Company: NXDT
Filing Date: 2025-04-25
Form Type: 424B3
Source: 0001437749-25-013177
Chunk: 55

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-04-25
Form: 424B3
Chunk 55
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 rather will recognize ordinary income for United States federal income tax purposes in an amount equal to the fair market value of the shares at the time the restricted shares are no longer subject to a substantial risk of forfeiture (within the meaning of the Code). Old NXDT generally will be entitled to a deduction at the time when, and in the amount that, the participant recognizes ordinary income on account of the lapse of the restrictions. A participant’s tax basis in the shares will equal the fair market value of those shares at the time the restrictions lapse, and the participant’s holding period for capital gains purposes will begin at that time. Any cash dividends paid on the shares before the restrictions lapse will be taxable to the participant as additional compensation (and not as dividend income). Under Section 83(b) of the Code, a participant may elect to recognize ordinary income at the time the restricted shares are awarded in an amount equal to their fair market value at that time, notwithstanding the fact that such shares are subject to restrictions and a substantial risk of forfeiture. If such an election is made, no additional taxable income will be recognized by such participant at the time the restrictions lapse, the participant will have a tax basis in the restricted shares equal to their fair market value on the date of their award, and the participant’s holding period for capital gains purposes will begin at that time. Old NXDT generally will be entitled to a tax deduction at the time when, and to the extent that, ordinary income is recognized by such participant.

Restricted Share Units:A participant subject to United States federal income tax who is granted a restricted shares unit will not recognize ordinary income for United States federal income tax purposes upon the receipt of the restricted shares unit, but rather will recognize ordinary income in an amount equal to the fair market value of the Old Common Shares at the time of settlement, and Old NXDT will have a corresponding deduction at that time.

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Performance Shares, Performance Units, Other Share-Based and Cash-Based Awards:In the case of other share-based and other cash-based awards, depending on the form of the award, a participant subject to United States federal income tax will not be taxed upon the grant of such an award, but, rather, will recognize ordinary income for United States federal income tax purposes when such an award vests or otherwise is free of restrictions. In any event, Old NXDT will be entitled to a deduction at the time when, and in the amount that, a participant recognizes ordinary income.

Profits Interest Units:A participant subject to United States federal