Company: EGP
Filing Date: 2025-12-05
Form Type: S-3ASR
Source: 0001140361-25-044456
Chunk: 48

Company: EASTGROUP PROPERTIES INC
Filing Date: 2025-12-05
Form: S-3ASR
Chunk 48
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 partnership, such partnership may elect to use a method of allocation under Section 704(c) of the Code that accelerates income to us. In that regard, when and if the Operating Partnership becomes a partnership for U.S. federal income tax purposes we would be treated as contributing our assets to a newly formed partnership.

Partnership Audit Rules

While generally the rules described above mean that a partnership is not subject to U.S. federal income tax, the rules applicable to U.S. federal income tax audits of partnerships effective for taxable years beginning after December 31, 2017 may require the partnership to pay the hypothetical increase in partner-level taxes (including interest and penalties) resulting from an adjustment of partnership (or partnership-related) tax items in connection with such audit. Such hypothetical tax liability, or “imputed underpayment” will be determined based on the highest rate of tax applicable to corporations or individuals, subject to certain potential adjustments that may reduce the amount. Under the default rule, this imputed underpayment generally must be paid in the year of the adjustment, resulting in a potential shift of the cost of an assessment to those persons that are partners in such partnership in the year of the assessment, and away from those who were partners in the year of the underpayment. The partnership audit rules create procedures to modify (or reduce) a proposed imputed underpayment if certain conditions are satisfied, but no assurances can be provided that such procedures can, or will, be used to reduce or eliminate imputed underpayments. The partnership may elect an alternative method under which the taxes resulting from the adjustment (and interest and penalties) are assessed at the partner level (often referred to as a “push-out election”), subject to a higher rate of interest than otherwise would apply. Treasury Regulations provide that when a push-out election affects a partner that is a REIT, such REIT may be able to use deficiency dividend procedures with respect to adjustments resulting from such election. It is possible that partnerships in which we directly and indirectly invest may be subject to U.S. federal income tax, interest and penalties in the event of a U.S. federal income tax audit as a result of these rules, and as a result, we could be required to bear the economic costs of taxes attributable to our partners.

Investments in Certain Debt Instruments and Preferred Equity

We may acquire mortgage, mezzanine, bridge loans and other debt investments. A real estate mortgage loan that we own generally will be treated as a real estate asset for purposes of the 75% asset test,