Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 95

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 95
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 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 the stockholder’s adjusted basis for tax purposes in the preferred stock for
which cash was received. Furthermore, under certain circumstances, a stockholder of shares of preferred stock may recognize gain or dividend
income to the extent that there are accumulated and unpaid dividends on the shares at the time of conversion into common stock.

Adjustments to Conversion Price. Adjustments in the conversion price, or the failure to make such adjustments,
pursuant to the anti-dilution provisions of the preferred stock or otherwise, may result in constructive distributions to the stockholders
of preferred stock that could, under certain circumstances, be taxable to them as dividends pursuant to Section 305 of the Code.
If such a constructive distribution were to occur, a stockholder of preferred stock could be required to recognize ordinary income for
tax purposes without receiving a corresponding distribution of cash. Under proposed regulations, such constructive distributions, if
any, would generally be deemed to occur on the date adjustments to the conversion price are made in accordance with the terms of