4.4 Real Estate Investment Trust (REIT) Dividends

Dividends from a real estate investment trust (REIT) are shown on Form 1099-DIV. Ordinary dividends reported in Box 1a are taxable at ordinary income rates except for the portion, if any, shown in Box 1b that qualifies for the zero or 15% capital gain rate. Dividends designated by the trust as capital gain distributions in Box 2a are reported by you as long-term capital gains regardless of how long you have held your trust shares. A loss on the sale of REIT shares held for six months or less is treated as a long-term capital loss to the extent of any capital gain distribution received before the sale plus any undistributed capital gains. However, this long-term loss rule does not apply to sales under periodic redemption plans.