Distributions in relation to Delaware Statutory Trusts (DST) are the monetary returns or payouts that the trust distributes to its beneficiaries or owners, who are typically investors.
DSTs are commonly used in the real estate industry, allowing multiple investors to hold fractional ownership of a property. The property within the trust generates income, often through rental or lease payments. After deducting operational costs, taxes, and reserve savings, the remaining net income is distributed to the investors in accordance with their proportionate interests in the DST. These are the distributions and they typically occur on a regular schedule, such as monthly or quarterly.
In a DST, the trust itself is not subject to federal income tax. Instead, the DST’s income, losses, and deductions are passed through to its beneficiaries, who report these items on their own tax returns. As such, the distributions received by DST beneficiaries may be subject to tax.
The specific terms of these distributions, including their timing, calculation, and taxation, will be defined in the DST’s trust agreement and offering documents. Therefore, potential investors should thoroughly review these documents and seek professional advice to fully understand the implications of these distributions.