UDR Reports Tax Status of 2023 Distributions
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Insights
The information provided by UDR, Inc. regarding the tax status of its 2023 distributions is critical for shareholders for tax planning and compliance purposes. The breakdown of distributions into various categories such as ordinary dividends, capital gains and nondividend distributions has direct implications on the tax liability of the shareholders. Ordinary dividends are typically taxed at the individual's income tax rate, whereas qualified dividends and long-term capital gains may benefit from lower tax rates. The unrecaptured section 1250 gains relate to the depreciation recapture on real estate and are taxed at a maximum rate of 25%, which is important for shareholders to note as it can impact the effective tax rate on their distributions.
Furthermore, the disclosure under Section 1061 of the Internal Revenue Code relates to the taxation of carried interest, which can affect shareholders with applicable partnership interests. The distinction between one-year and three-year amounts is pertinent due to the different tax treatment of short-term and long-term capital gains. Shareholders should be aware that the tax treatment of these distributions by state and local authorities may vary and it is advisable to consult with tax professionals for accurate reporting and to understand the potential tax obligations arising from these distributions.
The disclosure of tax information by UDR, Inc. is an essential aspect of financial transparency and can influence investor decisions. The allocation of distributions between ordinary income and return of capital, for example, can affect the stock's attractiveness to income-focused investors, such as those seeking steady dividend income. A higher proportion of return of capital can be favorable for tax purposes as it reduces the shareholder's cost basis in the stock and defers taxes until the stock is sold. However, it can also signal that less of the distribution is covered by earnings and profits, which may raise questions about the sustainability of distributions in the long term.
Investors also look at the portion of the distribution classified as Section 199A dividends, which can qualify for a 20% deduction under certain conditions, reducing the effective tax rate on this income. This can make the REIT's distributions more attractive to certain taxpayers, potentially impacting the demand for the stock. Financial analysts closely monitor these factors as they can influence the total after-tax return for shareholders, which is a critical component of investment performance.
As a REIT, UDR, Inc. is required to distribute at least 90% of its taxable income to shareholders and the tax characterization of these distributions is a reflection of the company's underlying operations. The presence of nondividend distributions indicates a portion of the payout is not derived from current or accumulated earnings and profits, which could suggest that the REIT is distributing returns of capital. This can sometimes occur when a REIT is disposing of assets and returning the proceeds to shareholders or when it is distributing cash flows from financing activities.
The stability and composition of these distributions are closely watched by REIT analysts as indicators of the company's operational health and financial management. The allocation to capital gains distributions reflects the profitability from property sales and can be a sign of an active portfolio management strategy. Analysts would assess these figures in the context of the broader market and the company's historical performance to evaluate UDR, Inc.'s position within the industry and its potential growth trajectory.
Record Date |
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Payment Date |
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Distribution Per Share |
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Box 1a Total Ordinary Dividends |
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Box 1b Qualified Dividends1 |
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Box 2a Total Capital Gain Distr. |
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Box 2b Unrecaptured Sec. 1250 Gain2 |
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Box 2e
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Box 2f
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Box 3
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Box 5
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Common Shares: |
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1/9/2023 |
1/31/2023 |
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4/10/2023 |
5/1/2023 |
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7/10/2023 |
7/31/2023 |
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10/10/2023 |
10/31/2023 |
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Total |
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Preferred Shares Series E: |
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1/9/2023 |
1/31/2023 |
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4/10/2023 |
5/1/2023 |
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7/10/2023 |
7/31/2023 |
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10/10/2023 |
10/31/2023 |
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Total |
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| (1) - These amounts are a subset of, and included in, the amounts in Box 1a. | ||||||||||||||||||||
| (2) - These amounts are a subset of, and included in, the amounts in Box 2a. | ||||||||||||||||||||
Pursuant to Treas. Reg. § 1.1061-6(c), UDR, Inc. is disclosing below two additional amounts for purposes of Section 1061 of the Internal Revenue Code. Section 1061 is generally applicable to direct and indirect holders of “applicable partnership interests.”
Record Date |
Payment Date |
Form 1099-DIV Box 2a, Total Capital Gain Distr. Per Share |
One Year Amounts Disclosure Per Share |
Three Year Amounts Disclosure Per Share |
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Common Shares: |
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1/9/2023 |
1/31/2023 |
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4/10/2023 |
5/1/2023 |
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7/10/2023 |
7/31/2023 |
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10/10/2023 |
10/31/2023 |
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Total |
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Preferred Shares Series E: |
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1/9/2023 |
1/31/2023 |
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4/10/2023 |
5/1/2023 |
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7/10/2023 |
7/31/2023 |
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10/10/2023 |
10/31/2023 |
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Total |
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Shareholders of record of the Company's common and preferred stock will receive an Internal Revenue Service Form 1099-DIV from EQ Shareowner Services, the Company's 2023 distribution paying agent. The form will report the distributions paid and the amounts designated as total ordinary dividends, qualified dividends, total capital gains, unrecaptured section 1250 gains, section 897 ordinary dividends, section 897 capital gain, nondividend distributions, and section 199A dividends. If shares were held in "street name" during 2023, the IRS form will be provided by a bank, brokerage firm, or nominee. Because the Company's tax return has not yet been filed for the year ended December 31, 2023, the distribution allocations presented herein have been calculated using the best available information to date.
The tax treatment of these distributions by state and local authorities varies and may not be the same as the IRS's treatment. Because federal and state tax laws affect individuals differently, the Company cannot advise shareholders on how distributions should be reported on their tax returns. The Company encourages shareholders to consult with their own tax advisors with respect to the federal, state and local income tax consequences of these distributions.
About UDR, Inc.
UDR, Inc. (NYSE: UDR), an S&P 500 company, is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate communities in targeted
View source version on businesswire.com: https://www.businesswire.com/news/home/20240116368690/en/
UDR, Inc.
Trent Trujillo
ttrujillo@udr.com
720-283-6135
Source: UDR, Inc.
FAQ
What is the tax status of UDR, Inc.'s 2023 distributions?
What are the details of common shares distributions for UDR, Inc. in 2023?
What are the details of preferred shares Series E distributions for UDR, Inc. in 2023?
Who will receive an IRS Form 1099-DIV from UDR, Inc.'s 2023 distribution paying agent?
What is the purpose of the additional disclosure for Section 1061 of the Internal Revenue Code by UDR, Inc.?
