Company: NXDT
Filing Date: 2025-04-23
Form Type: S-4/A
Source: 0001437749-25-012810
Chunk: 149

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-04-23
Form: S-4/A
Chunk 149
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DT as a Real Estate Investment Trust

New NXDT’s qualification as a REIT under the Code will depend upon the satisfaction by Old NXDT for the period ending immediately prior to the Conversion, and New NXDT, thereafter, of requirements of the Code relating to qualification for REIT status. Some of these requirements depend upon actual operating results, distribution levels, diversity of stock ownership, asset composition, source of income and record keeping. Accordingly, while New NXDT intends to qualify to be taxed as a REIT for U.S. federal income tax purposes, the actual results of New NXDT for any particular year (and combined with Old NXDT for the calendar year in which the Conversion is effective), might not satisfy these requirements.

The sections of the Code applicable to New NXDT are highly technical and complex. The following discussion summarizes material aspects of these sections of the Code.

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As a REIT, New NXDT generally will not have to pay U.S. federal corporate income taxes on New NXDT’s net income that New NXDT currently distributes to its stockholders. This treatment substantially eliminates the “double taxation” at the corporate and shareholder levels that generally results from investment in a regular corporation. New NXDT’s dividends, if any, however, generally will not be eligible for (i) the reduced rates of tax applicable to dividends received by noncorporate holders and (ii) the corporate dividends-received deduction.

However, New NXDT will have to pay U.S. federal income tax as follows:

| ● | New NXDT will have to pay tax at the U.S. federal corporate income tax rate on any REIT taxable income, including net capital gains, that we do not distribute to New NXDT shareholders during, or within a specified time after, the calendar year in which the income is earned, to the extent we cannot otherwise offset such income with our tax NOL carryforward. |

| ● | Under certain circumstances, New NXDT may have to pay the alternative minimum tax on New NXDT’s items of tax preference. |

| ● | If New NXDT elects to treat property that acquired in connection with a foreclosure of a mortgage loan or certain leasehold terminations as “foreclosure property,” New NXDT may thereby avoid a 100% tax on gain from a resale of that property (if the sale would otherwise constitute a prohibited transaction, as discussed below), but the income from the sale or operation of the property may be subject to U.S. federal corporate income tax