Question

REITs receive preferential tax treatment based upon:

A. portfolio of real estate investments
B. distribution of income to shareholders
C. registration with the Securities and Exchange Commission
D. listing on the New York Stock Exchange

Answer 1

REITs receive preferential tax treatment based upon their portfolio of real estate investments and the distribution of income to shareholders. So, the correct answer is option B.

Step-by-step explanation:

REITs receive preferential tax treatment based upon their portfolio of real estate investments and the distribution of income to shareholders. REITs are required to distribute at least 90% of their taxable income to shareholders, and due to this, they can avoid corporate-level taxation. Additionally, by meeting certain requirements and electing for REIT status, they can enjoy tax advantages such as deductions for dividends paid and a lower overall tax rate.

So, the correct answer is option B.