DALLAS, March 31, 2003 (PRIMEZONE) -- Income Opportunity Realty Investors, Inc. (AMEX:IOT) announced Monday that the company no longer meets the requirements of the Internal Revenue Code to qualify as a real estate investment trust for federal income tax purposes. Previously electing to operate as a REIT, IORI will now be treated as a regular corporation for federal income tax purposes in tax year 2003.
Performing testing of the Internal Revenue Code requirements to qualify as a REIT for federal income tax purposes, Income Opportunity Realty determined that it no longer met those requirements. Based on publicly disclosed information, the acquisitions of the company's stock in March 2003 by a wholly owned subsidiary of American Realty Investors, Inc. (NYSE:ARL) caused a concentration of ownership in excess of that permitted by the Code. The Code prohibits five or fewer shareholders from owning more than 50 percent of an entity for it to continue to qualify as a REIT. Under the Code, the company also cannot re-qualify as a REIT for at least five years.
"In a number of instances, operating as a regular corporation is advantageous to Income Opportunity and its shareholders. Now IORI can be more opportunistic in acquiring, managing and developing certain assets we believe will produce greater returns on our investment," said Ronald Kimbrough, Chief Financial Officer of Income Opportunity. "It allows the company to develop its land holdings," added Kimbrough.
Income Opportunity Realty Investors, Inc., a Dallas-based real estate company, invests in real estate through direct equity ownership and partnerships nationwide.