Company: NXDT
Filing Date: 2025-04-23
Form Type: S-4/A
Source: 0001437749-25-012810
Chunk: 174

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-04-23
Form: S-4/A
Chunk 174
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 or other property held primarily for sale to customers in the ordinary course of New NXDT’s or such partnership’s trade or business.

Partnership Audit Rules

Under rules applicable to U.S. federal income tax audits of partnerships, subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and any partner’s distributive share thereof) is determined, and taxes, interest, or penalties attributable thereto are assessed and collected, at the partnership level, absent an election to the contrary. It is possible that these rules could result in New NXDT’s OP (or any partnership invested in by its OP) in which New NXDT directly or indirectly invests being required to pay additional taxes, interest and penalties as a result of an audit adjustment, and New NXDT, as a direct or indirect partner of these partnerships, could be required to bear the economic burden of those taxes, interest, and penalties. Shareholders are urged to consult their tax advisors with respect to these rules and their potential impact on their investment in shares of New NXDT.

Taxation of Holders of New Stock

U.S. Stockholders

Dividends Generally. As long as New NXDT qualifies as a REIT, distributions made by New NXDT out of its current or accumulated earnings and profits, and not designated as capital gain dividends, will constitute dividends taxable to New NXDT’s taxable U.S. stockholders as ordinary income. However, certain noncorporate U.S. stockholders may deduct up to 20% of certain pass-through income, including ordinary REIT dividends that are not “capital gain dividends” or “qualified dividend income,” subject to certain limitations. To qualify for this deduction, the noncorporate U.S. stockholder receiving such dividends must hold the dividend-paying REIT stock for at least 46 days (taking into account certain special holding period rules) of the 91-day period beginning 45 days before the stock becomes ex-dividend and cannot be under an obligation to make related payments with respect to a position in substantially similar or related property. Noncorporate U.S. stockholders should consult their own tax advisors to determine the impact of tax rates on dividends received from New NXDT. Distributions made by New NXDT will not be eligible for the dividends received deduction in the case of U.S. stockholders that are corporations. Distributions made by New NXDT that New NXDT properly designates as capital gain dividends will be taxable to U.S. stockholders as