KFN » Topics » Holders of our shares will be subject to U.S. federal income tax on their share of our taxable income, regardless of whether or when they receive any cash distributions from us, and may recognize income in excess of our cash distributions.

These excerpts taken from the KFN 10-K filed Feb 28, 2008.

Holders of our shares will be subject to U.S. federal income tax on their share of our taxable income, regardless of whether or when they receive any cash distributions from us, and may recognize income in excess of our cash distributions.

        We intend to continue to operate so as to qualify, for U.S. federal income tax purposes, as a partnership and not as an association or a publicly traded partnership taxable as a corporation. Holders of our shares are subject to U.S. federal income taxation and, in some cases, state, local and foreign income taxation, on their allocable share of our taxable income, regardless of whether or when they receive cash distributions. In addition, certain of our investments, including investments in foreign CDO issuers and debt securities, may produce taxable income without corresponding distributions of cash to us or produce taxable income prior to or following the receipt of cash relating to such income. In addition, we may engage in other transactions, such as the sale of all or part of the common shares of the REIT Subsidiary and KFH II and the sale of all or part of the assets of the REIT Subsidiary and KFH II, as part of our strategy of allocating more capital to non-real estate-related investments. Furthermore, in the event that we sell part or all of the common stock of the REIT Subsidiary and recognize a taxable gain, holders of our common shares who exchanged their the REIT Subsidiary common stock for our common shares in the Restructuring Transaction will recognize part or all, respectively, of any such taxable gain that was deferred at the time of the Restructuring Transaction without a corresponding distribution of cash from us. Consequently, in some taxable years, holders of our common shares may recognize taxable income in excess of our cash distributions, and in some

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circumstances, may not receive cash distributions equal to their tax liability attributable to their allocation of our taxable income.

Holders of our shares will be subject to U.S. federal income tax on their share of our taxable income, regardless of whether or when they receive any cash distributions
from us, and may recognize income in excess of our cash distributions.



        We intend to continue to operate so as to qualify, for U.S. federal income tax purposes, as a partnership and not as an association or a publicly traded
partnership taxable as a corporation. Holders of our shares are subject to U.S. federal income taxation and, in some cases, state, local and foreign income taxation, on their allocable share of
our taxable income, regardless of whether or when they receive cash distributions. In addition, certain of our investments, including investments in foreign CDO issuers and debt securities, may
produce taxable income without corresponding distributions of cash to us or produce taxable income prior to or following the receipt of cash relating to such income. In addition, we may engage in
other transactions, such as the sale of all or part of the common shares of the REIT Subsidiary and KFH II and the sale of all or part of the assets of the REIT Subsidiary and KFH II, as
part of our strategy of allocating more capital to non-real estate-related investments. Furthermore, in the event that we sell part or all of the common stock of the REIT Subsidiary and
recognize a taxable gain, holders of our common shares who exchanged their the REIT Subsidiary common stock for our common shares in the Restructuring Transaction will recognize part or all,
respectively, of any such taxable gain that was deferred at the time of the Restructuring Transaction without a corresponding distribution of cash from us. Consequently, in some taxable years, holders
of our common shares may recognize taxable income in excess of our cash distributions, and in some



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circumstances,
may not receive cash distributions equal to their tax liability attributable to their allocation of our taxable income.



EXCERPTS ON THIS PAGE:

10-K (2 sections)
Feb 28, 2008
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