Instructions For Form 1120-Reit - 2010 (Page 16 of 17) in pdf

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Long-term capital gain as a long-term

See section 1563(d)(1) for the

Schedule L–Balance

capital loss on Schedule D (Form 1120),

definition of “stock” for purposes of

line 6.

determining stock ownership above.

Sheets per Books

How to Report

Question 5

The balance sheets should agree with the

If the REIT checked the “Other” box,

REIT’s books and records.

Check the “Yes” box if one foreign person

attach a schedule showing the

Line 1. Cash. Include certificates of

owned at least 25% of (a) the total voting

computation of each item included in the

deposits as cash on line 1.

power of all classes of stock of the REIT

total for line 6, Schedule J. In addition,

entitled to vote, or (b) the total value of all

Line 4. Tax-exempt securities. Include

identify: (a) the applicable Code section;

classes of stock of the REIT.

on this line:

(b) the type of taxes or interest; and (c)

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State and local government obligations,

enter the amount of tax or interest.

The constructive ownership rules of

the interest on which is excludable from

Line 7–Total Tax

section 318 apply in determining if a REIT

gross income under section 103(a), and

is foreign owned. See section 6038A(c)(5)

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Stock in a mutual fund or other RIC that

Include any deferred tax on the

and the related regulations.

distributed exempt-interest dividends

termination of a section 1294 election

during the tax year of the REIT.

applicable to shareholders in a qualified

Enter on line 5a the percentage owned

electing fund in the amount entered on

Line 24. Adjustments to shareholders’

by the foreign person specified in line 5.

line 7. See Form 8621, Part V, and How

equity. Examples of adjustments to

On line 5b, enter the name of the owner’s

to report, below.

report on this line include:

country.

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Unrealized gains and losses on

Subtract from the total for line 7 the

Note. If there is more than one

securities held “available for sale.”

deferred tax on the REIT’s share of the

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Foreign currency translation

undistributed earnings of a qualified

25%-or-more foreign owner, complete

adjustments.

electing fund (see Form 8621, Part II).

lines 5a and 5b for the foreign person with

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The excess of additional pension

the highest percentage of ownership.

How to report

liability over unrecognized prior service

Attach a schedule showing the

Foreign person. The term “foreign

cost.

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computation of each item included in, or

person” means:

Guarantees of employee stock (ESOP)

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subtracted from, the total for line 7. On

A foreign citizen or nonresident alien.

debt.

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the dotted line next to line 7, enter the

An individual who is a citizen of a U.S.

Compensation related to employee

amount of tax or interest, identify it as tax

possession (but who is not a U.S. citizen

stock award plans.

or interest, and specify the Code section

or resident).

If the total adjustment to be entered

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that applies.

A foreign partnership.

on line 24 is a negative number, enter the

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A foreign corporation.

amount in parentheses.

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Any foreign estate or trust within the

Schedule K—Other

meaning of section 7701(a)(31).

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Schedule M-1

A foreign government (or one of its

Information

agencies or instrumentalities) if it is

Be sure to answer all the lines that apply

engaged in the conduct of a commercial

Reconciliation of Income (Loss)

to the REIT.

activity as described in section 892.

per Books With Income per

Question 3

Return

Owner’s country. For individuals, the

Check the “Yes” box if the REIT is a

term “owner’s country” means the country

Line 5c. Travel and entertainment.

subsidiary in a parent-subsidiary

of residence. For all others, it is the

Include any of the following:

controlled group (defined below), even if

country where incorporated, organized,

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Meals and entertainment not deductible

the REIT is a subsidiary member of one

created, or administered.

under section 274(n).

group and the parent corporation of

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Expenses for the use of an

another.

Requirement to file Form 5472. If the

entertainment facility.

REIT checked “Yes” to line 5, it may have

Note. If the REIT is an “excluded

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The part of business gifts over $25.

to file Form 5472. Generally, a 25%

member” of a controlled group (see

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Expenses of an individual over $2,000,

foreign-owned corporation that had a

section 1563(b)(2)), it is still considered a

which are allocable to conventions on

reportable transaction with a foreign or

member of a controlled group for this

cruise ships.

domestic related party during the tax year

purpose.

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Employee achievement awards over

must file Form 5472.

Parent-subsidiary controlled group.

$400.

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The cost of entertainment tickets over

The term “parent-subsidiary controlled

See Form 5472 for filing instructions

face value (also subject to 50% limit

group” means one or more chains of

and penalties for failure to file.

under section 274(n)).

corporations connected through stock

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The cost of skyboxes over the face

ownership (section 1563(a)(1)). Both of

Item 8

value of nonluxury box seat tickets.

the following requirements must be met:

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Tax-exempt interest. Show any

The part of luxury water travel not

1. At least 80% of the total combined

tax-exempt interest received or accrued.

deductible under section 274(m).

voting power of all classes of voting stock

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Include any exempt-interest dividends

Expenses for travel as a form of

entitled to vote or at least 80% of the total

received as a shareholder in a mutual

education.

value of all classes of stock of each

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fund or other RIC.

Other nondeductible travel and

corporation in the group (except the

entertainment expenses.

parent) must be owned by one or more of

Item 9

the other corporations in the group and

For more information, see Pub. 542,

2. The common parent must own at

Enter the amount of the net operating loss

Corporations.

least 80% of the total combined voting

(NOL) carryover to the tax year from prior

Line 7. Tax-exempt interest. Include as

power of all classes of stock entitled to

years, even if some of the loss is used to

interest any exempt-interest dividends

vote or at least 80% of the total value of

offset income on this return. The amount

received by the REIT as a shareholder in

all classes of stock of one or more of the

to enter is the total of all NOLs generated

a mutual fund or other RIC.

other corporations in the group. Stock

in prior years but not used to offset

owned directly by other members of the

income in a tax year prior to 2010. Do not

Paperwork Reduction Act Notice. We

group is not counted when computing the

reduce the amount by any NOL deduction

ask for the information on this form to

voting power or value.

reported on line 21a.

carry out the Internal Revenue laws of the

-16-

Instructions For Form 1120-Reit - 2010 Page 16

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