Instructions For Form 1120-Reit - 2010 (Page 14 of 17) in pdf

result of certain failures to meet the asset

increase in taxes due under section

for definitions and details on how to figure

test requirements of section

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

the tax.

856(c)(4)(B)(iii) if:

dotted line to the left of line 2h, enter

Line 6–Other Taxes

•

Following its identification of the failure,

“Section 1291” and the amount.

the REIT disposes of assets within 6

Include any of the following taxes and

Do not include on line 2h any interest

interest in the total on line 7. Check the

months after the last day of the quarter in

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

which the REIT’s identification of the

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

show the amount of interest owed in the

failure occurred (or such time period

used to compute the total.

bottom margin of page 1, Form

prescribed by the Secretary and in the

Recapture of investment credit. If the

1120-REIT, and enter “Section 1291

manner prescribed by the Secretary), or

REIT disposed of investment credit

interest.” For details, see Form 8621.

•

The requirements of the asset test of

property or changed its use before the

Additional tax under section 197(f). A

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

end of its useful life or recovery period, it

corporation that elects to pay tax on the

the specified time period.

may owe a tax. See Form 4255,

gain from the sale of an intangible under

Certain REIT qualification failures of

Recapture of Investment Credit, for

the related person exception to the

sections 856 – 859 (other than sections

details.

anti-churning rules should include any

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

Recapture of low-income housing

additional tax due under section

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

credit. If the REIT disposed of property

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

to meet the REIT qualification

(or there was a reduction in the qualified

dotted line next to line 2h, enter “Section

requirements under sections 856 – 859,

basis of the property) for which it took the

197” and the amount. For more

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

low-income housing credit, it may owe a

information, see Pub. 535.

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

tax. See Form 8611, Recapture of

status if the failure is due to reasonable

Line 3a–Foreign Tax Credit

Low-Income Housing Credit.

cause and not due to willful neglect. In

To find out when a REIT can claim the

Interest due under the look-back

addition, the REIT must pay (as

foreign tax credit for payment of income

methods. If the REIT used the look-back

prescribed by regulations and in the same

tax to a foreign country or U.S.

method for certain long-term contracts,

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

possession, see Form 1118, Foreign Tax

see Form 8697, Interest Computation

each failure to satisfy a provision of

Credit – Corporations.

Under the Look-Back Method for

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

Completed Long-Term Contracts, for

Line 3b–Credit from Form 8834,

Line 2g–Alternative Minimum

information on figuring the interest the

line 29

Tax (AMT)

REIT may have to include.

Enter any qualified electric vehicle

Unless the REIT is treated as a small

The REIT may also have to include

passive activity credits from prior years

corporation exempt from the AMT, it may

interest due under the look-back method

allowed for the current tax year from Form

owe the AMT if it has any of the

for property depreciated under the income

8834, Qualified Plug-In Electric and

adjustments and tax preference items

forecast method. See Form 8866, Interest

Electric Vehicle Credit, line 29.

listed on Form 4626, Alternative Minimum

Computation Under the Look-Back

Tax – Corporations. The REIT must file

Line 3c–General Business

Method for Property Depreciated Under

Form 4626 if its taxable income (loss)

the Income Forecast Method.

Credit

combined with these adjustments and tax

Other. Additional taxes and interest

The REIT is required to file Form 3800,

preference items is more than the smaller

amounts can be included in the total

General Business Credit, to claim most

of:

entered on line 7. Check the box for

•

business credits. For a list of allowable

$40,000 or

“Other” if the REIT includes any of the

•

credits, see Form 3800. Enter the

The REIT’s allowable exemption

taxes and interest discussed below. See

allowable credit from Part II, line 32, of

amount (from Form 4626).

How to report, for the line 7 instructions

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

For this purpose, taxable income does

for details on reporting these amounts on

applicable credit form and its instructions.

not include the NOL deduction. See Form

an attached schedule.

See Form 3800 for a complete listing of

4626 for details.

general business credits.

1. Recapture of qualified electric

Exemption for small corporations.

vehicle (QEV) credit. The REIT must

Line 3d–Other credits

A REIT is treated as a small corporation

recapture part of the QEV credit it claimed

exempt from the AMT for its tax year

Include any allowable credits not reported

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

beginning in 2010 if that year is the

above, such as the Credit for Prior Year

the vehicle was placed in service, it

REIT’s first tax year in existence

Minimum Tax – Corporations (Form 8827).

ceases to qualify for the credit. See

(regardless of its gross receipts) or:

Attach a statement that identifies the type

Regulations section 1.30-1 for details on

and amount for each credit. Attach the

how to figure the recapture.

1. It was treated as a small

applicable credit form to the return.

2. Recapture of Indian employment

corporation exempt from the AMT for all

credit. Generally, if an employer

prior tax years beginning after 1997 and

Bond credits from Form 8912. Enter

terminates the employment of a qualified

2. Its average annual gross receipts

the allowable credits from Form 8912,

employee less than 1 year after the date

for the 3-year tax period (or portion

Credit to Holders of Tax Credit Bonds,

of initial employment, any Indian

thereof during which the REIT was in

line 18.

employment credit allowed for a prior tax

existence) ending before its tax year

Line 5–Personal Holding

year because of wages paid or incurred to

beginning in 2010 did not exceed $7.5

that employee must be recaptured. For

million ($5 million if the REIT had only 1

Company Tax

details, see Form 8845 and section 45A.

prior tax year).

A REIT is taxed as a personal holding

3. Recapture of new markets credit

company under section 542 if:

For more details, see the Instructions

(see Form 8874).

•

At least 60% of its adjusted ordinary

for Form 4626.

4. Recapture of employer-provided

gross income for the tax year is personal

childcare facilities and services credit

Line 2h–Income Tax

holding company income, and

(see Form 8882).

•

At any time during the last half of the

Deferred tax under section 1291. If the

5. Interest due on deferred tax

tax year more than 50% in value of its

REIT was a shareholder in a passive

attributable to (a) installment sales of

outstanding stock is owned, directly or

foreign investment company (PFIC) and

certain timeshares and residential lots

indirectly, by five or fewer individuals.

received an excess distribution or

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

disposed of its investment in the PFIC

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

nondealer installment obligations (section

during the year, it must include the

Personal Holding Company (PHC) Tax,

453A(c)).

-14-

Instructions For Form 1120-Reit - 2010 Page 14

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