One of the problems not fully described in the materials filed with the SEC is that many of the investors will incur income taxes that could run as high as 40% or more of the value of the REIT shares they would get. Yet, because of lock-up periods that could run as long as 18 months, they will be unable to sell more than perhaps 12 to 15% of the stock to help pay those taxes. For a typical $10,000 unit, that tax hit could be as much as $100,000 in excess of the value of the stock that they would be permitted to sell to pay the tax. The Helmsley Trust is tax exempt and has no tax problem, but it can cash out almost immediately. The Malkins will be restricted from selling for 6 months, but control whether the lock-up period will go beyond that. Moreover, they will be re-imbursed for any taxes imposed on "phantom income" from four properties in which they have major interests and large potential tax liabilities. Many of the shareholders in Empire State Building Associates will also incur taxes on "phantom income", but will not be reimbursed.
So what are we as individual partners in Associates to do tax wise and otherwise? Just wait it out and see what happens with these various suits? I am confused on how a $10000 investment could result in a $100000 tax?
Write something about yourself. No need to be fancy, just an overview.
Empire State Building
Empire State Building Ipo Malkin
Empire State Building Malkin Ipo
Empire State Realty Trust