In the latest financial report, it's evident that there have been significant changes in the company's tax status. The company elected to be taxed as a Real Estate Investment Trust (REIT) under Sections 856 through 860 of the IRC commencing with the 2014 taxable year. The REIT election has continued and is expected to remain in effect for subsequent taxable years.
According to the report, the company's counsel, Sullivan & Worcester LLP, is of the opinion that the company has qualified for taxation as a REIT under the IRC for the 2014 through 2024 taxable years. However, this is subject to certain conditions including compliance with qualification tests and accurate representation of factual matters. Failure to qualify as a REIT could result in significant tax liabilities and impact the amount of cash available for distribution to stockholders.
As a REIT, the company is generally not subject to federal income tax on its net income distributed as dividends to stockholders. Distributions to stockholders are included in their income as dividends. However, the report indicates that the company may still be subject to federal tax in certain circumstances, including undistributed real estate investment trust taxable income, net income from the disposition of foreclosure property, net income from prohibited transactions, and failure to satisfy certain gross income and asset tests.
These changes in tax status and the potential impact on the company's tax liabilities and distributions to stockholders are crucial indicators of the company's financial performance and standing. Today the company's shares have moved 0.2% to a price of $95.41. Check out the company's full 8-K submission here.
