Instructions For Form 1120-Reit - 2009 (Page 9 of 17) in pdf

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Disabled access credit.

Form 8932, Credit for Employer

Foreign or U.S. possession income

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Employer credit for social security and

Differential Wage Payments.

taxes if a tax credit is claimed (however,

Medicare taxes paid on certain employee

see the Instructions for Form 5735 for

See the instructions for these forms for

tips.

special rules for possession income

more information. Do not include salaries

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Credit for small employer pension plan

taxes).

and wages deductible elsewhere on the

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startup costs.

Taxes not imposed on the REIT.

return, such as amounts included in

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Credit for employer-provided childcare

Taxes, including state or local sales

officer’s compensation, elective

facilities and services.

taxes, that are paid or incurred in

contributions to a section 401(k) cash or

connection with an acquisition or

If the REIT is eligible to claim any of

deferred arrangement, or amounts

disposition of property (these taxes must

these credits, figure each current year

contributed under a salary reduction SEP

be treated as a part of the cost of the

credit before figuring the deduction for

agreement or a SIMPLE IRA plan.

acquired property or, in the case of a

expenses on which the credit is based. If

disposition, as a reduction in the amount

If the REIT provided taxable fringe

the REIT capitalized any costs on which it

realized on the disposition).

benefits to its employees, such as

figured the credit, reduce the amount

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Taxes assessed against local benefits

personal use of a car, do not

CAUTION

capitalized by the credit attributable to

that increase the value of the property

deduct as wages the amounts allocated

these costs.

assessed (such as for paving, etc.).

for depreciation and other expenses

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See the instructions for the form used

Taxes deducted elsewhere on the

claimed on lines 16 and 18.

to figure the applicable credit.

return.

Line 11. Repairs and maintenance.

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Excise taxes imposed under section

Line 9. Compensation of officers. Do

Enter the cost of incidental repairs and

4981 on undistributed REIT income.

not include compensation deductible

maintenance, such as labor and supplies,

elsewhere on the return, such as elective

See section 164(d) for information on

that do not add to the value of the

contributions to a section 401(k) cash or

apportionment of taxes on real property

property or appreciably prolong its life.

deferred arrangement, or amounts

between seller and purchaser.

New buildings, machinery, or permanent

contributed under a salary reduction SEP

Line 15. Interest.

improvements that increase the value of

agreement or a SIMPLE IRA plan.

the property are not deductible. They

Interest expense cannot be used

Disallowance of deduction for

must be depreciated or amortized.

to offset interest income.

employee compensation in excess of

Line 12. Bad debts. Enter the total

CAUTION

$1 million. Publicly held REITs cannot

debts that became worthless in whole or

deduct compensation to a “covered

The deduction for interest is limited

in part during the tax year. A cash basis

employee” to the extent that the

when the REIT is a policyholder or

taxpayer may not claim a bad debt

compensation exceeds $1 million.

beneficiary with respect to a life

deduction unless the amount was

Generally, a covered employee is:

insurance, endowment, or annuity

previously included in income.

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The principal executive officer of the

contract issued after June 8, 1997. For

Line 13. Rents. If the REIT rented or

REIT (or an individual acting in that

details, see section 264(f). Attach a

leased a vehicle, enter the total annual

capacity) as of the end of the tax year; or

statement showing the computation of the

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rent or lease expense paid or incurred

An employee whose total

deduction.

during the year. Also complete Part V of

compensation must be reported to

The REIT must make an interest

Form 4562, Depreciation and

shareholders under the Securities

allocation if the proceeds of a loan were

Amortization. If the REIT leased a vehicle

Exchange Act of 1934 because the

used for more than one purpose (for

for a term of 30 days or more, the

employee is among the three highest

example, to purchase a portfolio

deduction for the vehicle lease expense

compensated officers for that tax year

investment and to acquire an interest in a

may have to be reduced by an amount

(other than the principal executive officer).

passive activity). See Temporary

called the inclusion amount.

Regulations section 1.163-8T for the

For this purpose, compensation does

The REIT may have an inclusion

interest allocation rules.

not include the following:

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amount if:

Income from certain employee trusts,

The following interest is not deductible:

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annuity plans, or pensions and

Interest on indebtedness incurred or

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And the

Any benefit paid to an employee that is

continued to purchase or carry obligations

vehicle’s

excluded from the employee’s income.

if the interest is wholly exempt from

FMV on

income tax. See section 265(b) for special

The deduction limit does not apply to:

the first

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rules and exceptions for financial

Commissions based on individual

day of

institutions. Also see section 265(b)(7) for

performance,

the lease

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a temporary de minimis safe-harbor

Qualified performance-based

The lease term began:

exceeded:

exception for certain financial institutions

compensation, and

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for tax-exempt bonds issued in 2009 and

Income payable under a written,

After 12/31/07 but before 1/1/10 . . $18,500

2010.

binding contract in effect on February 17,

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After 12/31/06 but before 1/1/08 . . $15,500

For cash basis taxpayers, prepaid

1993.

interest allocable to years following the

After 12/31/04 but before 1/1/07 . . $15,200

The $1-million limit is reduced by

current tax year (for example, a cash

amounts disallowed as excess parachute

After 12/31/03 but before 1/1/05 . . $17,500

basis calendar year taxpayer who in 2009

If the lease term began before January 1, 2004, see

payments under section 280G. See

prepaid interest allocable to any period

Pub. 463, Travel, Entertainment, Gift, and Car

section 162(m) and Regulations section

after 2009 can deduct only the amount

Expenses, to find out if the corporation has an

1.162-27. Also, see Notice 2007-49,

allocable to 2009).

inclusion amount. The inclusion amount for lease

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2007-25 I.R.B. 1429.

terms beginning in 2010 will be published in the

Interest and carrying charges on

Internal Revenue Bulletin in early 2010.

Line 10. Salaries and wages. Enter the

straddles. Generally, these amounts must

total salaries and wages paid for the tax

be capitalized. See section 263(g).

See Pub. 463 for instructions on

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year, reduced by the amount claimed on:

Interest paid or incurred on any portion

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figuring the inclusion amount.

Form 5884, Work Opportunity Credit;

of an underpayment of tax that is

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Form 5884-A, Credits for Affected

Line 14. Taxes and licenses. Enter

attributable to an understatement arising

Midwestern Disaster Area Employers;

taxes paid or incurred during the tax year,

from an undisclosed listed transaction or

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Form 8844, Empowerment Zone and

but do not include the following:

an undisclosed reportable avoidance

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Renewal Community Employment Credit;

Federal income taxes (except for the

transaction (other than a listed

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Form 8845, Indian Employment Credit;

tax imposed on net recognized built-in

transaction) entered into in tax years

and

gain allocable to ordinary income).

beginning after October 22, 2004.

-9-

Instructions For Form 1120-Reit - 2009 Page 9

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