Question

To qualify as a pass-through entity for U.S. corporate income tax, a REIT must be all of the following EXCEPT

Answer 1

To qualify as a pass-through entity for U.S. corporate income tax, a REIT must be all of the following EXCEPT : ​Jointly owned by less than 100 persons.

What Is a Real Estate Investment Trust (REIT)?

A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate.

Modeled after mutual funds, REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments—without having to buy, manage, or finance any properties themselves.

To qualify as a REIT, a company must comply with certain provisions in the Internal Revenue Code (IRC). These requirements include to primarily own income-generating real estate for the long term and distribute income to shareholders.

Specifically, a company must meet the following requirements to qualify as a REIT:

• Invest at least 75% of total assets in real estate, cash, or U.S. Treasuries
• Derive at least 75% of gross income from rents, interest on mortgages that finance real property, or real estate sales
• Pay a minimum of 90% of taxable income in the form of shareholder dividends each year
• Be an entity that's taxable as a corporation
• Be managed by a board of directors or trustees
• Have at least 100 shareholders after its first year of existence
• Have no more than 50% of its shares held by five or fewer individuals

Therefore, we can conclude that the correct option is D.

Your question is incomplete, but most probably your full question was:

To qualify as a pass-through entity for U.S. corporate income tax, a REIT must be all of the following EXCEPT

a.​structured as a corporation, trust, or association.

b.​have transferable shares or certificates of interest.

c.​managed by a board of directors or trustees.

d.​jointly owned by less than 100 persons.

Learn more about REIT on:

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