SIE practice questioneasyREITs - Distribution Requirement
For a Real Estate Investment Trust (REIT) to avoid federal taxation on income, it must distribute at least:
- A100% of its net profits
- B90% of its taxable income to shareholders✓ Correct answer
- C80% of gross revenues to the SEC
- D50% of its income as dividends
Explanation
Why B — 90% of its taxable income to shareholders
A REIT generally must distribute at least 90% of taxable income to shareholders to avoid entity-level federal income taxation on distributed income. The other percentages are not the REIT distribution requirement.
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