SIE practice questionhardREITs - Tax Qualification
In order to qualify as a REIT under IRS rules, a company must:
- AInvest at least 75% of assets in real estate activities✓ Correct answer
- BDistribute at least 50% of earnings annually
- CHold only commercial properties
- DBe incorporated outside the United States
Explanation
Why A — Invest at least 75% of assets in real estate activities
To qualify as a REIT, at least 75% of assets must be in real estate, cash, or government securities. The distribution requirement is 90%, not 50%; C/D are not requirements.
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