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A REIT is required to pay a dividend of at least 90 percent of its taxable income each year. A dividend is any distribution of cash or property made by a corporation to its shareholders out of its earnings and profits from the current taxable year and then from accumulated earnings and profits from prior years.
Qualified REIT dividends are reported on Form 1040, line 3a. These qualify for the lower long-term capital gains tax rate. Capital gains distributions from the sale of REIT shares are reported on Schedule D and Form 1040. These may be taxed at lower long-term capital gains rates depending on your holding period.
To determine an assets cash flow and earnings, investors generally refer to financial results as explained through generally accepted accounting principles (GAAP). At first glance, a REITs GAAP earnings might reveal that it hasnt made any money at all and, therefore, does not need to issue a dividend payment.
Derive at least 75% of gross income from rents, interest on mortgages that finance real property, or real estate sales. Pay a minimum of 90% of taxable income in the form of shareholder dividends each year. Be an entity thats taxable as a corporation.
To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.
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Where do I enter dividends received by or paid by the corporation on an 1120 return? Enter dividends received by the corporation, and special deductions, on screen C, Schedule C Dividends Received. The Dividends Received Deduction Worksheet (Wks DRD) is generated from data entered in fields 3-1, 3-2, 3-3, and 3-4.
A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing properties. By law, 90% of an REITs profits must be distributed as dividends to shareholders.
Invest at least 75% of its total assets in real estate. Derive at least 75% of its gross income from rents from real property, interest on mortgages financing real property or from sales of real estate. Pay at least 90% of its taxable income in the form of shareholder dividends each year.