Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 142

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 142
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 be recharacterized as short-term capital gains for certain holders of applicable partnership interests and
not eligible for reduced rates of tax. The regulations provide that REITs may, but are not required to, provide this additional reporting.

If a U.S. stockholder recognizes a loss upon
a disposition of our stock in an amount that exceeds a prescribed threshold, it is possible that the provisions of Treasury Regulations
involving “reportable transactions” could apply, resulting in a requirement to separately disclose the loss-generating transaction
to the Service. These Treasury Regulations are written quite broadly and apply to many routine and simple transactions. A reportable
transaction currently includes, among other things, a sale or exchange of stock resulting in a tax loss in excess of (a) $10 million
in any single year or $20 million in any combination of years in the case of stock held by a C corporation or by a partnership with only
C corporation partners or (b) $2 million in any single year or $4 million in any combination of years in the case of stock held
by any other partnership or an S corporation, trust or individual, including losses that flow through pass through entities to individuals.
A taxpayer discloses a reportable transaction by filing IRS Form 8886 with its federal income tax return and, in the first year
of filing, a copy of Form 8886 must be sent to the Service’s Office of Tax Shelter Analysis. The penalty for failing to disclose
a reportable transaction is generally $10,000 in the case of a natural person and $50,000 in any other case.

Information Reporting Requirements and Withholding. We or the applicable withholding agent will report to U.S. holders
and to the Service the amount and the tax character of distributions we pay during each calendar year, and the amount of tax we withhold,
if any. Under the backup withholding rules, a U.S. holder may be subject to backup withholding (currently at a rate of 24%) with respect
to distributions unless such holder:

| · | is a corporation or comes within                                                                                                      
 certain other exempt categories and, when required, demonstrates this fact; or                                                        |
| · | provides a taxpayer identification number, certifies                                                                                  
 as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding 
 rules.                                                                                                                                |

A U.S. holder who does not provide the applicable
withholding agent with its correct taxpayer identification number also may be subject to penalties imposed by