Question

QUESTION 2

1. Pick all the answers that are required for a REIT to qualify for its non taxable status, or, in other words, what are the REIT rules?  

   		It must have at least 100 shareholders
   		REITs are never taxable
   		There are no specific rules for REIT qualification.
   		REITs do not need a Board of Directors or Trustees
   		No more than 50% of its shares can be owned by 5 or fewer shareholders
   		It must distribute at least 90% of cash flow
   		It must distribute at least 90% of taxable income
   		REITs must have a Board of Directors or Trustees
   		100% of its assets must be real estate related
   		REITS must be structured as taxable corporations
   		At least 75% of its assets must be real estate related
   		It must have at least 10 shareholders

Answer 1

Following are the points from the given list that are required for a REIT to qualify for its non taxable status or REIT rules: -

• It must have at least 100 shareholders ( After its first year of existence)
• No more than 50% of its shares can be owned by 5 or fewer shareholders
• It must distribute at least 90% of taxable income ( as dividend to shareholders)
• REITs must have a Board of Directors or Trustees
• REITS must be structured as taxable corporations
• At least 75% of its assets must be real estate related

Other statements given in the question apart from the above given statements are not required.