)(5) of the Code, relating to the definition of a real estate investment trust.

Full Text

Rev. Rul. 65-3

Advice has been requested whether pension and profit-sharing trusts, which qualify under sections 401(a) and 501(a) of the Internal Revenue Code of 1954, are persons for purposes of section 856(a)(5) of the Code, relating to the definition of a real estate investment trust.

X , a commercial bank and trust company, is the trustee for, and manages the investments of, a large number of employees' pension and profit-sharing trusts which qualify under sections 401(a) and 501(a) of the Code.

X established a trust which was intended to qualify as a real estate investment trust under section 856 of the Code. All of the shares of beneficial interest in the trust were offered exclusively to, and were purchased by, more than one hundred of the various pension and profit-sharing trusts of which X is the trustee.

Section 856(a)(5) of the Code provides, in effect, that in order to qualify as a real estate investment trust the beneficial ownership of the trust must be held by more than one hundred persons.

The term `person' is not defined in section 856 of the Code. However, section 856(c)(6)(D) of the Code provides, in effect, that all terms not expressly defined in section 856 of the Code shall have the same meaning as when used in the Investment Company Act of 1940, as amended, 15 U.S.C. 80a.

Section 2(a)(27) of the Investment Company Act of 1940, as amended, 15 U.S.C. 80a-2(a)(27), provides that `person' means a natural person or company, and section 2(a)(8) of the Act, 15 U.S.C. 80a-2(a)(8), provides that company means, among other things, a trust or a fund.

In addition, section 3(c) of the Act, 15 U.S.C. 80a-3(c), refers to a pension or profit-sharing trust as a person.

The general definition of the term `person' in the Act includes a trust and a fund. Further, the reference, in section 3(c) of the Act, to such pension and profit sharing trusts affirmatively recognizes that those particular trusts are `persons' within the meaning of the Act.

It is therefore held that each separate pension and profit-sharing trust in the instant case is a `person' for purposes of the one-hundered-persons requirement of section 856(a)(5) of the Code, relating to the definition of a real estate investment trust.