Company: CLPR
Filing Date: 2025-04-30
Form Type: DEF 14A
Source: 0001437749-25-013840
Chunk: 38

Company: Clipper Realty Inc.
Filing Date: 2025-04-30
Form: DEF 14A
Chunk 38
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 value of shares received in payment or the amount of cash received, as applicable, and the Company will be entitled to a corresponding deduction at such time.

LTIP Units. Grantees generally are not expected to recognize taxable income at the time of the grant of LTIP Units or the vesting of those units, provided that (i) the LTIP Units qualify as “profits interests” within the meaning of the Code and related IRS guidance; (ii) the grantee does not dispose of the LTIP Units within two years of issuance; and (iii) certain other requirements are met. Grantees generally would make the election provided for under Section 83(b) of the Code, recognizing zero income at the time of grant, in which case the LTIP Units could be disposed of within two years of issuance. As a holder of LTIP Units, however, a grantee will be required to report on his or her income tax return his or her allocable share of the operating partnership’s income, gains, losses, deductions and credits in accordance with the partnership agreement, regardless of whether the operating partnership actually makes a distribution of cash to the grantee. Distributions of money by the operating partnership to the grantee, will generally be taxable to the grantee to the extent that such distributions exceed the grantee’s tax basis in the operating partnership. Any such gain generally will be capital gain, but a portion may be treated as ordinary income, depending on the assets of our operating partnership at that time. Generally, no deduction is available to us upon the grant, vesting or disposition of the LTIP Units.

Cash-Based Awards. A grantee will not recognize income, and the Company will not be allowed a tax deduction, at the time a cash-based award is granted (for example, when the performance goals are established). Upon receipt of cash in settlement of the award, a grantee will recognize ordinary income equal to the cash received, and the Company will be allowed a corresponding federal income tax deduction at that time.

Tax Withholding. The Company has the right to deduct or withhold, or require a participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including employment taxes) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of grants under the plans.

Certain Tax Code Limitations on Deductibility. Section 162(m) of the Code generally places a $1 million annual limit on a company’s tax deduction for