Series 7 Exam Question 311: Answer and Explanation

Question: 311

Which of the following is NOT a characteristic of a real estate investment trust (REIT)?

• A. Pass-through treatment of income only
• B. Pass-through treatment of income and losses
• C. At least 75 percent of the assets must be invested in real-estate-related projects.
• D. Ownership of real property without management responsibility

Correct Answer: B

Explanation:

B. Real Estate Investment Trusts pass through income earned by the real-estate investments, but not losses. Real-estate limited partnerships pass through income and losses to investors because DPPs aren't responsible for paying business taxes.