True or False: A REIT is required to distribute all its taxable income after expenses to unit holders.

A Real Estate Investment Trust (REIT) is not required to distribute all of its taxable income after expenses to its unit holders. There are specific regulations governing REITs, particularly in North America, that necessitate the distribution of a substantial portion of income to qualify for certain tax advantages. For instance, in the United States, a REIT must distribute at least 90% of its taxable income to shareholders to maintain its tax-exempt status on the corporate level. However, it is not mandated to distribute 100% of its taxable income.

This means that while a REIT must make distributions, it can retain a portion of its income for reinvestment or other purposes. Therefore, the statement implying that a REIT is required to distribute all its taxable income is false. It must distribute a majority, but not necessarily all, of it, making the correct understanding more nuanced than an absolute requirement.

In this context, acknowledging the subtleties around the percentage of income that must be distributed helps clarify the broader regulatory framework within which REITs operate.