Question

An IRS code criteria for a REIT to qualify as a tax-free entity is:

Question 9 options:

	1) it can not issue transferable shares
	2) it may be a financial institution or insurance company
	3) it must derive at least 75% of its gross income from real estate related investments
	4) it may not hold all of its assets in the form of mortgages

Question 10 (2 points)

Land loans are considered to be:

Question 10 options:

	1) risky
	2) tax beneficial
	3) non-risky
	4) none of the above

Question 11 (2 points)

The investor of a property may give a portion of the increase in value of the property in exchange for:

Question 11 options:

	1) a share of the cash flows
	2) a lower rate of interest from a lender
	3) a greater share of the title to the property
	4) none of the above

Question 12 (2 points)

A rolling option gives the developer the right to roll the option from one property which he has decided not to purchase to another property.

Question 12 options:

	1) True
	2) False

Answer 1

I can only answer 1 question at a time, so I am answering only question 9.

Question 9) Answer is

3)	it must derive at least 75% of its gross income from real estate related investments

IRS code criterias for a REIT to qualify as a tax-free entity are:

• Be an entity that is taxable as a corporation
• Be managed by a board of directors or trustees
• Have shares that are fully transferable
• Have a minimum of 100 shareholders
• Have no more than 50 percent of its shares held by five or fewer individuals during the last half of the taxable year
• Invest at least 75 percent of its total assets in real estate assets
• Derive at least 75 percent of its gross income from rents from real property or interest on mortgages financing real property • Have no more than 25 percent of its assets consist of stock in taxable REIT subsidiaries
• Pay annually at least 90 percent of its taxable income in the form of shareholder dividends

Please do rate me and mention doubts, if any, in the comments section.