Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 83

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 83
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distributions that we properly designate as capital gain dividends as long-term capital gain, to the extent that they do not exceed our
actual net capital gain for the taxable year, without regard to the period for which the U.S. holder has held our shares of capital stock.
Dividends designated as capital gain dividends may not exceed our dividends paid for the taxable year, including dividends paid the following
year that are treated as paid in the current year. A corporate U.S. holder may, however, be required to treat up to 20% of certain capital
gain dividends as ordinary income. Net capital gain is generally taxable at a maximum U.S. federal income tax rate of 20%, in the case
of U.S. stockholders who are individuals, and 21% for corporations. Capital gain dividends attributable to the sale of depreciable real
property held for more than 12 months are subject to a 25% U.S. federal income tax rate for U.S. stockholders who are individuals, trusts
or estates, to the extent of previously claimed depreciation deductions.

We may elect to retain and pay income tax on
the net long-term capital gain that we recognize in a taxable year. In that case, to the extent we designate such amount on a timely
notice to such stockholder, a U.S. holder would be taxed on its proportionate share of our undistributed long-term capital gain. The
U.S. holder would receive a credit or refund for its proportionate share of the tax we paid. The U.S. holder would increase the basis
in its shares of capital stock by the amount of its proportionate share of our undistributed long-term capital gain, minus its share
of the tax we paid.

A U.S. holder will not incur tax on a distribution
in excess of our current and accumulated earnings and profits if the distribution does not exceed the adjusted basis of the U.S. holder’s
shares of capital stock. Instead, the distribution will reduce the adjusted basis of such shares of capital stock. A U.S. holder will
recognize a distribution in excess of both our current and accumulated earnings and profits and the U.S. holder’s adjusted basis
in his or her shares of capital stock as long-term capital gain, or short-term capital gain if the shares of capital stock have been
held for one year or less, assuming the shares of capital stock are a capital asset in the hands of the U.S. holder. In addition, if
we declare a distribution in