Company: NXDT
Filing Date: 2025-06-12
Form Type: S-4
Source: 0001437749-25-020201
Chunk: 55

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-06-12
Form: S-4
Chunk 55
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 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.

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.

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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 it 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 at the U.S. federal corporate income tax rate. |

| ● | If New NXDT has net income from “prohibited transactions,” as defined in the Code, New NXDT will have to pay a 100% tax on that income. Prohibited transactions are, in general, certain sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. |

| ● | If New NXDT should fail to satisfy the 75% gross income test or the 95% gross income test, as discussed below under “–Requirements for Qualification–Income Tests,” but has nonetheless maintained New NXDT’s qualification as a