Company: BHM
Filing Date: 2025-07-08
Form Type: DRS
Source: 0001104659-25-066400
Chunk: 374

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-07-08
Form: DRS
Chunk 374
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 our Operating Partnership (1) could cause us to be allocated lower amounts of depreciation
deductions for tax purposes than would be allocated to us if all contributed properties were to have a tax basis equal to their fair market
value at the time of the contribution and (2) in the event of a sale of such properties, could cause us to be allocated taxable gain
in excess of the economic or book gain allocated to us as a result of such sale, with a corresponding benefit to the contributing partners.
An allocation described in (2) above might cause us to recognize taxable income in excess of cash proceeds in the event of a sale
or other disposition of property, which may adversely affect our ability to comply with the REIT distribution requirements and may result
in a greater portion of our distributions being taxed as dividends. We have not yet decided what method our Operating Partnership will
use to account for book-tax differences.

Sale of a Partnership’s Property

Generally, any gain realized
by a Partnership on the sale of property held by the Partnership for more than one year will be long-term capital gain, except for any
portion of such gain that is treated as depreciation or cost recovery recapture. Under Section 704(c) of the Code, any gain
or loss recognized by a Partnership on the disposition of contributed properties will be allocated first to the partners of the Partnership
who contributed such properties to the extent of their built-in gain or built-in loss on those properties for U.S. federal income tax
purposes. The partners’ built-in gain or built-in loss on such contributed properties will equal the difference between the partners’
proportionate share of the book value of those properties and the partners’ tax basis allocable to those properties at the time
of the contribution as reduced for any decrease in the “book-tax difference.” See “—Income Taxation of the Partnerships
and their Partners—Tax Allocations with Respect to Partnership Properties.” Any remaining gain or loss recognized by the Partnership
on the disposition of the contributed properties, and any gain or loss recognized by the Partnership on the disposition of the other properties,
will be allocated among the partners in accordance with their respective percentage interests in the Partnership.

Our share of any gain realized
by a Partnership on the sale of any property held by the Partnership as inventory or other property held primarily for sale to customers
in the ordinary course of the Partnership’s trade or business will be treated as income from a prohibited transaction that is subject
to a 100% penalty tax. Such prohibited