Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 81

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 81
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as a partnership for U.S. federal income tax purposes holds our securities, the U.S. federal income tax treatment of a partner in the
partnership will generally depend on the status of the partner and the activities of the partnership and certain determinations made
at the partner level. If you are a partner in a partnership holding our securities, you should consult your tax advisor regarding the
consequences of the purchase, ownership and disposition of our securities by the partnership.

Taxation of Taxable U.S. Holders on Distributions on Shares. As long as we qualify as a REIT, a taxable U.S. holder
must generally take into account as ordinary income distributions made out of our current or accumulated earnings and profits that we
do not designate as capital gain dividends or retained long-term capital gain. Dividends paid to a U.S. holder will not qualify for the
dividends received deduction generally available to corporations. In addition, dividends paid to a U.S. holder generally will not qualify
for the 20% tax rate for “qualified dividend income.”

The maximum tax rate for qualified dividend income
received by taxpayers taxed at individual rates is currently 20%. Qualified dividend income generally includes dividends paid to U.S.
holders taxed at individual rates by domestic C corporations and certain qualified foreign corporations. Because we are not generally
subject to U.S. federal income tax on the portion of our REIT taxable income distributed to our stockholders (see “— Taxation
of Our Company” above), our dividends generally will not be eligible for the 20% rate on qualified dividend income.

As a result, our ordinary REIT dividends will
be taxed at the higher tax rate applicable to ordinary income. Beginning in taxable years on or after January 1, 2018 and before
January 1, 2026, non-corporate U.S. stockholders will be entitled to deduct 20% of ordinary REIT dividends they receive. In combination
with the 37% maximum rate applicable to non-corporate U.S. stockholders in such years, ordinary REIT dividends are subject to a maximum
tax rate of 29.6%, as compared with the 39.6% rate applicable in taxable years beginning before January 1, 2018. Pursuant to Treasury
Regulations finalized in 2020, in order for a dividend paid by a REIT to be eligible to be eligible for this reduced tax rate, a non-corporate
U.S. stockholder must meet