Hollywood Park Can Reinstate ‘Paired’ Status

The House of Representatives on Wednesday approved a bill that would allow Inglewood-based Hollywood Park Inc. to reinstate a special tax structure as part of a broader bill to fix a host of mistakes lawmakers made in their rush to enact the first major tax cut in more than a decade.

Hollywood Park, owner of the famed racetrack of the same name and other gaming and real estate assets, was one of a handful of companies that secured the right in 1984 to continue to “pair” its status as a real estate investment trust with a taxable corporation.

REITs are exempt from corporate income taxes if, among other things, they distribute at least 95% of net income to shareholders as a dividend.

Hollywood Park abandoned the structure but recently indicated it wanted to reinstate the corporate system that would allow it to own real estate and operate other businesses without violating REIT rules.

On Wednesday, Hollywood Park shares advanced $1.75 to close at $19.38 in Nasdaq trading.

The legislation simply clarifies that Hollywood Park has the right to reinstate the REIT structure, according to Ken Kies, staff director of the Joint House Committee on Taxation. Officials at Hollywood Park declined to comment on the vote.

The so-called corrections bill was attached to a measure to reform the Internal Revenue Service, which the House passed by a vote of 426 to 4.

The bill is intended to correct several technical glitches that Congress created in its haste to enact a $95-billion tax cut in August.