In a recent episode of Real Talk on Motley Fool Live, a viewer asked whether distributions from real estate investment trusts, or REITs, meet the IRS definition of "qualified dividend." And while the short answer is "not usually," there's more to the story. In this clip, recorded on Jan. 7, Fool.com contributors Matt Frankel and Jason Hall discuss why REIT dividends can be so complicated and what it means for investors.

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Jason Hall: Long Hold and Prosper, I'll grab this one real quick. Are REIT dividends classified as qualified for tax purposes? No.

Matt Frankel: Generally no.

Hall: Generally no, right. Here's the reason why. REITs are structured and get certain tax benefits as a pass-through entity. As long as they're paying out 90% of their GAAP earnings per share was the main qualifier where they don't actually pay federal income tax. They don't pay corporate income tax. They get some benefits so they can pass more of their cash flows along to shareholders. But generally they're not. Sometimes they're considered return of capital depending on how they structure them. So they can actually be tax-free, but in general, no, they end up as part of your regular income.

Frankel: A REIT will send you a tax statement at the end of the year, if you hold them in a taxable account and it will break down where the dividends came from. The short answer is, it depends where they made their money. To be a REIT you only have to get 75% of your income from real estate. For example, if they got some income from a non-real estate business that they own and they didn't get the tax benefits whatever, that's where like a portion could be considered a qualified dividend, but in general no.

Hall: But you get that 1099 and it has the breakdown so it's easy to figure out.