Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 80

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 80
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 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. These rules could result
in the Operating Partnership being required to pay additional taxes, interest and penalties as a result of an audit adjustment, and we
could be required to bear the economic burden of those taxes, interest, and penalties even though we, as a REIT, may not otherwise have
been required to pay additional corporate-level taxes as a result of the related audit adjustment. Prospective stockholders are urged
to consult their tax advisors with respect to these changes and their potential impact on their investment in our securities.

The discussion above assumes that our Operating
Partnership is treated as a “partnership” for U.S. federal income tax purposes. Generally, a domestic unincorporated entity
with two or more owners is treated as a partnership for U.S. federal income tax purposes unless it affirmatively elects to be treated
as a corporation. However, certain “publicly traded partnerships” are treated as corporations for U.S. federal income tax
purposes. We intend to comply with one or more exceptions to treatment of our Operating Partnership as a corporation under the publicly
traded partnership rules. Failure to qualify for such an exception could prevent us from qualifying as a REIT.

Taxation of U.S. Holders

The term “U.S. holder” means a beneficial
owner of our securities that, for U.S. federal income tax purposes, is:

| · | a citizen or resident of the United                                                                                                  
 States;                                                                                                                              |
| · | a corporation (including an entity treated as a corporation                                                                          
 for U.S. federal income tax purposes) created or organized under the laws of the United States, any of its States or the District    
 of Columbia;                                                                                                                         |
| · | an estate whose income is subject to U.S. federal income                                                                             
 taxation regardless of its source; or                                                                                                |
| · | any trust if (i) a U.S. court is able to exercise                                                                                    
 primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial 
 decisions of the trust or (ii) it has a valid election in place to be treated as a U.S. person.                                      |

If a partnership, entity or arrangement treated