Company: NXDT
Filing Date: 2025-04-23
Form Type: S-4/A
Source: 0001437749-25-012810
Chunk: 175

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-04-23
Form: S-4/A
Chunk 175
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 gain from the sale of a capital asset held for more than one year, to the extent that such dividends do not exceed New NXDT’s actual net capital gain for the taxable year, without regard to the period for which a U.S. stockholder has held the shares of New Stock. Thus, with certain limitations, capital gain dividends received by an individual U.S. stockholder may be eligible for preferential rates of taxation. Furthermore, New NXDT may designate a portion of its dividends as eligible for the preferential rate on qualified dividend income, provided that the amount so designated may not exceed that portion of distributions attributable to:

• dividends received by New NXDT from non-REIT corporations, such as a TRS; and

• income upon which New NXDT has paid U.S. federal corporate income tax (for example, if New NXDT distributes taxable income that it retained and paid tax on in the prior taxable year).

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To the extent that New NXDT makes distributions not designated as capital gain dividends in excess of New NXDT’s current and accumulated earnings and profits, these distributions will be treated first as a tax-free return of capital to each U.S. stockholder. Thus, these distributions will reduce the adjusted basis that the U.S. stockholder has in the shares of New Stock for tax purposes by the amount of the distribution, but not below zero. Distributions in excess of a U.S. stockholder’s adjusted basis in the shares of New Stock will be taxable as capital gains, provided that the shares of New Stock have been held as a capital asset. For purposes of determining the portion of distributions on separate classes of shares of New Stock that will be treated as dividends for U.S. federal income tax purposes, current and accumulated earnings and profits will be allocated to distributions resulting from priority rights of preferred stock before being allocated to other distributions.

As described above, dividends authorized by New NXDT in October, November, or December of any year and payable to a stockholder of record on a specified date in any of these months will be treated as both paid by New NXDT and received by the stockholder on December 31 of that year, provided that New NXDT actually pays the dividend on or before January 31 of the following calendar year. Stockholders may not include in their own income tax returns any net operating losses or capital losses of New NXDT.

New NXDT may make distributions to holders of shares of New Stock that are paid in shares of New Stock. In certain