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12 Cards in this Set

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What portion of a REIT's income is not subject to federal income tax?
Any REIT taxable income or capital gain distributed to stockholders.
What may be taxable for federal tax purposes?
Any income or capital gain NOT distributed.
What tax rate would be effective if we were subject to federal tax?
Normal corporate rates.
What happens if a REIT elects to pay income tax on its net long term capital gains?
Stockholders are required to include their proportionate share of the REIT's UNdistributed long-term capital gain in income. Note: They will receive a refundable credit for thier share of any taxes paid by the REIT on such gain.
Despite the REIT's election to be taxed as a REIT there are 7 special circumstances that may require a REIT to pay federal income and excise tax. Name 1?
1) To the extent that the REIT does not distribute all of it's net capital gain or distributes at least 90%, but less than 100%, of our “REIT taxable income,” as adjusted, we will be subject to tax on the undistributed amount at regular corporate tax rates
Despite the REIT's election to be taxed as a REIT there are 7 special circumstances that may require a REIT to pay federal income and excise tax. Name Second?
2) We may be subject to the “alternative minimum tax” on certain items of tax preference to the extent that this tax exceeds our regular tax
Despite the REIT's election to be taxed as a REIT there are 7 special circumstances that may require a REIT to pay federal income and excise tax. Name Third?
3) If we have net income from the sale or other disposition of “foreclosure property” that is held primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we will be subject to tax at the highest corporate rate on this income
Despite the REIT's election to be taxed as a REIT there are 7 special circumstances that may require a REIT to pay federal income and excise tax. Name Fourth?
3) Any net income from prohibited transactions (which are, in general, sales or other dispositions of property held primarily for sale to customers in the ordinary course of business, other than dispositions of foreclosure property and dispositions of property due to an involuntary conversion) will be subject to a 100% tax
Despite the REIT's election to be taxed as a REIT there are 7 special circumstances that may require a REIT to pay federal income and excise tax. Name Fifth?
5) If we fail to satisfy either the 75% or 95% gross income tests, but nonetheless maintain our qualification as a REIT because certain other requirements are met, we will be subject to a 100% tax on an amount equal to (1) the gross income attributable to the greater of (i) 75% of our gross income over the amount of qualifying gross income for purposes of the 75% gross income test or (ii) 95% of our gross income (90% of our gross income for taxable years beginning on or before October 22, 2004) over the amount of qualifying gross income for purposes of the 95% gross income test multiplied by (2) a fraction intended to reflect our profitability
Despite the REIT's election to be taxed as a REIT there are 7 special circumstances that may require a REIT to pay federal income and excise tax. Name Sixth?
6) If we fail to distribute during each year at least the sum of (1) 85% of our REIT ordinary income for the year, (2) 95% of our REIT capital gain net income for such year (other than capital gain that we elect to retain and pay tax on) and (3) any undistributed taxable income from preceding periods, we will be subject to a 4% excise tax on the excess of such required distribution over amounts actually distributed
Despite the REIT's election to be taxed as a REIT there are 7 special circumstances that may require a REIT to pay federal income and excise tax. Name Sixth?
 We will also be subject to a tax of 100% on the amount of any rents from real property, deductions or excess interest paid to us by any of our “taxable REIT subsidiaries” that would be reduced through reallocation under certain federal income tax principles in order to more clearly reflect income of the taxable REIT subsidiary.
What federal tax could a REIT be required to pay if it acquires a C-corporation in a carryover transaction?
Any specified liabilities inherited from that C-corporation.