IIT/DC Industrial Liquidating Trust Tax Information
Industrial Income Trust Inc. (“IIT” or “the Company”) completed a merger with an affiliate of Global Logistic Properties Limited (“GLP”), in an all cash transaction valued at approximately US$4.55 billion, subject to certain transaction costs. As a result of this transaction investors previously received:
- Cash proceeds of US$10.30 per share in cash paid by GLP in the merger
- Cash proceeds of US$0.26 per share in cash from the net proceeds of a loan secured by properties excluded from the merger with GLP and now owned by DC Industrial Liquidating Trust (the “Liquidating Trust”)
- The issuance of one Liquidating Trust unit per share, estimated at the time of the merger to have a value of US$0.56 per unit
For the tax-year ended December 2015, the following tax reporting will be sent.
All former IIT taxable accounts reported on Form 1099-DIV
- Quarterly distributions taxable in 2015. These distributions are characterized as 100% capital gain, with 100% being Unrecaptured Section 1250 gain; these amounts will be reported in boxes 2a and 2b
- The cash proceeds portion of the transaction, which totals $10.56 per share, will be reported in Box 8 of 1099-DIV
- The fair market value as of the date of issuance of the units in the Liquidating Trust issued in the transaction, which is US$0.56 per unit, will be reported in Box 9 of 1099-DIV as a “Non-cash Liquidation Distribution”
- Investors who have Ameriprise, LPL Financial, Hilliard Lyons, Sterne Agee or NFS as their non-qualified custodian will receive consolidated tax reporting produced and mailed by the brokerage firm or custodian of record
All Liquidating Trust accounts (including qualified accounts)
- Grantor Letter from the Liquidating Trust, to be mailed in late February 2016. This document will report each unitholder’s allocable share of the Liquidating Trust’s income and expenses for 2015
IIT Merger Taxable Gain/Loss Calculation
Investors in taxable accounts will be responsible for determining their own specific taxable gain or loss resulting from the total proceeds reported on 1099-DIV. Investors in taxable accounts must determine their cost basis in their IIT shares by subtracting all return of capital historically reported to them on Form 1099-DIV from the total gross purchase amount for their IIT shares, including any share purchases made pursuant to IIT’s distribution reinvestment plan.
Investors should consult their tax advisor regarding their individual circumstances and to determine their required tax reporting.
Distributions Historical Breakdown
Distributions to stockholders are characterized for federal income tax purposes as: (i) ordinary income; (ii) non-taxable return of capital; or (iii) long-term capital gain. Distributions that exceed the Company’s current and accumulated tax earnings and profits constitute a return of capital and reduce the stockholders’ basis in the common shares. To the extent that a distribution exceeds both current and accumulated earnings and profits and the stockholders’ basis in the common shares, the distributions will generally be treated as a gain from the sale or exchange of such stockholders’ common shares. At the beginning of each year, the Company notifies its stockholders of the taxability of the distributions paid during the preceding year. The following table summarizes the information reported to investors regarding the taxability of distributions on common shares for the years ended December 31, 2015, 2014, 2013, 2012, 2011 and 2010.
- The unaudited preliminary taxability of the Company’s 2015, 2014, 2013, 2012, 2011 and 2010 distributions was:
|1099-DIV||Box 1a||Box 2a||Box 2b||Box 3||Distributions|
Liquidating Trust Taxable Income
With respect to the Liquidating Trust, if an investor’s units are held in a taxable account, this information should be used in determining the investor’s 2015 taxable income. If an investor’s units are held in a tax-exempt or qualified account, the investor should send a copy of the Grantor Letter (include all pages) to the trustee of the investor’s account. The trustee will need this information to prepare the investor’s annual statement. Tax-exempt or qualified accounts include Individual Retirement Accounts (IRAs) and other qualified accounts such as 401(k) plans, SEP IRAs, 403(B) accounts and profit sharing plans.
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