Question

With regard to taxation of distributions from a REIT,

Options:
A) In the majority of cases, dividends are taxed as ordinary income.
B) In the majority of cases, dividends are considered qualified for the lower tax rate.
C) Capital gains distributions are treated as long-term capital gains.
D) Capital gains distributions are taxed as ordinary income.

Answer 1

In the majority of cases, capital gains distributions from a REIT are treated as long-term capital gains. Capital gains are the profits made from the sale of assets such as stocks.

Step-by-step explanation:

In the case of taxation of distributions from a Real Estate Investment Trust (REIT), capital gains distributions are treated as long-term capital gains.

Therefore, the correct option is C) Capital gains distributions are treated as long-term capital gains.

Capital gains are the profits made from the sale of assets such as stocks. When an investor sells shares in a REIT and realizes a capital gain, that gain is subject to long-term capital gains tax rates. These rates are typically lower than ordinary income tax rates.