Instructions For Form 1120-Reit - 2009 (Page 14 of 17) in pdf

prescribed by the Secretary and in the

1120-REIT, and enter “Section 1291

property or changed its use before the

manner prescribed by the Secretary), or

interest.” For details, see Form 8621.

end of its useful life or recovery period, it

•

The requirements of the asset test of

may owe a tax. See Form 4255,

Additional tax under section 197(f). A

section 856(c)(4) are otherwise met within

Recapture of Investment Credit, for

corporation that elects to pay tax on the

the specified time period.

details.

gain from the sale of an intangible under

the related person exception to the

Certain REIT qualification failures of

Recapture of low-income housing

anti-churning rules should include any

sections 856 – 859 (other than sections

credit. If the REIT disposed of property

additional tax due under section

856(c)(2), 856(c)(3) and 856(c)(4)).

(or there was a reduction in the qualified

197(f)(9)(B) in the total for line 2h. On the

Under section 856(g)(5), a REIT that fails

basis of the property) for which it took the

dotted line next to line 2h, enter “Section

to meet the REIT qualification

low-income housing credit, it may owe a

197” and the amount. For more

requirements under sections 856 – 859,

tax. See Form 8611, Recapture of

information, see Pub. 535.

except for section 856(c)(2), 856(c)(3),

Low-Income Housing Credit.

and 856(c)(4), may avoid loss of its REIT

Line 3a–Foreign Tax Credit

Interest due under the look-back

status if the failure is due to reasonable

methods. If the REIT used the look-back

To find out when a REIT can claim the

cause and not due to willful neglect. In

method for certain long-term contracts,

foreign tax credit for payment of income

addition, the REIT must pay (as

see Form 8697, Interest Computation

tax to a foreign country or U.S.

prescribed by regulations and in the same

Under the Look-Back Method for

possession, see Form 1118, Foreign Tax

manner as tax) a penalty of $50,000 for

Completed Long-Term Contracts, for

Credit – Corporations.

each failure to satisfy a provision of

information on figuring the interest the

sections 856 – 859. See section 856(g)(5).

Line 3b–Credit from Form 8834,

REIT may have to include.

line 29

Line 2g–Alternative Minimum

The REIT may also have to include

Tax (AMT)

Enter any qualified electric vehicle

interest due under the look-back method

passive activity credits from prior years

for property depreciated under the income

Unless the REIT is treated as a small

allowed for the current tax year from Form

forecast method. See Form 8866, Interest

corporation exempt from the AMT, it may

8834, Qualified Plug-In Electric and

Computation Under the Look-Back

owe the AMT if it has any of the

Electric Vehicle Credit, line 29.

Method for Property Depreciated Under

adjustments and tax preference items

the Income Forecast Method.

listed on Form 4626, Alternative Minimum

Line 3c–General Business

Tax – Corporations. The REIT must file

Credit

Other. Additional taxes and interest

Form 4626 if its taxable income (loss)

amounts can be included in the total

The REIT is required to file Form 3800,

combined with these adjustments and tax

entered on line 7. Check the box for

General Business Credit, to claim most

preference items is more than the smaller

“Other” if the REIT includes any of the

business credits. For a list of allowable

of:

taxes and interest discussed below. See

•

credits, see Form 3800. Enter the

$40,000 or

How to report, for the line 7 instructions

•

allowable credit from Part II, line 32, of

The REIT’s allowable exemption

for details on reporting these amounts on

Form 3800, on line 3c. Also, see the

amount (from Form 4626).

an attached schedule.

applicable credit form and its instructions.

For this purpose, taxable income does

1. Recapture of qualified electric

See Form 3800 for a complete listing of

not include the NOL deduction. See Form

vehicle (QEV) credit. The REIT must

general business credits.

4626 for details.

recapture part of the QEV credit it claimed

Line 3d–Other credits

in a prior year if, within 3 years of the date

Exemption for small corporations.

Include any allowable credits not reported

A REIT is treated as a small corporation

the vehicle was placed in service, it

above, such as the Credit for Prior Year

ceases to qualify for the credit. See

exempt from the AMT for its tax year

Minimum Tax – Corporations (Form 8827).

Regulations section 1.30-1 for details on

beginning in 2009 if that year is the

Attach a statement that identifies the type

REIT’s first tax year in existence

how to figure the recapture.

and amount for each credit. Attach the

2. Recapture of Indian employment

(regardless of its gross receipts) or:

applicable credit form to the return.

credit. Generally, if an employer

1. It was treated as a small

terminates the employment of a qualified

Bond credits from Form 8912. Enter

corporation exempt from the AMT for all

employee less than 1 year after the date

the allowable credits from Form 8912,

prior tax years beginning after 1997 and

of initial employment, any Indian

Credit to Holders of Tax Credit Bonds,

2. Its average annual gross receipts

employment credit allowed for a prior tax

line 18.

for the 3-year tax period (or portion

year because of wages paid or incurred to

thereof during which the REIT was in

Line 5–Personal Holding

that employee must be recaptured. For

existence) ending before its tax year

Company Tax

details, see Form 8845 and section 45A.

beginning in 2009 did not exceed $7.5

3. Recapture of new markets credit

A REIT is taxed as a personal holding

million ($5 million if the REIT had only 1

(see Form 8874).

company under section 542 if:

prior tax year).

•

4. Recapture of employer-provided

At least 60% of its adjusted ordinary

childcare facilities and services credit

For more details, see the Instructions

gross income for the tax year is personal

(see Form 8882).

for Form 4626.

holding company income, and

•

5. Interest due on deferred tax

At any time during the last half of the

Line 2h–Income Tax

attributable to (a) installment sales of

tax year more than 50% in value of its

certain timeshares and residential lots

Deferred tax under section 1291. If the

outstanding stock is owned, directly or

(section 453(l)(3)) and (b) certain

REIT was a shareholder in a passive

indirectly, by five or fewer individuals.

nondealer installment obligations (section

foreign investment company (PFIC) and

See Schedule PH (Form 1120), U.S.

453A(c)).

received an excess distribution or

Personal Holding Company (PHC) Tax,

6. Interest due on deferred gain

disposed of its investment in the PFIC

for definitions and details on how to figure

(section 1260(b)).

during the year, it must include the

the tax.

increase in taxes due under section

Line 6–Other Taxes

Built-in Gains Tax

1291(c)(2) in the total for line 2h. On the

dotted line to the left of line 2h, enter

Include any of the following taxes and

If, on or after January 2, 2002, property of

“Section 1291” and the amount.

interest in the total on line 7. Check the

a C corporation becomes property of a

appropriate box(es) for the form, if any,

Do not include on line 2h any interest

REIT by either: (a) the qualification of the

used to compute the total.

due under section 1291(c)(3). Instead,

C corporation as a REIT; or (b) the

show the amount of interest owed in the

Recapture of investment credit. If the

transfer of such property to a REIT, then

bottom margin of page 1, Form

REIT disposed of investment credit

the REIT will be subject to the built-in

-14-

Instructions For Form 1120-Reit - 2009 Page 14

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