The press release from Regency Centers Corporation provides an update on its tax status as a real estate investment trust (REIT) and the implications for its federal income tax treatment. The company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code.
As a REIT, the company is generally exempt from paying U.S. federal corporate income taxes on its REIT taxable income that is distributed to its stockholders, thereby avoiding double taxation. However, the press release outlined several instances where the company would be required to pay U.S. federal income tax, including on undistributed REIT taxable income, net income from certain property dispositions, prohibited transactions, and other specific circumstances.
The press release also highlighted the potential tax consequences for the company if it fails to meet various qualification tests imposed under the Code, such as the 75% and 95% gross income tests, as well as the asset tests. Failure to meet these tests could result in additional taxes or penalties.
Furthermore, the press release discussed the requirements for qualification as a REIT, including the need to be managed by trustees or directors, issue transferable shares, and be beneficially owned by a certain number of individuals or entities.
The update also included the role of tax counsel in providing an opinion on the company's qualification and taxation as a REIT, emphasizing that the opinion was based on certain assumptions and representations.
Lastly, the press release acknowledged the potential for other taxes, such as payroll taxes and state and local taxes, as well as the company's efforts to minimize non-U.S. tax liability.
Today the company's shares have moved -0.6% to a price of $70.67. For more information, read the company's full 8-K submission here.
