SIE practice questionmediumREITs
If a REIT distributes less than 90% of its taxable income to shareholders, the REIT:
- AAutomatically becomes a mutual fund
- BMust pass through all tax losses to investors
- CMay lose its special tax treatment✓ Correct answer
- DWill be listed on a major exchange
Explanation
Why C — May lose its special tax treatment
A is correct; failure to distribute the required 90% can result in loss of REIT tax benefits. B, C, and D are not consequences of insufficient distributions.
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