Windstream announced its plan to spin off telecommunication network assets into a separate publicly traded real estate investment trust (REIT). Before its announcement, Windstream had received a favorable private letter ruling from the IRS confirming that the spin off would be tax-free and that the spin-off's assets would qualify as real property for REIT purposes. Why is this of interest? Well, maybe because of the assets that Windstream spun off. Windstream ditched its existing fiber and copper network into the REIT, together with some real estate and other fixed assets. The real estate, compared to the overall assets transferred, comprised a small portion of the assets. Moreover, the primary purpose of the spin-off is not the management of real estate. Rather, the REIT's primary purpose is to lease the transferred assets back to Windstream through a long-term "triple-net" exclusive lease. Nonetheless, Windstream succeeded in qualifying its spin off as a REIT. The net result is that it allows Windstream to deduct, for federal income tax purposes, the amount of rent paid to the REIT without a corresponding corporate level income tax inclusion in income by the REIT. This will save Windstream an estimated $650 million in taxable income. Windstream's shareholders retained their existing shares in addition to receiving shares in the REIT. This is significant for several reasons. 1. The IRS allowed the tax-free transaction of the spin-off despite the election for REIT status (another tax savings). Effectively, this allows Windstream to claim two promotional deals instead of having to elect only one coupon. 2. The IRS recognized transmission infrastructure such as cable and wiring in addition to the underlying real estate as qualifying assets for REIT purposes. The ruling has broad implications that are favorable to taxpayers. Many types of businesses, particularly in telecommunications, will be eligible to claim the benefits of a REIT structure. At least until the IRS or Congress closes the loophole.