Instructions For Form 1120-Reit - 2009 (Page 12 of 17) in pdf

•

dividends paid deductions. See Example

“Backup Withholding.” in the blank space

Indicates that the election under

1 in Regulations section 1.172-5(a)(4).

above line 24h.

section 856(e) is being made;

•

Identifies the property to which the

Special NOL rules apply when:

Line 25. Estimated tax penalty. A REIT

election applies;

•

that does not make estimated tax

•

An ownership change occurs, the

Includes the name, address, and EIN of

payments when due may be subject to an

amount of the taxable income of a loss

the REIT, the date the property was

underpayment penalty for the period of

REIT that may be offset by the

acquired, and a brief description of how

underpayment. Generally, a REIT is

pre-change NOL carryovers is limited

the property was acquired (including the

subject to the penalty if its tax liability is

(see section 382 and the related

name of the person from whom the

$500 or more and it did not timely pay the

regulations). A loss REIT must file an

property was acquired); and

smaller of:

•

information statement with its income tax

Gives a description of the lease or debt

•

Its alternative minimum tax minus the

return for each tax year that certain

with respect to which default occurred or

credit for federal tax paid on fuels for

ownership shifts occur (see Temporary

was imminent.

2009 as shown on the return or

Regulations section 1.382-2T(a)(2)(ii) for

•

The REIT can revoke the election by

Its prior year’s tax (computed in the

details). See Regulations section

filing a revocation on or before the due

same manner). See section 6655 for

1.382-6(b) for details on how to make the

date (including extensions) for filing Form

details and exceptions, including special

closing-of-the-books election.

•

1120-REIT. See section 856(e) for more

rules for large corporations.

A REIT acquires control of another

details.

REIT (or acquires its assets in a

Use Form 2220, Underpayment of

Line 2. Gross income from foreclosure

reorganization), the amount of

Estimated Tax by Corporations, to

property. Do not include income that

pre-acquisition losses that may offset

determine whether the REIT owes a

qualifies under the REIT’s 75% gross

recognized built-in gains is limited (see

penalty and to figure the amount of the

income test under section 856(c)(3)(A),

section 384).

penalty. Generally, the REIT does not

(B), (C), (D), (E), or (G). These amounts

have to file this form because the IRS can

Tax and Payments

must be reported in Part I.

figure the amount of any penalty and bill

Line 24b. Estimated tax payments.

the REIT for it. However, even if it does

Line 4. Deductions. Deduct only those

Enter any estimated tax payments the

not owe the penalty, the REIT must

expenses that have a proximate and

REIT made for the tax year.

complete and attach Form 2220 if the

primary relationship to earning the income

annualized income or adjusted seasonal

shown on line 3. This includes:

Line 24f(1). Enter the credit (from Form

•

installment method is used, or the REIT is

Depreciation on foreclosure property;

2439) for the REIT’s share of the tax paid

•

a large corporation computing its first

Interest paid or accrued on debt of the

by a regulated investment company (RIC)

required installment based on the prior

REIT that is attributable to the carrying of

or another REIT on undistributed

the property;

year’s tax. See the Instructions for Form

long-term capital gains included in the

•

2220 for the definition of a “large

Real estate taxes; and

REIT’s income. Attach Form 2439 to

•

corporation.”

Fees charged by an independent

Form 1120-REIT.

contractor to manage such property.

If Form 2220 is attached, check the

Line 24f(2). Enter the credit from Form

Do not deduct general overhead and

4136, Credit for Federal Tax Paid on

box on this line and enter the amount of

administrative expenses in Part II.

any penalty.

Fuels, if the REIT qualifies to claim this

credit. Attach Form 4136 to Form

1120-REIT.

Part III—Tax for Failure To

Part II—Tax on Net Income

Line 24g. Refundable Credits From

Meet Certain

Forms 3800 and 8827. The REIT can

From Foreclosure Property

elect to claim certain unused research

Source-of-Income

Complete Part II only if the gross income,

and minimum tax credits instead of

gains, losses, and deductions from

claiming any additional first-year special

Requirements

foreclosure property (defined in section

depreciation allowance for eligible

Section 856(c)(6) provides REITs with a

856(e)) result in net income. If an overall

qualified property or qualified extension

relief provision if they have failed to

net loss results, report the gross income,

property placed in service during the tax

satisfy the source-of-income requirements

gains, losses, and deductions from

year. If the REIT makes the election,

of sections 856(c)(2) and 856(c)(3). If

foreclosure property on the appropriate

enter on line 24g the amounts from line

section 856(c)(6) applies to a REIT for

lines of Part I.

19c of Form 3800 and line 8c of Form

any taxable year, a tax is imposed on the

8827, if applicable. See the instructions

Property may be treated as foreclosure

REIT under section 857(b)(5).

for these forms. Also, see Rev. Proc.

property only if it meets the requirements

All REITs must complete lines 1a

2008-65, 2008-44 I.R.B. 1082, and Rev.

of section 856(e) and the REIT elects to

through 8 of Part III to determine whether

Proc. 2009-33, 2009-29 I.R.B.150.

treat the property as foreclosure property

they are subject to the tax imposed under

in the year it was acquired. The property

The REIT must use the refundable

section 857(b)(5). If line 8 is zero, the tax

continues to be foreclosure property until

credits from Forms 3800 and 8827

does not apply, and the REIT does not

the close of the 3rd tax year following the

to reduce any built-in gains tax

CAUTION

have to complete the rest of Part III.

tax year in which the REIT acquired it. For

derived from property that it owned when

However, if line 8 is greater than zero, the

more information, see section 856(e).

it was a C corporation, before the credits

REIT is subject to this tax, and must

can be used to reduce the REIT’s income

However, if the foreclosure property is

complete the rest of Part III to determine

tax. See the instructions for line h of the

qualified health care property, it will cease

the amount of tax.

Built-in Gains Tax Worksheet Instructions

to be foreclosure property as of the close

A REIT that has failed the

beginning on page 15.

of the 2nd year following the tax year the

source-of-income requirements of

REIT acquired it (although the REIT may

Line 24h. Add the amounts on lines 24d

sections 856(c)(2) and 856(c)(3) may

request one or more extensions to this

through 24g and enter the total on line

avoid loss of its REIT status as a result of

2-year grace period not to extend beyond

24h.

the failure if, following identification of its

the 6th year). See section 856(e)(6) for

Backup withholding. If the REIT had

failure to meet the source-of-income

details.

income tax withheld from any payments it

requirements, the REIT sets forth a

received because, for example, it failed to

This election must be made by the

description of each item of its gross

give the payer its correct EIN, include the

due date for filing Form 1120-REIT

income described in sections 856(c)(2)

amount withheld in the total for line 24h.

(including extensions). To make the

and 856(c)(3) in an attached schedule. In

Enter the amount withheld and the words

election, attach a statement that:

addition, its failure to meet the

-12-

Instructions For Form 1120-Reit - 2009 Page 12

Related Articles

Related forms

Related Categories