Company: BHM
Filing Date: 2025-03-28
Form Type: POS AM
Source: 0001104659-25-029225
Chunk: 359

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-03-28
Form: POS AM
Chunk 359
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 a carryover, rather
than a fair market value, adjusted tax basis in such contributed assets equal to the adjusted tax basis of the contributors in such assets,
resulting in a book-tax difference. As a result of that book-tax difference, we will have a lower adjusted tax basis with respect to that
portion of our Operating Partnership’s assets than we would have with respect to assets having a tax basis equal to fair market
value at the time of acquisition. This could result in lower depreciation deductions with respect to the portion of our Operating Partnership’s
assets attributable to such contributions.

The U.S. Treasury Department
has issued regulations requiring partnerships to use a “reasonable method” for allocating items with respect to which there
is a book-tax difference and outlining several reasonable allocation methods. Under certain available methods, the carryover basis of
contributed properties in the hands of 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