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Monday, July 12, 2010

Off-Topic: Weyerhaeuser Huge Payout, Transitions to a REIT

Converting to a REIT, Weyerhaeuser will lower its federal tax by 35%, increase shareholder distributions, and pay out a huge initial distribution, amounting to about $26. WY shares sell for about $37.

Most of that initial payout will be in the form of stock; cash distributions are limited to 10% of the total distribution.

According to the message boards, the distribution will be taxable and may result in taxes greater than the cash payout. 

REITs often pay no corporate income tax.

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