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SEC Filings

PREM14A
FOREST CITY REALTY TRUST, INC. filed this Form PREM14A on 09/21/2018
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The distribution made by the Company will not be eligible for the dividends-received deduction in the case of U.S. stockholders that are corporations.

The distribution made by the Company, to the extent that the Company properly designates as a capital gain dividend, will be taxable to U.S. stockholders as gain from the sale of a capital asset held for more than one year, to the extent that such dividend does not exceed the Company’s actual net capital gain for the taxable year, without regard to the period for which a U.S. stockholder has held the shares of our common stock. Thus, with certain limitations, a capital gain dividend received by an individual U.S. stockholder may be eligible for preferential rates of taxation. U.S. stockholders that are corporations may, however, be required to treat up to 20% of certain capital gain dividends as ordinary income.

To the extent that the Company makes any special REIT taxable income distribution not designated as a capital gain dividend in excess of the Company’s current and accumulated earnings and profits, such a distribution will be treated first as a tax-free return of capital to each U.S. stockholder. Thus, such a distribution will reduce the adjusted basis that the U.S. stockholder has in the shares of our common stock for tax purposes by the amount of the distribution, but not below zero. This reduction will increase gain (or reduce loss) a U.S. stockholder would recognize in respect of the merger (see “Treatment of the Per Share Merger Consideration—U.S. Stockholders”). The distribution made in excess of a U.S. stockholder’s adjusted basis in the shares of our common stock will be taxable as capital gain, provided that the shares of our common stock have been held as a capital asset.

The special REIT taxable income distribution, if any, made by the Company will not be treated as passive activity income. As a result, U.S. stockholders generally will not be able to apply any passive losses against that income or gain.

Non-U.S. Stockholders

Ordinary Dividend. The special REIT taxable income distribution, other than the portion of the distribution designated by the Company as a capital gain dividend, will generally be treated as ordinary income to the extent that the distribution is made out of the Company’s current or accumulated earnings and profits. The portion of the distribution designated by the Company as a capital gain dividend, made to a non-U.S. stockholder who owns no more than 10% of shares of our common stock at all times during the one-year period ending on the date of the distribution, will also generally be treated as ordinary income. A withholding tax equal to 30% of the gross amount of the distribution will ordinarily apply to the distribution of this kind to non-U.S. stockholders, unless an applicable tax treaty reduces that tax. However, if income from the investment in the shares of our common stock is treated as effectively connected with the non-U.S. stockholder’s conduct of a U.S. trade or business or, if required by an applicable income tax treaty as a condition for subjecting the non-U.S. stockholder to U.S. taxation on a net income basis, is attributable to a permanent establishment or fixed base that the non-U.S. stockholder maintains in the United States, tax at graduated rates will generally apply to the non-U.S. stockholder in the same manner as applied to U.S. stockholders with respect to dividends, and the 30% branch profits tax may also apply if the stockholder is a foreign corporation. The Company expects that it or the applicable withholding agent will withhold U.S. tax at the rate of 30% on the gross amount of the special REIT taxable income distribution, other than the portion of the distribution that is treated as attributable to gain from sales or exchanges of U.S. real property interests and a capital gain dividend, paid to a non-U.S. stockholder, unless (a) a lower treaty rate applies and the required form evidencing eligibility for that reduced rate is filed with the Company or the appropriate withholding agent or (b) the non-U.S. stockholder files an IRS Form W-8-ECI or a successor form with the REIT or the appropriate withholding agent claiming that the distribution is effectively connected with the non-U.S. stockholder’s conduct of a U.S. trade or business and in either case other applicable requirements were met.

Capital Gain Dividend. As described above, the special REIT taxable income distribution that is attributable to gain from sales or exchanges by the Company of U.S. real property interests that is paid with respect to our common stock that is held by a non-U.S. stockholder who does not own more than 10% of such stock at any time

 

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