2020 Tax Information for HGR Liquidating Trust

Tax Impli­ca­tions of the Recent Liq­ui­dat­ing Dis­tri­b­u­tions¹

The fol­low­ing Q&A and Cost Basis Cal­cu­la­tor are designed to help you under­stand the tax sim­pli­fi­ca­tion of the liq­ui­dat­ing dis­tri­b­u­tions. Hines Glob­al REIT formed a liq­ui­dat­ing trust, called HGR Liq­ui­dat­ing Trust (“Trust”) to facil­i­tate the com­ple­tion of its Plan of Liq­ui­da­tion approved by its stock­hold­ers on July 17, 2018. Accord­ing­ly, Hines Glob­al REIT formed the Trust and trans­ferred its remain­ing assets and lia­bil­i­ties to the Trust on June 30, 2020 (the ​“Liq­ui­da­tion Date”). Please note that this infor­ma­tion is pro­vid­ed for illus­tra­tive pur­pos­es only and to help give you a gen­er­al under­stand­ing of the con­se­quences of the recent liq­ui­dat­ing dis­tri­b­u­tions. We are not pro­vid­ing legal or tax advice. Share­hold­ers should con­tact their tax advi­sors for specifics regard­ing the tax­a­tion of their indi­vid­ual invest­ments. The ques­tions and answers are based on cer­tain assump­tions that may not be accurate.

1. Q: How will liq­ui­dat­ing dis­tri­b­u­tions be report­ed for tax pur­pos­es?
A: The non­cash liq­ui­dat­ing dis­tri­b­u­tions received in 2020, will be report­ed to share­hold­ers on their 2020 Form 1099-DIV. The liq­ui­dat­ing dis­tri­b­u­tions will be includ­ed in Box 10, ​“Non­cash Liq­ui­da­tion Dis­tri­b­u­tions” on the 2020 1099-DIV which we expect to be mailed on or before Jan­u­ary 31, 2021.

2. Q: What are the tax impli­ca­tions for Box 10, ​“Non­cash Liq­ui­da­tion Dis­tri­b­u­tions” for Tax­able Accounts (such as indi­vid­ual or joint ten­ant type accounts)?
A: The Cash Liq­ui­da­tion Dis­tri­b­u­tions report­ed in 2018 and 2019 were non-tax­able dis­tri­b­u­tions until such time that the total Cash Liq­ui­da­tion Dis­tri­b­u­tions received exceed the cost basis of the invest­ment. If the Cash Liq­ui­da­tion Dis­tri­b­u­tions exceed­ed the cost basis, the por­tion of the Cash Liq­ui­da­tion Dis­tri­b­u­tions that exceed­ed basis was con­sid­ered a cap­i­tal gain and taxed accord­ing­ly. Whether you report­ed the gain as a long-term or short-term cap­i­tal gain in pri­or year depends on how long you have held the stock.

• If the Cash Liq­ui­da­tion Dis­tri­b­u­tions do not exceed the cost basis, then the full amount of the Cash Liq­ui­da­tion Dis­tri­b­u­tions will be non-taxable.
• If the Cash Liq­ui­da­tion Dis­tri­b­u­tions did not exceed the cost basis in pri­or year, use the Non­cash Liq­ui­da­tion Dis­tri­b­u­tion to cal­cu­late the gain / loss that can be rec­og­nized in 2020 as the final liq­ui­dat­ing dis­tri­b­u­tions has been made and the account has been ful­ly liquidated.
  

3. Q: What are the tax impli­ca­tions for Box 10, ​“Non­cash Liq­ui­da­tion Dis­tri­b­u­tions” for Non-Tax­able Accounts (such as IRAs)?
A: As long as the cash remains with­in the Qual­i­fied Account and is not dis­trib­uted out of the Qual­i­fied account, receipt of non­cash Liq­ui­da­tion Dis­tri­b­u­tions by such an account gener­i­cal­ly will not have any imme­di­ate tax implications.

4. Q: How do I cal­cu­late the cost basis of the invest­ment?
A: Use the cal­cu­la­tor below, or take the fol­low­ing steps to make the calculation:

• Step 1: Use the total cost of the shares, includ­ing any costs of pur­chase such as com­mis­sions and fees. (The cost of any shares received pur­suant to the div­i­dend rein­vest­ment plan is equal to their val­ue on the date of receipt.)
• Step 2: Reduce the total from Step 1 by all Non­div­i­dend Dis­tri­b­u­tions (Box 3 on Form 1099-DIV) report­ed while you owned the shares, as well as all Cash Liq­ui­da­tion Dis­tri­b­u­tions (Box 9 on Form 1099-DIV) and the Non­cash Liq­ui­da­tion Dis­tri­b­u­tion (Box 10 on Form 1099-DIV). 

For addi­tion­al infor­ma­tion, please vis­it HGR Liq­ui­dat­ing Trust – Fre­quent­ly Asked Ques­tions.

Accord­ing to IRS pro­nounce­ments, includ­ing IRS Pub­li­ca­tion 550 (excerpts of which are repro­duced below), the cal­cu­la­tions should gener­i­cal­ly be com­put­ed sep­a­rate­ly for each block of shares owned by a tax­pay­er (i.e., shares acquired in mul­ti­ple trans­ac­tions at dif­fer­ent times), although use of an aver­age cost across mul­ti­ple blocks of stock is per­mit­ted in cer­tain cas­es. If you need assis­tance locat­ing the doc­u­ments or amounts required for Steps 1 and 2 above, please con­tact Hines Investor Ser­vices at 888.220.6121.