Craig Stern, managing director at Forvis Mazars, sat down for a video interview during Nareit’s REITwise: 2025 Law, Accounting & Finance Conference in San Antonio on March 25-27.
Stern discussed several groundbreaking IRS rulings that could significantly impact REITs. He detailed a first-of-its-kind ruling concerning REITs that end a tax year with no income or assets. In this case, a REIT formed to acquire real estate failed to secure necessary funding and ended the year with zero income and assets. Despite this, the IRS ruled that the REIT still met qualification requirements.
Stern noted that a REIT with no income or assets was “in fact a REIT” because it also had no bad income or assets.
He emphasized the importance of planning, advising REITs to make small, income-generating investments to avoid uncertainty. “If you know about it up front, you proactively handle it. And if you don't...you have this ruling to rely on,” he said.
Stern also addressed the IRS’s position on EV charging stations, confirming they can be considered a qualifying service for REITs—provided conditions, such as tenant-focused usage and minimal public access, are met.
Stern also highlighted two new rulings related to airport terminals and prepaid rent structures. These rulings recognize REIT involvement in infrastructure projects and clarify treatment of Section 467 loans when REITs fund terminal construction. Stern described the developments as “very significant,” signaling the IRS’s evolving view of what constitutes qualifying REIT activity.