Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 145

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 145
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, however in such a situation it generally is expected that any additional gain recognized with respect to the Company Merger (after recognition of gain with respect to the Restructuring) would be immaterial.

U.S. Holders should consult their tax advisers regarding the U.S. federal income tax consequences of the Company Merger if it does not qualify as an A Reorg (including the requirement to recognize gain in that event).

Consequences of a Redemption to U.S. Holders

In the event that a U.S. Holder elects to participate in a Redemption pursuant to the redemption provisions described in this Information Circular under “The Reorganization,” the treatment of the Redemption for U.S. federal income tax purposes generally will depend on whether the redemption qualifies as a sale of the Units under Section 302 of the Code or rather as a distribution.

If the Redemption qualifies as a sale of Units under Section 302 of the Code, a U.S. Holder generally will recognize capital gain or loss on Redemption in an amount equal to the difference between the amount realized on the Redemption and such U.S. Holder’s adjusted tax basis in its redeemed Units, each determined in U.S. dollars. This gain or loss generally will be long-term capital gain or loss if the U.S. Holder has held such Units for more than one year. However, if a U.S. Holder recognizes a loss upon the sale or other disposition of Units that it has held for six months or less, after applying certain holding period rules, the loss recognized generally will be treated as a long-term capital loss to the extent the U.S. Holder received distributions from the REIT which were required to be treated as long-term capital gains.

If the Redemption instead qualifies as a distribution, a U.S. Holder generally will be required to include in gross income the amount of proceeds received with respect to the Redemption to the extent such proceeds are paid out of the REIT’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles) on the day actually or constructively received by the U.S. Holder and, other than with respect to capital gain dividends and certain amounts which have previously been subject to corporate level tax, as discussed below, will be taxable to the REIT’s U.S. Holders as ordinary income. As long as the REIT qualifies as a real estate investment trust, these amounts will not be eligible for the dividends-received deduction in the case of U.S. Holders that are corporations or, with limited exceptions, the preferential rates on