Real Estate Investment Trust Corner: ROFO Payment Is Held as REIT Qualifying Income, but Taxpayers Beware

The first gross income test for a REIT is the "75% Test," which requires at least 75% of the REIT's gross income to be derived from "qualifying income."For this purpose, "qualifying income" generally includes, among others, rents from real property, interest on mortgages or interests in real property, or gain from the sale or other disposition of interests in real property and real estate mortgages. With respect to "gain from the sale or other disposition of interests in real property," the IRS has interpreted the term "interest in real property" broadly.