Instructions For Form 1120-Reit - 2010 (Page 10 of 17) in pdf

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Original issue discount (OID) on certain

Supplies used and consumed in the

income must be modified (see section

high-yield discount obligations. See

business.

172(b)). To the extent that contributions

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section 163(e)(5) to determine the

Utilities.

are used to reduce taxable income for this

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amount of the deduction for OID that is

Ordinary losses from trade or business

purpose and increase an NOL carryover,

deferred and the amount that is

activities of a partnership (from Schedule

a contributions carryover is not allowed.

disallowed on a high-yield discount

K-1 (Form 1065 or 1065-B)). Do not offset

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

obligation. The rules under section

ordinary income against ordinary losses.

Cash contributions. For

163(e)(5) do not apply to certain

Instead, include the income on line 7.

contributions of cash, check, or other

high-yield discount obligations issued

Show the partnership’s name, address,

monetary gifts (regardless of the amount),

after August 31, 2008 and before January

and EIN on a separate statement

the REIT must maintain a bank record, or

1, 2011. See section 163(e)(5)(F). Also,

attached to this return. If the amount is

a receipt, letter, or other written

see Notice 2010-11, 2010-4 I.R.B. 326.

from more than one partnership, identify

communication from the donee

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Section 108(i) OID deduction. If the

the amount from each partnership.

organization indicating the name of the

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REIT issued a debt instrument with

Deduction for certain energy efficient

organization, the date of the contribution,

original issue discount (OID) that is

commercial building property placed in

and the amount of the contribution.

subject to section 108(i)(2) because of an

service during the year. See section

Contributions of $250 or more. A

election under section 108(i) to defer the

179D, Notice 2008-40, 2008-14 I.R.B.

REIT can deduct a contribution of $250 or

recognition of income from the

725, and Notice 2006-52, 2006-26 I.R.B.

more only if the REIT receives a written

cancellation of debt (COD), the deduction

1175.

acknowledgment from the donee

for all or a portion of the OID that accrues

Charitable contributions. Enter

organization that shows the amount of

prior to the first tax year the COD is

contributions or gifts actually paid within

cash contributed, describes any property

includible in income is deferred until the

the tax year to or for the use of charitable

contributed, and gives a description and a

COD is includible in income. The

and governmental organizations

good faith estimate of the value of any

aggregate amount of OID that is deferred

described in section 170(c) and any

goods or services provided in return for

during this period is generally allowed as

unused contributions carried over from

the contribution or states that no goods or

a deduction ratably over the 5-year period

prior years.

services were provided in return for the

the COD is includible in income under

REITs reporting taxable income on the

contribution. The acknowledgment must

section 108(i). The amount deferred is

accrual method may elect to treat as paid

be obtained by the due date (including

limited to the amount of COD subject to

during the tax year any deductible

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

the section 108(i) election. See section

contributions paid by the 15th day of the

earlier, the date the return is filed. Do not

108(i) for more details . Also see page 6

3rd month after the end of the tax year if

attach the acknowledgment to the tax

for the annual information statement that

the contributions were authorized by the

return, but keep it with the REIT’s

is required if the election under section

board of directors during the tax year.

records. These rules apply in addition to

108(i) is made.

Attach a declaration to the return stating

the filing requirements for Form 8283,

Line 16. Depreciation. Include on line

that the resolution authorizing the

Noncash Charitable Contributions.

contributions was adopted by the board of

16 depreciation and the cost of certain

Special rules and limits apply to:

directors during the tax year. The

property that the REIT elected to expense

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Contributions to organizations

declaration must include the date the

under section 179. See Form 4562 and

conducting lobbying activities. See

resolution was adopted.

the related instructions to figure the

section 170(f)(9).

amount to enter on this line.

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Contributions of property other than

If the REIT contributed money for

cash. See Form 8283.

Line 18. Other deductions.

relief of victims in the area

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Contributions of computer technology

affected by the January 12, 2010,

CAUTION

Penalties or fines paid to any

and equipment for educational purposes.

earthquake in Haiti and chose to deduct

government agency or

See section 170(e)(6).

those amounts on its 2009 return instead

instrumentality because of a

of its 2010 return, do not include those

CAUTION

For more information on charitable

violation of a law are not deductible. See

amounts again here.

contributions, including substantiation and

Publication 535, Business Expenses, for

recordkeeping requirements, see section

Limitation on deduction. The total

additional information.

170 and the related regulations and Pub.

amount claimed may not be more than

526, Charitable Contributions. For special

10% of taxable income (the sum of Part I,

Attach a schedule, listing by type and

rules that apply to corporations, see Pub.

line 22; Part II, line 5; Part IV, line 3; and

amount, all allowable deductions that are

542.

Form 2438, line 11) computed without

not deductible elsewhere on the return.

regard to the following:

Enter the total on line 18. Include

Pension, profit-sharing, etc., plans.

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Any deduction for contributions.

amortization and organization expenses.

Include the deduction for contributions to

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The domestic production activities

Generally, a deduction may not be taken

qualified pension, profit-sharing, or other

deduction under section 199.

for any amount that is allocable to a class

funded deferred compensation plans.

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The limitation under section 249 on the

of exempt income. See section 265(b) for

Employers who maintain such a plan

deduction for bond premium.

exceptions.

generally must file one of the forms listed

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Any net operating loss (NOL) carryback

below unless exempt from filing under

Examples of other deductions include:

to the tax year under section 172.

regulations or other applicable guidance,

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Amortization (see Form 4562).

Any capital loss carryback to the tax

even if the plan is not a qualified plan

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Certain business start-up and

year under section 1212(a)(1).

under the Internal Revenue Code. The

organizational costs that the REIT elects

Carryover. Charitable contributions

filing requirement applies even if the REIT

to deduct.

does not claim a deduction for the current

that exceed the 10% limitation cannot be

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Depletion. Attach Form T (Timber),

tax year. There are penalties for failure to

deducted for the tax year but may be

Forest Activities Schedule, if a deduction

carried over to the next 5 tax years.

file these forms on time and for

for depletion of timber is taken.

overstating the pension plan deduction.

Special rules apply if the REIT has an

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Reforestation costs. The REIT can

See sections 6652(e) and 6662(f). Also

NOL carryover to the tax year. In figuring

elect to deduct up to $10,000 of qualified

see the instructions for the applicable

the charitable contributions deduction for

reforestation expenses, for each

forms.

the tax year, the 10% limit is applied

qualifying timber property. The REIT can

Form 5500, Annual Return/Report of

using the taxable income after taking into

elect to amortize over 84 months any

Employee Benefit Plan.

account any deduction for the NOL.

amount not deducted.

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Insurance premiums.

To figure the amount of any remaining

Form 5500-SF, Short Form Annual

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Legal and professional fees.

NOL carryover to later years, taxable

Return/Report of Small Employee Benefit

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Instructions For Form 1120-Reit - 2010 Page 10

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