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Investment
Structures for
Real Estate
Investment
Funds
kpmg.com
Contents
Investment Structures for Real Estate Investment Funds 01
Who Are the Investors? 02
In What Assets Will the Fund Invest? 03
Will There Be Leverage? 04
What Types of Investment Vehicles Are Available? 05
What May Be the Appropriate Type of Entity for Each
Type of Investor and Asset?
06
Structuring to Accommodate Preferences of Different Types of Investors 11
Conclusion 12
Bios 13
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms
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name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 26701NSS
1 Investment Structures for
Real Estate Investment Funds
Investment Structures for
Real Estate Investment Funds
While the real estate market has yet to experience a real This summary and the chart below provide a general overview
recovery, fund investment in real estate appears to be of some of the major factors that should be considered in
experiencing a cautious but marked rejuvenation, and fund structuring real estate funds that invest primarily in U.S. real
managers are beginning to raise capital to form funds. property. The chart identifies the type of investment entity
But given the experience of the economic downturn, through which each type of investor may generally prefer to
investors who venture into real estate investments nowadays invest. As the chart illustrates, the mix of different types of
do so with greater demands to accommodate their particular investors, each with distinct tax considerations, can lead to
needs so as to maximize their potential return while divergent and often conflicting structuring preferences.
minimizing their downside risk. One of these crucial demands
This summary explains the investor preferences indicated
is for investment structures that accommodate specific tax
in the chart and provides an overview of how alternative
sensitivities, given that tax consequences can negatively
investment vehicles (AIVs) may be used to accommodate
impact an investor’s return, as well as the volatility of returns
different types of investors within a real estate fund.
in today’s real estate markets. Consequently, in structuring
real estate investment funds, it is critical to understand each
prospective investor’s tax sensitivities.
Investment in U.S. Real Estate
Structuring Summary Chart
Rental Real Estate – Fractions
Rule Compliant (all passive, no Operating
services, incidental personal Rental Real Estate – Real Estate Dealer
property or personal property Not Fractions Rule Business Property
Investor Classification leased with the real property) Compliant (e.g., Hotels) Only
Taxable
o o o o
Super Tax-Exempt
o o o o
Tax-Exempt (qualified organizations)
o *◊ * ◊ (w/TRS) *
Tax-Exempt (all others)
*◊ *◊ * ◊ (w/TRS) *
Foreign
*◊ *◊ * ◊ (w/TRS) *
Foreign Governments (assuming blockers
*◊ *◊ * ◊ (w/TRS) *
are not controlled commercial entities)
Legend:
* Blocker
o Flow-through
◊ REIT (assuming domestically controlled)
w/TRS With Taxable REIT Subsidiary
Investment Structures for
Real Estate Investment Funds 2
Who Are the Investors?
The typical investors in U.S. real estate funds include individuals • Foreign governments and their integral parts and controlled
and entities, both domestic and foreign. Foreign investors may entities generally are not taxable on certain types of income,
include foreign governments and their sovereign wealth funds. including U.S. investments in stocks or bonds or other
Tax-exempt entities, including pension funds, educational securities, certain financial instruments, and interest on
institutions, and other large charitable organizations, also may deposits in banks in the United States. Funds identified
invest in U.S. real estate funds. as sovereign wealth funds may be considered a foreign
government, integral part thereof, or an eligible controlled
Each of the various investor types is subject to distinct taxation
entity; however, not all sovereign wealth funds are eligible
regimes, as generally discussed below.
for tax-exempt treatment. Foreign governments are taxable
• Taxable investors include high net-worth individuals, on income derived from commercial activities or received
corporations and flow-through entities that have high from controlled commercial entities (as generally explained
net‑worth individuals, and corporations as owners. below). Also, the exemption for foreign governments does
not apply to certain investments in U.S. real property that
• Tax-exempt organizations may include state-sponsored
are covered by the Foreign Investor Real Property Tax Act
pension funds that often are treated for tax purposes as
(FIRPTA). Notably, income or gain from real property that the
a division of a state and are generally thought to be tax-
foreign government holds directly or through a flow-through
exempt based on their governmental status (i.e., “super
entity is not exempt from U.S. taxation.
tax-exempts”). Other tax-exempt investors include corporate
pension funds, educational institutions, and charitable • Finally, foreign investors may include individuals and
organizations that generally are taxable on their income from foreign entities that are taxable on a net basis on income
unrelated businesses and on income from debt-financed that is effectively connected to a U.S. trade or business.
investment (known as unrelated business taxable income, or These foreign taxpayers are subject to the FIRPTA regime,
UBTI), subject to certain exceptions. which generally taxes foreign persons on the disposition
of U.S. real property as though they were engaged in a
U.S. trade or business.
3 Investment Structures for
Real Estate Investment Funds
In What Assets Will the Fund Invest?
The consequences to each of the types of fund investors (see
chart on page one) vary significantly depending on the type of
real estate asset in which the fund invests. For example, dealer
property (i.e., property held primarily for sale to customers in
the course of business, such as condominiums or residential
lots) will present income character issues for virtually all
tax-exempt and foreign investors. Likewise, the operation
of commercial properties (e.g., hotels) almost always will
require structuring to facilitate investment by tax-exempt and
foreign investors. Considerations will be more varied for office,
industrial, and residential rental properties. Foreign investors
will likely still require structure modifications, while tax‑exempt
investors may, in some cases, be able to hold the property
directly through the fund.Investment Structures for
Real Estate Investment Funds 4
Will There Be Leverage?
In addition to the type of asset in which a fund invests,
the type of financing used by the fund affects the tax
treatment of certain investors. When property is financed
with leverage, income from the property generally is taxable
to tax-exempt entities (other than governmental divisions)
as income from unrelated debt-financed property unless
certain exceptions apply. Certain tax-exempt investors
that are “qualified organizations,” including pension funds,
educational institutions, title holding companies, and certain
church retirement income accounts, may avoid being taxable
on debt‑financed income from real property when the fund
complies with strict income allocation requirements, referred
to as “the fractions rule,” and when the financing otherwise
meets certain requirements.5 Investment Structures for
Real Estate Investment Funds
What Types of Investment Vehicles
Are Available?
Just as the type of investor, type of real estate asset, and type Another type of entity often used to “block” certain types of
of financing critically impact the tax treatment of investors, income is a real estate investment trust (REIT). Although REITs
the type of entity through which investors invest in funds are taxable as corporations for most federal income tax purposes,
also affects the tax consequences. The fund itself generally they are permitted deductions for dividends paid and thus,
is formed either as a partnership or a limited liability company effectively, are not taxable at the entity level so long as taxable
taxable as a partnership for U.S. federal income tax purposes. income is distributed on an annual basis. REITs are subject to a
Thus, the fund itself is not taxable, and the fund’s income, loss, separate taxation regime. Formed as corporations for U.S. federal
deduction, and credit flow through to its partners. Also, any income tax purposes, REITs block the attribution of a trade or
trade or business conducted, directly or indirectly, by the fund business and generate dividend income that generally is not
will be attributed, for many purposes, to its investors. treated as UBTI for tax-exempt investors. However, REITs are
subject to restrictions on the types of property they may hold
On the other hand, when an investor invests through a
and the activities in which they may engage. REITs are largely
corporate entity, referred to as a “blocker,” the trade or
restricted to holding rental real estate assets and mortgages as
business of the underlying flow-through entity generally is
well as a limited amount of other passive investment assets.
not attributed to a partner. Thus, holding such an interest
REITs are discouraged from holding dealer property through
would not cause a foreign investor to be treated as engaged
the imposition of a 100 percent penalty tax imposed on any
in a U.S. trade or business. Also, dividend income from a
gains derived from the sale of such property. However, REITs
corporate blocker would be passive income that generally
may form taxable REIT subsidiaries (TRSs) subject to certain
would not be treated as UBTI for tax-exempt investors.
rules, which may engage in many activities that a REIT could not
Finally, an “uncontrolled” blocker similarly protects a foreign
undertake directly. Thus, the chart indicates the potential use of a
government from being connected to a commercial activity and
REIT for investments in rental real property and for investments in
from being taxable on the income from the entity. The trade-off
hotel property if used together with a taxable REIT subsidiary.
for this “blocker” protection is that these corporate entities
are subject to an entity‑level tax. In addition, if the blocker is a With the foregoing as background, this section of the summary
domestic entity, dividends and interest payments made to a will discuss each of the types of investors included in the
foreign investor generally are subject to withholding at a rate of structuring summary chart above, with reference to the various
30 percent (unless reduced by applicable treaty or exempted by types of real estate investments included in the chart. It is
statutory exemption). If the blocker is a foreign entity operating important to note that the types of entities indicated in the
through a branch in the United States, it may also be subject chart with respect to each investor and type of investment are
to a 30 percent (unless reduced by applicable treaty) branch merely general recommendations. However, when structuring
profits tax on the branch’s effectively connected earnings funds, the individual facts and circumstances for each investor
and profits to the extent that income is treated as repatriated and investment must be separately considered in each case to
under the branch profits tax rules. ensure that all potential consequences have been considered.Investment Structures for
Real Estate Investment Funds 6
What May Be the Appropriate Type of
Entity for Each Type of Investor and Asset?
Domestic Taxable Investors Tax-Exempt Investors
Taxable investors who are U.S. citizens may include individuals Tax-exempt investors (other than the state-sponsored investors
and entities that are either taxable as corporations or are discussed above) are taxable on income from unrelated
themselves flow-through entities with taxable partners. businesses and on income from debt-financed property.
Domestic individuals and entities taxed as corporations may However, tax-exempts generally are not taxable on rents from
invest directly in a fund or through partnerships formed to real property, unless such property is financed with leverage.
invest in other funds. These investors typically do not want If tax-exempt investors are to be allocated income from a fund
to incur an entity-level tax on their investments. As a result, that would be subject to tax as UBTI, the tax-exempt investors
they generally do not want to invest in a fund through a taxable would be required to file U.S. tax returns in addition to paying
corporation and they do not want the fund to invest in real the required tax. Many tax-exempt investors that would be
estate through a taxable corporation. subject to U.S. tax on allocable fund income prefer to invest
through corporations (i.e., blockers) that are required to pay the
State-Sponsored Pension Funds and tax and file U.S. tax returns. Although such a structure may not
result in any tax savings for the tax-exempt entity, the structure
Other “Super Tax-Exempt” Investors will allow the tax-exempt entity to avoid paying tax directly or
Certain U.S. pension funds that are considered to be an
filing tax returns.
integral part of a state or political subdivision are thought not
to be taxable for U.S. federal income tax purposes on any of As mentioned above, certain tax-exempt investors that are
their income. Thus, as shown in the chart, such investors are “qualified organizations,” such as educational institutions
not particularly sensitive to the type of real estate asset to be and pension funds, may avoid UBTI from debt-financed real
invested in, the structure through which the investment is property when a fund complies with the fractions rule and
made (other than through a taxable corporation), or the use the financing meets certain requirements. In broad terms,
of leverage. Accordingly, similar to taxable investors, these the fractions rule prescribes onerous requirements with
investors may prefer to invest through flow-through entities respect to partnership allocations that are intended to prevent
so as not to incur an entity-level tax. Due to some uncertainty, the shifting of tax benefits from tax-exempt partners to taxable
however, as to the nature of the tax exemption applicable partnerships. Where financing meets certain requirements,
to these investors, some may prefer structuring alternatives the fund is able to comply with the fractions rule, holds only
more generally applicable to other types of tax-exempt real property generating rental income, and does not otherwise
entities in order to provide an additional level of safety in engage in another trade or business, qualified organizations
their tax structuring. will prefer to invest directly in the fund and enjoy flow-through
treatment. It is important to note, however, that, depending
on the services offered to tenants of the rental property or
the level of personal property associated with the real estate,
such income nevertheless may be taxable as UBTI, even to a
qualified organization.7 Investment Structures for
Real Estate Investment Funds
Because it is rare that a fund would invest in real estate Finally, it is important to understand that, although investing
without leverage, we assume for purposes of the chart and through a corporate blocker may provide certain advantages
the summary that all fund investments are debt-financed. to a tax-exempt entity, as more particularly discussed above,
Thus, where the fund does not comply with the fractions investing through a blocker may, in some circumstances,
rule, qualified organizations may prefer to invest through a increase a tax-exempt’s overall tax rate. First, to the extent
blocker. Because tax-exempt entities that are not “qualified that some property in the blocker generates “good” income
organizations” are not protected from UBTI associated with that otherwise would be exempt from tax (i.e., rents from real
debt-financed property by compliance with the fractions rule, property), that income would be subject to an entity-level tax
such entities also may prefer to invest through a blocker. inside the blocker. Second, even though property generates
operating income that is UBTI, in many situations, gain from the
When the fund engages in operational activities with respect
sale of that property may not generate UBTI. Third, operating
to real estate that go beyond rental activities, as in the case of
income and disposition gain from leveraged property,
a fund that holds and manages hotel properties, tax-exempts,
whether held directly or through a partnership, may be
including qualified organizations, will often prefer to invest
taxable by reference to a fraction that is the relevant debt
through a blocker to avoid recognizing UBTI. Similarly, when
over the relevant adjusted basis. If held in a blocker, the entire
a fund invests in dealer properties such as condominiums,
amount of income and gains is subject to an entity-level tax.
tax‑exempt investors will often prefer to invest through a
blocker to avoid UBTI. Tax-exempt investors may mitigate some portion of the
corporate-level tax imposed on non-REIT blockers through
Assuming a tax-exempt entity did not incur debt to acquire
the use of leverage (and deductible interest on such leverage),
its shares, dividends from a corporation (including a REIT)
although the protection provided by the blocker will be
are generally not taxable as UBTI to a tax-exempt entity.
compromised if the blocker is a “controlled entity.”
When pension funds are direct or indirect investors in a REIT,
it is important to be aware of rules relating to “pension-held
REITs.” A REIT is a pension-held REIT if (1) it would not have
Foreign Investors
Foreign investors typically do not want to trigger a U.S.
qualified as a REIT but for being allowed to meet the REIT
income tax return filing obligation. Property operations often
minimum shareholder requirement by looking through to
will rise to the level of a trade or business, such that the
the beneficial ownership of its qualified trust owners, and
income attributable to such operations would constitute
(2) at least one qualified trust holds more than 25 percent
taxable, effectively connected income to a foreign investor.
(by value) of the interests in the REIT, or one or more qualified
Similarly, the FIRPTA rules generally would cause gains from
trusts (each of which own more than 10 percent by value of
the disposition of U.S. real estate to be subject to U.S. tax
the REIT interests) hold in aggregate, more than 50 percent
with respect to such investors and may require the filing of a
(by value) of the REIT interests. When a pension fund holds
U.S. income tax return. For this purpose, real estate includes
more than 10 percent (by value) of a pension-held REIT,
direct interests in U.S. real property as well as stock in certain
a portion of the pension fund’s dividends from the REIT
domestic corporations that hold primarily U.S. real property
may be treated as income from an unrelated business and
that are United States Real Property Holding Corporations
taxable as UBTI to the extent such amounts would be UBTI
(USRPHCs).
if recognized directly by the pension fund (and provided the
UBTI amounts exceed five percent of the REIT’s total income).Investment Structures for
Real Estate Investment Funds 8
REIT blockers are often a foreign investor’s first choice When the use of a REIT blocker is not possible—for example,
because they effectively do not pay tax if they make the when the types of properties to be held by the real estate fund
required distributions each year. However, REIT blockers include dealer property—foreign investors typically prefer to
can be used only if the fund invests in activities that permit invest through a corporate blocker entity. As with investment
the blocker to be a REIT. Dispositions of REIT shares are not through a REIT blocker, a foreign investor avoids attribution
taxable to foreign investors under the FIRPTA rules if the REIT of the property-related trade or business activity by investing
is “domestically controlled.” A REIT is domestically controlled through a corporate blocker, and the ownership of blocker
if, during the shorter of the five-year period ending on the date stock, in itself, does not trigger a U.S. income tax return filing
of the disposition or the period it was in existence, less than obligation. When the corporate blocker is formed as a domestic
50 percent in value of the stock was held directly or indirectly entity, it will be required to file a U.S. income tax return, and
by foreign persons. Ordinary dividends from a domestically dividends and interest paid by the blocker to the foreign
controlled REIT are treated as any other dividends received investor generally will be subject to withholding at a flat rate
by a foreign person, subject to withholding at a fixed rate of 30 percent as payments of fixed or determinable annual
of 30 percent, as reduced by treaty, if applicable. However, or periodic income. The withholding tax on dividends may be
when a domestically controlled REIT disposes of real property reduced or eliminated by treaty, if applicable. If the domestic
and distributes a capital gain dividend, the portion of the corporation is a USRPHC, the withholding rules become more
dividend designated as a capital gains dividend will be treated complicated and treaty benefits may be limited to a 10 percent
under the FIRPTA rules as income from the disposition of U.S. gross tax. In addition, a blocker’s effective tax rate may be
real property, subject to FIRPTA withholding and possibly the reduced, subject to certain limitations, by the use of leverage
branch profits tax (where the investor is a foreign corporation), to provide deductions for the blocker, thereby reducing its
and necessitating the filing of a U.S. federal income tax return. taxable income. Furthermore, when foreign investors fund9 Investment Structures for
Real Estate Investment Funds
capital as debt to the blocker, interest payments to the investor would be treated as engaged in a U.S. trade or business and
may, in certain circumstances, qualify as portfolio interest, therefore required to file a U.S. tax return. Further, the foreign
which is statutorily exempt from the 30 percent withholding blocker could be subject to the 30 percent branch profits
tax. Alternatively, interest payments paid by the blocker debtor tax. In addition, a branch interest tax may apply to interest
to a foreign investor may qualify for a reduced withholding payments made by the foreign blocker. As with the 30 percent
rate under an applicable treaty. It is important to note that withholding tax on dividends and interest, the branch profits
a domestic, non-REIT blocker may constitute a USRPHC, tax and the branch interest tax may be reduced by treaty,
depending on its percentage of “U.S. Real Property Interests” if applicable.
(USRPIs) relative to other property. If the blocker is a USRPHC,
then the transfer of its shares is generally taxable under Foreign Governments, Integral
FIRPTA, and the transferee of the shares would be required
to withhold 10 percent of the gross proceeds from the sale.
Parts of Foreign Government, and
Thus, a typical exit strategy involves the sale of assets beneath Controlled Entities
the blocker, with the blocker making a liquidating distribution Generally, a foreign government is not subject to tax in the
of its share of the sales proceeds to its shareholders. After the United States on certain U.S. source investment income,
taxable sale of all real property held (directly or indirectly) by including income from stocks, bonds, or other domestic
the blocker (assuming all its dispositions of USRPIs in the past securities owned by such foreign governments. In addition,
five years were taxable), the blocker would no longer be a a foreign government is not taxable on the sale of stock
USRPHC. As a result, FIRPTA would not apply to the liquidation of a USRPHC, unless the foreign government controls
of the blocker. the USRPHC. For purposes of this exemption, a foreign
government includes its integral parts and controlled entities.
If, instead, a foreign blocker is used, the blocker would be
Regulations provide that foreign pension funds that meet
subject to FIRPTA on the disposition of its USRPIs, which
certain requirements are controlled entities for purposes of
would include its interest in the real estate fund. The blocker
the exemption.10
Investment Structures for
Real Estate Investment Funds
The exemption, however, does not apply to income derived circumstances, prefer to invest through a blocker entity that
from the conduct of any commercial activity (whether within or is subject to U.S. tax. Recently issued regulations, which
outside the United States), income received from a controlled eliminate attribution of commercial activities to minority
commercial entity, or income derived from the disposition of limited partners with limited management rights, mitigate the
any interest in a controlled commercial entity. A controlled need for blocking commercial activities in many instances.
commercial entity is an entity that engages in commercial Nonetheless, foreign government investors still generally
activities either within or outside of the United States, in which will use blockers for the same reasons as more traditional
a foreign government holds (directly or indirectly) 50 percent non‑U.S. investors. The foreign government investor will
or more of the interests (by vote or value) or holds (directly or receive dividends attributable to such blocker entities that are
indirectly) an interest that provides the foreign government exempt from U.S. tax. In preserving the exemption available to
effective control of the entity. Importantly, a foreign foreign governments, it is critical that the blocker not constitute
government is not exempt on income earned from a USRPI a controlled commercial entity, so other investors should
or income from the disposition of a USRPI. own more than 50 percent, by vote and value, of the direct or
indirect interests in such entity. Accordingly, the chart assumes
Historically, in order to preserve its exemption from U.S.
that any blocker entity is not a controlled commercial entity.
taxation, a foreign government investor would, in all11 Investment Structures for
Real Estate Investment Funds
Structuring to Accommodate Preferences
of Different Types of Investors
As illustrated in the chart on page one, and the above different preferences regarding whether the blocker is inserted
discussion, different types of real estate fund investors in the structure above or beneath the fund.
often have varying, and sometimes conflicting, structuring
Although this discussion focuses on the tax sensitivities
preferences (e.g., certain investors may require a blocker while
and preferences of the investors, it is important to note
others prefer not to use a blocker) relating to their particular
that the sponsor is also affected by the structuring choices
tax sensitivities. In order to meet the needs of all the types
dictated by the varying needs of the investors, as blockers
of investors in any given real estate fund, it often becomes
can affect the sponsor’s income due to entity-level taxes.
necessary to introduce fund structures that use alternative
In addition, the use of AIVs in certain structures may
investment vehicles, or AIVs. In the simplest structure, all
complicate economic arrangements relating to the sponsor’s
investors who desire blocker protection could invest through a
carried interest.
single blocker. However, as explained above and as illustrated
in the chart, not all investors will desire to block all investments. Finally, as the complexity of a structure increases to
Consequently, a fund manager may be asked to create accommodate the needs of different investors as well as
separate partnerships that meet the needs of specific types of the sponsor, special attention should be paid to the overall
investors where investors desire that only certain investments economic substance of the investment plan. This includes
be blocked. examination of the governing terms of the various entities
employed, as well as the terms of any special agreements
Further, it may be preferable that some investments are
that may be required between entities and/or the investors.
blocked using corporate blockers, while others are blocked
using REIT blockers. In addition, the investors may have12
Investment Structures for
Real Estate Investment Funds
Conclusion
As the discussion above makes clear, when structuring funds
that will invest in U.S. real property, it is critical to consider
the type of investments the fund will make and the likely
investors in the fund, and to understand the sensitivities of
those investors. With careful analysis and planning, different
investors with varying needs can be accommodated within an
AIV structure that takes those needs into consideration.13 Investment Structures for
Real Estate Investment Funds
Bios
James Sowell
James Sowell is a principal in the Passthroughs group of the Washington National Tax
Practice of KPMG LLP, focusing primarily on tax issues relating to partnerships and
REITs and debt workouts for such entities. He currently leads the Real Estate practice
for Washington National Tax. Mr. Sowell previously was with the U.S. Department of the
Treasury (Office of Tax Policy) where he served first as an attorney advisor and then as
an associate tax legislative counsel. Mr. Sowell is a former chairman of the Real Estate
Committee of the American Bar Association (Tax Section) and is a former vice chairman of
the Tax Policy Advisory Committee of the Real Estate Roundtable.14
Investment Structures for
Real Estate Investment Funds
Jim G. Tod
Jim G. Tod is a partner in the Passthroughs group for KPMG’s Washington National Tax
Practice. The Passthroughs group is responsible for providing advice to KPMG professionals
and clients regarding the federal taxation of partnerships, real estate investment trusts and
S Corporations across all major industries. In addition, the Passthroughs group advises on
specialty areas such as like-kind exchanges, oil and gas, leasing, and excise taxes. Mr. Tod
has over 19 years of experience focusing on alternative investment funds and the use of
partnerships and limited liability companies in merger and acquisition transactions. He also
has extensive experience in real estate, debt restructurings, and alternative energy and has
served as a member of the AICPA’s Partnership Technical Resource Panel and a project
leader for the American Bar Association.15 Investment Structures for
Real Estate Investment Funds
Ossie Borosh
Ossie Borosh is a senior manager in the Passthroughs group of the Washington National Tax
Practice of KPMG LLP. Ms. Borosh has more than 10 years of experience in providing tax
services to clients with an emphasis in the partnership taxation area and has experience in a
broad range of partnership and real estate transactions and debt restructurings. Ms. Borosh
is the chairman of the ABA Tax Section Real Estate Committee’s Subcommittee on
Tax-Exempt Investor issues.16
Investment Structures for
Real Estate Investment FundsFor more information on this topic, please contact: Jim Sowell jsowell@kpmg.com 202.533.5710 kpmg.com ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser. © 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 26701NSS
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