You Buy a REIT for $50 a Share

question 20

Essay

You buy a REIT for $50 a share. The REIT distributes $3.00 consisting of return of capital. You are in the 30 percent income tax bracket (which also applies to short-term capital gains)and the 15 percent long-term capital gains bracket. What is the tax implication of this distribution?

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Definitions:

Interest

A recurring payment at a specified rate for borrowing money or for postponing the payment of an owed amount.

Invested

Money put into something with the expectation of gain, typically through an interest-bearing or equity-based vehicle.

Student Tickets

Discounted tickets offered to individuals enrolled in educational institutions as a benefit or to encourage attendance at events.

Box Office

The place where tickets to events such as movies, plays, and concerts are sold, often used to refer to the commercial success of such events.