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Go Zone clean-up cost. The REIT may

Contributions to organizations conducting

A bona fide business discussion must

deduct fifty percent of any qualified Go Zone

lobbying activities. See section 170(f)(9).

occur during, immediately before, or

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clean-up cost paid or incurred on or after

Contributions of property other than cash.

immediately after the meal; and

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August 28, 2005, and before January 1,

See Form 8283.

An employee of the REIT must be present

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2008. See section 1400N(f).

Contributions of computer technology and

at the meal.

equipment for educational purposes. See

Charitable contributions. Enter

See section 274(n)(3) for a special rule

section 170(e)(6).

contributions or gifts actually paid within the

that applies to expenses for meals

tax year to or for the use of charitable and

consumed by individuals subject to the

Note. For contributions of cash, check, or

governmental organizations described in

hours of service limits of the Department of

other monetary gifts (regardless of the

section 170(c) and any unused contributions

Transportation.

amount), made in tax years beginning after

carried over from prior years.

August 17, 2006, the REIT must maintain a

Membership dues. The REIT can

bank record, or a receipt, letter, or other

REITs reporting taxable income on the

deduct amounts paid or incurred for

written communication from the donee

accrual method may elect to treat as paid

membership dues in civic or public service

organization indicating the name of the

during the tax year any deductible

organizations, professional organizations

organization, the date of the contribution,

contributions paid by the 15th day of the 3rd

(such as bar and medical associations),

and the amount of the contribution.

month after the end of the tax year if the

business leagues, trade associations,

contributions were authorized by the board

chambers of commerce, boards of trade,

For more information on charitable

of directors during the tax year. Attach a

and real estate boards. However, no

contributions, including substantiation and

declaration to the return stating that the

deduction is allowed if a principal purpose of

recordkeeping requirements, see section

resolution authorizing the contributions was

the organization is to entertain, or provide

170 and the related regulations and Pub.

adopted by the board of directors during the

entertainment facilities for, members or their

526, Charitable Contributions. For special

tax year. The declaration must include the

guests. In addition, a REIT cannot deduct

rules that apply to corporations, see Pub

date the resolution was adopted.

membership dues in any club organized for

542.

business, pleasure, recreation, or other

Limitation on deduction. The total

social purpose. This includes country clubs,

Pension, profit-sharing, etc., plans.

amount claimed may not be more than 10%

golf and athletic clubs, airline and hotel

Include the deduction for contributions to

of taxable income computed without regard

qualified pension, profit-sharing, or other

clubs, and clubs operated to provide meals

to the following:

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funded deferred compensation plans.

under conditions favorable to business

Any deduction for contributions.

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discussion.

Employers who maintain such a plan

The special deductions on line 21b,

generally must file one of the forms listed

relating to dividends paid.

Entertainment facilities. The REIT

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below, even if the plan is not a qualified plan

The deduction allowed under section 249,

cannot deduct an expense paid or incurred

under the Internal Revenue Code. The filing

relating to any premium paid or incurred

for a facility (such as a yacht or hunting

requirement applies even if the REIT does

upon the repurchase of a convertible bond.

lodge) used for an activity usually

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not claim a deduction for the current tax

Any net operating loss (NOL) carryback to

considered entertainment, amusement, or

year. There are penalties for failure to file

the tax year under section 172.

recreation.

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these forms on time and for overstating the

Any capital loss carryback to the tax year

Amounts treated as compensation.

pension plan deduction. See sections

under section 1212(a)(1).

Generally, the REIT may be able to deduct

6652(e) and 6662(f).

Carryover. Charitable contributions that

otherwise nondeductible meals, travel, and

Form 5500, Annual Return/Report of

exceed the 10% limitation cannot be

entertainment expenses if the amounts are

Employee Benefit Plan. File this form for a

deducted for the tax year but may be carried

treated as compensation to the recipient and

plan that is not a one-participant plan (see

over to the next 5 tax years.

reported on Form W-2 for an employee or

below).

on Form 1099-MISC for an independent

Special rules apply if the REIT has an

contractor.

Form 5500-EZ, Annual Return of

NOL carryover to the tax year. In figuring the

One-Participant (Owners and Their

charitable contributions deduction for the tax

However, if the recipient is an officer,

Spouses) Retirement Plan. File this form for

year, the 10% limit is applied using the

director, or beneficial owner (directly or

a plan that only covers the owner (or the

taxable income after taking into account any

indirectly) of more than 10% of any class of

owner and his or her spouse) but only if the

deduction for the NOL.

stock, the deduction for otherwise

owner (or the owner and his or her spouse)

nondeductible meals, travel, and

To figure the amount of any remaining

owns the entire business.

entertainment expenses is limited to the

NOL carryover to later years, taxable

amount treated as compensation. See

Travel, meals, and entertainment.

income must be modified (see section

section 274(e)(2) and Notice 2005-45,

Subject to limitations and restrictions

172(b)). To the extent that contributions are

2005-24 I.R.B. 1228.

discussed below, a REIT can deduct

used to reduce taxable income for this

ordinary and necessary travel, meals, and

Lobbying expenses. Generally, lobbying

purpose and increase an NOL carryover, a

entertainment expenses paid or incurred in

expenses are not deductible. These

contributions carryover is not allowed. See

its trade or business. Also, special rules

expenses include:

section 170(d)(2)(B).

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apply to deductions for gifts, skybox rentals,

Amounts paid or incurred in connection

Substantiation requirements.

luxury water travel, convention expenses,

with influencing federal or state legislation

Generally, no deduction is allowed for any

and entertainment tickets. See section 274

(but not local legislation); or

contributions of $250 or more unless the

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and Pub. 463 for more details.

Amounts paid or incurred in connection

REIT receives a written acknowledgment

with any communication with certain federal

Travel. A REIT cannot deduct travel

from the donee organization that shows the

executive branch officials in an attempt to

expenses of any individual accompanying a

amount of cash contributed, describes any

influence the official actions or positions of

corporate officer or employee, including a

property contributed, and gives a description

the officials. See Regulations section

spouse or dependent of the officer or

and a good faith estimate of the value of any

1.162-29 for the definition of “influencing

employee, unless:

goods or services provided in return for the

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legislation.”

That individual is an employee of the

contribution or states that no goods or

REIT, and

services were provided in return for the

Dues and other similar amounts paid to

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His or her travel is for a bona fide

contribution. The acknowledgment must be

certain tax-exempt organizations may not be

obtained by the due date (including

business purpose and would otherwise be

deductible. See section 162(e)(3). If certain

deductible by that individual.

extensions) of the REIT’s return, or, if

in-house lobbying expenditures do not

earlier, the date the return is filed. Do not

exceed $2,000, they are deductible. For

Meals and entertainment. Generally,

attach the acknowledgment to the tax return,

information on contributions to charitable

the REIT can deduct only 50% of the

but keep it with the REIT’s records. These

organizations that conduct lobbying

amount otherwise allowable for meals and

rules apply in addition to the filing

activities, see section 170(f)(9).

entertainment expenses paid or incurred in

requirements for Form 8283, Noncash

its trade or business. In addition (subject to

For more information on other deductions

Charitable Contributions.

exceptions under section 274(k)(2)):

that may apply to corporations, see Pub.

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Special rules and limits apply to:

Meals must not be lavish or extravagant;

535.

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Instructions For Form 1120-Reit - Internal Revenue Service Of Department Of The Treasury - 2007 Page 9

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