Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 150

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 150
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 equivalent to a dividend.” However, the determination as to whether
any of the alternative tests of Section 302(b) of the Code will be satisfied with respect to any particular holder of preferred
stock depends upon the facts and circumstances at the time the determination must be made. We urge prospective holders of preferred stock
to consult their own tax advisors to determine such tax treatment.

If a redemption of preferred stock is not treated
as a distribution taxable as a dividend to a particular holder, it will be treated as a taxable sale or exchange by that holder. As a
result, the holder will recognize gain or loss for federal income tax purposes in an amount equal to the difference between (i) the
amount of cash and the fair market value of any property received (less any portion thereof attributable to accumulated and declared
but unpaid dividends, which will be taxable as a dividend to the extent of our current and accumulated earnings and profits) and (ii) the
holder’s adjusted tax basis in the shares of the preferred stock. Such gain or loss will be capital gain or loss if the shares
of preferred stock were held as a capital asset, and will be long-term gain or loss if such shares were held for more than one year.
If a redemption of preferred stock is treated as a distribution taxable as a dividend, the amount of the distribution will be measured
by the amount of cash and the fair market value of any property received by the holder, and the holder’s adjusted tax basis in
the redeemed shares of the preferred stock will be transferred to the holder’s remaining shares of our stock. If the holder owns
no other shares of our stock, such basis may, under certain circumstances, be transferred to a related person or it may be lost entirely.

Conversion of Preferred Stock into Common Stock. In general, no gain or loss will be recognized for federal
income tax purposes upon conversion of the preferred stock solely into shares of common stock. The basis that a stockholder will have
for tax purposes in the shares of common stock received upon conversion will be equal to the adjusted basis for the stockholder in the
shares of preferred stock so converted, and provided that the shares of preferred stock were held as a capital asset, the holding period
for the shares of common stock received would include the holding period for the shares of preferred stock converted. A stockholder will,
however, generally recognize gain or loss on the receipt of cash in lieu of fractional shares of common stock in an amount equal to the
difference between the amount of cash received and