|FOREST CITY REALTY TRUST, INC. filed this Form PREM14A on 09/21/2018|
As used in this section, the term U.S. stockholder means a beneficial owner of shares of common stock, who, for U.S. federal income tax purposes, is:
Beneficial owners of shares of common stock who are neither a U.S. stockholder nor a partnership for U.S. federal income tax purposes are referred to in this section as non-U.S. stockholders.
ALL HOLDERS OF OUR COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
U.S. Federal Income Tax Treatment of the Special REIT Taxable Income Distribution
For U.S. federal income tax purposes, the Company intends to treat the special REIT taxable income distribution (if any) as a dividend distribution to holders of shares of our common stock to the extent of the Companys current and accumulated earnings and profits. Notwithstanding the intended U.S. federal income tax treatment described herein, the federal income tax treatment of the special REIT taxable income distribution, if any, is not free from doubt, and the IRS or a court may disagree with the Companys intended treatment. The rest of this discussion assumes that the Companys intended U.S. federal income tax treatment of the special REIT taxable income distribution is respected. Holders of shares of our common stock are urged to consult their own tax advisors regarding the impact to them of this potential alternative treatment in their particular circumstances.
The special REIT taxable income distribution, if any, made by the Company out of its current or accumulated earnings and profits, and not designated as a capital gain dividend, will constitute dividends taxable to the Companys U.S. stockholders as ordinary income. Noncorporate U.S. stockholders will generally not be entitled to the preferential tax rate applicable to qualified dividend income except with respect to the portion of any distribution (a) that represents income from dividends the Company received from a corporation in which the Company owns shares (but only if such dividends would be eligible for the lower rate on dividends if paid by the corporation to its individual stockholders), (b) that is equal to the sum of the Companys REIT taxable income (taking into account the dividends paid deduction available to the Company) and certain net built-in gain with respect to property acquired from a C corporation in certain transactions in which the Company must adopt the basis of the asset in the hands of the C corporation for the Companys previous taxable year, less any taxes paid by the Company during its previous taxable year, or (c) that represents earnings and profits that were accumulated in a non-REIT taxable year, in each case, provided that certain holding period and other requirements are satisfied at both the Company and individual stockholder levels; however, to the extent not so treated as qualified dividend income and not designated as a capital gain dividend, the distribution will generally constitute a dividend with respect to which noncorporate U.S. stockholders will be permitted to take a deduction equal to 20% of such dividend, subject to certain limitations. For example, this deduction does not reduce a U.S. stockholders net investment income as described below in Medicare Tax. Additionally, under recently proposed Treasury regulations, the ability of a U.S. stockholder to take the 20% deduction may depend on such stockholders individual circumstances. Noncorporate U.S. stockholders should consult their own tax advisors to determine the impact of tax rates on dividends received from the Company.