Day: September 10, 2024

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Sen. Elizabeth Warren (D-Mass.) is the latest member of Congress to call for the Internal Revenue Service (IRS) to pay more attention to taxation around real estate investment trusts (REITs). Officials are closely examining how some in the health care and hospitality sectors behave regarding owning properties.

REITs don’t pay corporate income tax if they meet certain requirements. Instead, they pass most of their income directly to shareholders, avoiding the “double taxation” other corporations face. To maintain this tax-exempt status, a REIT must follow certain rules, including distributing at least 90% of its taxable income to shareholders as dividends. A REIT must also have 75% of its assets in real estate, cash, or government securities and derive at least 75% of its gross income from real estate-related activities, such as rent, mortgage interest, or property sales.

Concerns over REIT taxation began this summer with a July letter from Senator Ron Wyden (D-OR) to the IRS. The IRS responded in August with a letter clarifying and restating REIT rules. It pointed out that one exception to rules about related party rents exists for qualified lodging facilities. REITs are allowed to own qualified lodging facilities or qualified health care properties, but they cannot directly operate them. Instead, REITs use a taxable REIT subsidiary (TRS).

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The REIT Investment Diversification and Empowerment Act of 2007 created the TRS structure. It ​​allowed health care and hospitality businesses to be structured as REITs. Before that, many REITs were restricted from operating health care and senior housing facilities because they had to generate most of their income from passive sources, such as rent, rather than active business operations.

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The IRS letter clarified that the TRS must contract an eligible independent contractor to operate and manage the qualified lodging facility. It cannot directly or indirectly operate or manage a lodging facility or it risks losing its special tax status. The IRS stated that it is aware that some REITs have been having the TRS lease the qualified lodging facility from the REIT and indirectly operate it, warning that REITs using this approach could lose their tax status for five years.

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Senator Warren responded to that letter with her own letter to the IRS. She stated that while REITs are intended to be passive income opportunities for smaller-scale investors, some may violate the rules. She specifically called out Medical Properties Trust (NYSE:MPW) as raising questions about whether it has met IRS requirements.

In the letter, she said: “As the IRS continues to identify massive corporations and businesses that may be violating tax law, I urge you to increase enforcement scrutiny of REITs, especially large health and hospitality REITs that may be illegally claiming significant tax breaks while meddling in the operations of their tenants.”

Bisnow contacted the National Association of Real Estate Investment Trusts (Nareit), which said in a statement that there are no signs that REITs have violated any tax laws. The IRS has named no specific REITs concerning any potential violations.

Better Yields Than Some REITs?

The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through publicly-traded REITs.

Arrived Homes, the Jeff Bezos-backed investment platform has launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. It paid 8.1% in July. The best part? Unlike other private credit funds, this one has a minimum investment of only $100.

Looking for fractional real estate investment opportunities? The Benzinga Real Estate Screener features the latest offerings.

This article Senator Elizabeth Warren Joins The Call For REIT Crackdowns: What’s Behind The Controversy? originally appeared on Benzinga.com

The cost of an annual Costco membership recently increased from $60 to $65 for a basic Gold Star membership, and from $120 to $130 for an Executive membership. Now that you’re paying more, it’s especially important to make sure you’re getting great value out of your membership — no matter which one you have.

With that in mind, here are a few Costco benefits you may not be taking advantage of. And if that’s the case, you’re missing out big time.

1. Inexpensive gas that outperforms other fuel

There’s a reason Costco members love filling their tanks at the store’s fuel stations. And it’s not just the convenience of being able to get gas in conjunction with buying groceries.

Not only is Costco’s gasoline known to be competitively priced, but it’s also TOP TIER certified. This means you’re likely to get better performance out of Costco gas than gas that doesn’t have that same designation.

Now, one downside of filling up your car at Costco is that you won’t be eligible for the 2% cash back that comes with an Executive membership. While most Costco purchases qualify for Executive member cash back, gas is an exception. But if you pay for your fuel using a credit card with bonus gas rewards, you can potentially earn more than 2% back each time you fill up.

2. Discounted gift cards

Costco is known for its bulk groceries and paper towels more so than its selection of gift cards. But if you’re not buying gift cards at Costco, you may be overpaying for them elsewhere.

Costco discounts its gift cards below their face value, which means you’re guaranteed to save money on whichever ones you decide to buy. As one example, right now, Costco is selling $100 worth of IHOP gift cards for $69.99. If you were to buy those gift cards from IHOP directly, you’d probably pay $100 unless you managed to snag some limited-time promotion.

3. An extremely flexible return policy

If you’ve ever kept a Costco purchase you ended up not wanting because you were afraid to take it back months after the fact, you cost yourself money for nothing. Don’t sweat it, though — just pledge to take advantage of the flexible returns Costco is known for in the future.

In a nutshell, Costco will let you bring back almost any product at any time for a full refund. There are some exceptions you should know about, though.

Electronics and appliances must be returned within 90 days if you want your money back. And certain items, like cigarettes, alcohol, and gift cards can’t be returned at all.

You should also know that you can return partially eaten food to Costco if there’s an issue with its taste, or if it spoils ahead of its printed sell-by date. But you need to be reasonable when returning opened food products.

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The general rule is that if you’re bringing food back due to a quality issue, you have to return 50% of it or more. You can’t buy a giant carton of strawberries, eat most of them, and then bring back three tiny berries for a refund while claiming their taste was off.

The $65 or $130 you pay for a Costco membership gives you access to a world of benefits. It pays to familiarize yourself with the perks of joining Costco so you can get the maximum value.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

3 Costco Perks You Aren’t Taking Advantage of — but You Should was originally published by The Motley Fool

Qualcomm has reportedly considered the acquisition of certain segments of Intel’s chip design business to enhance its product offerings, reports Reuters, citing sources.

The mobile chipmaker has shown interest in Intel’s client PC design unit, among other divisions.

However, Qualcomm has not made any formal approach to Intel regarding a potential acquisition, according to an Intel spokesperson.

Intel, which recently faced financial challenges, including a second-quarter loss, staff reductions, and a pause on dividend payments, is said to be committed to its PC business.

The spokesperson emphasised that Intel remains “strongly dedicated to our PC business.”

The company is also planning to present a strategy to its board of directors that may include divesting non-core business units to streamline costs.

This includes potentially selling the programmable chip unit Altera.

Qualcomm, with a market value of $184bn and known for its smartphone chips, has been contemplating the acquisition for several months, although plans have not been finalised and may change.

The interest from Qualcomm comes at a time when Intel’s PC client business revenue has declined by 8% to $29.3bn last year, reflecting the broader weakness in the PC market.

Intel’s client group, once famed for its “Intel Inside” campaign, produces laptop and desktop chips that are widely used globally.

Intel executives believe that the advent of artificial intelligence in PCs will lead to increased consumer demand and sales.

In a recent setback for Intel, its contract manufacturing business failed tests with Broadcom, indicating that Intel’s advanced manufacturing process, known as 18A, is not ready for high-volume production.

The tests involved sending silicon wafers through the 18A process, with Broadcom receiving the wafers last month.

After evaluation, it was determined that the process requires further development.

A representative for Broadcom said the company is “evaluating the product and service offerings of Intel Foundry and have not concluded that evaluation.”

“Qualcomm considering acquiring parts of Intel’s chip business ” was originally created and published by Verdict, a GlobalData owned brand.

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