### Question
How does Regulated Investment Companies and Real Estate Investment Trusts define excess interest?


### Answer
Under *26 U.S.C. § 857*, **excess interest** is defined as:

> any deductions for interest payments by a taxable REIT subsidiary of a real estate investment trust to such trust to the extent that the interest payments are in excess of a rate that is commercially reasonable

#### Citation:
  - *26 U.S.C. § 857*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter M-Regulated Investment Companies and Real Estate Investment Trusts > PART II-REAL ESTATE INVESTMENT TRUSTS**

