Tax Rates
. The maximum tax rate for
non-corporate
taxpayers for (1) long-term capital gains, including certain capital gain dividends, generally is 20% (although depending on the characteristics of the assets which produced
these gains and on designations which we may make, certain capital gain dividends may be taxed at a 25% rate) and (2) qualified dividend income generally is 20%. In general, dividends payable by REITs are not eligible for the reduced tax
rate on qualified dividend income, except to the extent that certain holding period requirements have been met and the REITs dividends are attributable to dividends received from taxable corporations (such as its taxable REIT subsidiaries) or
to income that was subject to tax at the corporate/REIT level (for example, if the REIT distributed taxable income that it retained and paid tax on in the prior taxable year). Capital gain dividends will only be eligible for the rates described
above to the extent that they are properly designated by the REIT as capital gain dividends. U.S. holders that are corporations may be required to treat up to 20% of some capital gain dividends as ordinary income. In addition,
non-corporate
U.S. holders, including individuals, generally may deduct 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend income, for taxable years beginning
after December 31, 2017 and before January 1, 2026.
Taxation of
Tax-Exempt
Holders of Our Capital
Stock
Dividend income from us and gain arising upon a sale of shares of our capital stock generally should not be unrelated business
taxable income, or UBTI, to a
tax-exempt
holder, except as described below. This income or gain will be UBTI, however, to the extent a
tax-exempt
holder holds its shares
as debt-financed property within the meaning of the Code. Generally, debt-financed property is property the acquisition or holding of which was financed through a borrowing by the
tax-exempt
holder.
For
tax-exempt
holders that are social
clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, or qualified group legal services plans exempt from U.S. federal income taxation under Sections 501(c)(7), (c)(9), (c)(17) or (c)(20) of the Code,
respectively, income from an investment in our shares will constitute UBTI unless the organization is able to properly claim a deduction for amounts set aside or placed in reserve for specific purposes so as to offset the income generated by its
investment in our shares. These prospective investors should consult their tax advisors concerning these set aside and reserve requirements.
Notwithstanding the above, however, a portion of the dividends paid by a pension-held REIT may be treated as UBTI as to certain
trusts that hold more than 10%, by value, of the interests in the REIT. A REIT will not be a pension-held REIT if it is able to satisfy the not closely held requirement without relying on the look-through
exception with respect to certain trusts or if such REIT is not predominantly held by qualified trusts. As a result of restrictions on ownership and transfer of our stock contained in our charter, we do not expect to be
classified as a pension-held REIT, and as a result, the tax treatment described above should be inapplicable to our holders. However, because our capital stock is (and, we anticipate, will continue to be) publicly traded, we cannot
guarantee that this will always be the case.
Taxation of
Non-U.S.
Holders of Our Capital Stock
The following discussion addresses the rules governing U.S. federal income taxation of the acquisition, ownership and disposition of our
capital stock by
non-U.S.
holders. These rules are complex, and no attempt is made herein to provide more than a brief summary of such rules. Accordingly, the discussion does not address all aspects of U.S.
federal income taxation and does not address other federal, state, local or
non-U.S.
tax consequences that may be relevant to a
non-U.S.
holder in light of its
particular circumstances. We urge
non-U.S.
holders to consult their tax advisors to determine the impact of U.S. federal, state, local and
non-U.S.
income and other tax
laws and any applicable tax treaty on the purchase, ownership and disposition of shares of our capital stock, including any reporting requirements.
Distributions Generally
. Distributions (including any taxable stock distributions) that are neither attributable to gains from
sales or exchanges by us of United States real property interests, or USRPIs, nor
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