Company: BHM
Filing Date: 2025-07-08
Form Type: DRS
Source: 0001104659-25-066400
Chunk: 331

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-07-08
Form: DRS
Chunk 331
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 elect to
treat the subsidiary as a TRS. A corporation (other than a REIT) of which a TRS directly or indirectly owns more than 35% of the
voting power or value of the outstanding securities will automatically be treated as a TRS. We will not be treated as holding the
assets of a TRS or as receiving any income that the TRS earns. Rather, the stock issued by a TRS to us will be an asset in our
hands, and we will treat the distributions paid to us from such TRS, if any, as income to the extent of the TRS’s earnings and
profits. This treatment may affect our compliance with the gross income and asset tests. Because we will not include the assets and
income of TRSs in determining our compliance with the REIT requirements, we may use such entities to undertake activities
indirectly, such as earning fee income, that the REIT rules might otherwise preclude us from doing directly or through
pass-through subsidiaries. Overall, no more than 20% (25% for 2026 and future tax years) of the value of a REIT’s assets may
consist of stock or securities of one or more TRSs.

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A TRS pays income tax at regular
corporate rates on any income that it earns. In addition, the TRS rules limit the deductibility of interest paid or accrued by a
TRS to its parent REIT to assure that the TRS is subject to an appropriate level of U.S. federal income taxation. For example, deductions
are disallowed for business interest expense (even if paid to third parties) in excess of the sum of a taxpayer’s business interest
income and 30% of the adjusted taxable income of the business, which is its taxable income computed without regard to business interest
income or expense, net operating losses (“NOLs”) or the pass-through income deduction. Such limitations may also impact the
amount of U.S. federal income tax paid by a TRS. Further, the TRS rules impose a 100% excise tax on certain transactions between
a TRS and its parent REIT, such as intercompany loans, or the REIT’s tenants that are not conducted on an arm’s-length basis.

A TRS may not directly or
indirectly operate or manage any healthcare facilities or lodging facilities or provide rights to any brand name under which any healthcare
facility or lodging