Instructions For Form 1120-Reit - 2010 (Page 9 of 17) in pdf

If the REIT is eligible to claim any of

If the REIT provided taxable fringe

disposition, as a reduction in the amount

these credits, figure each current year

benefits to its employees, such as

realized on the disposition).

•

credit before figuring the deduction for

personal use of a car, do not

Taxes assessed against local benefits

CAUTION

expenses on which the credit is based. If

deduct as wages the amounts allocated

that increase the value of the property

the REIT capitalized any costs on which it

for depreciation and other expenses

assessed (such as for paving, etc.).

•

figured the credit, reduce the amount

claimed on lines 16 and 18.

Taxes deducted elsewhere on the

capitalized by the credit attributable to

return.

Line 11. Repairs and maintenance.

•

these costs.

Excise taxes imposed under section

Enter the cost of incidental repairs and

4981 on undistributed REIT income.

See the instructions for the form used

maintenance, such as labor and supplies,

See section 164(d) for information on

to figure the applicable credit.

that do not add to the value of the

apportionment of taxes on real property

property or appreciably prolong its life.

Line 9. Compensation of officers. Do

between seller and purchaser.

New buildings, machinery, or permanent

not include compensation deductible

improvements that increase the value of

Line 15. Interest.

elsewhere on the return, such as elective

the property are not deductible. They

contributions to a section 401(k) cash or

Interest expense cannot be used

must be depreciated or amortized.

deferred arrangement, or amounts

to offset interest income.

contributed under a salary reduction SEP

Line 12. Bad debts. Enter the total

CAUTION

agreement or a SIMPLE IRA plan.

debts that became worthless in whole or

The deduction for interest is limited

Disallowance of deduction for

in part during the tax year. A cash basis

when the REIT is a policyholder or

employee compensation in excess of

taxpayer may not claim a bad debt

beneficiary with respect to a life

$1 million. Publicly held REITs cannot

deduction unless the amount was

insurance, endowment, or annuity

deduct compensation to a “covered

previously included in income.

contract issued after June 8, 1997. For

employee” to the extent that the

Line 13. Rents. If the REIT rented or

details, see section 264(f). Attach a

compensation exceeds $1 million.

leased a vehicle, enter the total annual

statement showing the computation of the

Generally, a covered employee is:

rent or lease expense paid or incurred

deduction.

•

The principal executive officer of the

during the year. Also complete Part V of

The REIT must make an interest

REIT (or an individual acting in that

Form 4562, Depreciation and

allocation if the proceeds of a loan were

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

Amortization. If the REIT leased a vehicle

•

used for more than one purpose (for

An employee whose total

for a term of 30 days or more, the

example, to purchase a portfolio

compensation must be reported to

deduction for the vehicle lease expense

investment and to acquire an interest in a

shareholders under the Securities

may have to be reduced by an amount

passive activity). See Temporary

Exchange Act of 1934 because the

called the inclusion amount.

Regulations section 1.163-8T for the

employee is among the three highest

interest allocation rules.

compensated officers for that tax year

The REIT may have an inclusion

(other than the principal executive officer).

amount if:

The following interest is not deductible:

•

Interest on indebtedness incurred or

For this purpose, compensation does

And the

continued to purchase or carry obligations

not include the following:

vehicle’s

•

if the interest is wholly exempt from

Income from certain employee trusts,

FMV on

income tax. See section 265(b) for special

annuity plans, or pensions and

the first

•

rules and exceptions for financial

Any benefit paid to an employee that is

day of

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

excluded from the employee’s income.

the lease

a temporary de minimis safe-harbor

The deduction limit does not apply to:

The lease term began:

exceeded:

exception for certain financial institutions

•

Commissions based on individual

for tax-exempt bonds issued in 2010 and

performance,

After 12/31/07 but before 1/1/11 . . $18,500

2011.

•

Qualified performance-based

•

For cash basis taxpayers, prepaid

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

compensation, and

interest allocable to years following the

•

Income payable under a written,

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

current tax year (for example, a cash

binding contract in effect on February 17,

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

basis calendar year taxpayer who in 2010

1993.

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

prepaid interest allocable to any period

The $1-million limit is reduced by

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

after 2010 can deduct only the amount

Expenses, to find out if the corporation has an

amounts disallowed as excess parachute

allocable to 2010).

inclusion amount. The inclusion amount for lease

payments under section 280G. See

•

Interest and carrying charges on

terms beginning in 2011 will be published in the

section 162(m) and Regulations section

straddles. Generally, these amounts must

Internal Revenue Bulletin in early 2011.

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

be capitalized. See section 263(g).

2007-25 I.R.B. 1429.

•

See Pub. 463 for instructions on

Interest paid or incurred on any portion

figuring the inclusion amount.

Line 10. Salaries and wages. Enter the

of an underpayment of tax that is

total salaries and wages paid for the tax

attributable to an understatement arising

Line 14. Taxes and licenses. Enter

year, reduced by the amount claimed on:

from an undisclosed listed transaction or

taxes paid or incurred during the tax year,

•

Form 5884, Work Opportunity Credit;

an undisclosed reportable avoidance

but do not include the following:

•

Form 8844, Empowerment Zone and

•

transaction (other than a listed

Federal income taxes (except for the

Renewal Community Employment Credit;

transaction) entered into in tax years

tax imposed on net recognized built-in

•

Form 8845, Indian Employment Credit;

beginning after October 22, 2004.

gain allocable to ordinary income).

and

•

Special rules apply to:

Foreign or U.S. possession income

•

Form 8932, Credit for Employer

•

taxes if a tax credit is claimed (however,

Disqualified interest on certain

Differential Wage Payments.

see the Instructions for Form 5735 for

indebtedness under section 163(j). See

See the instructions for these forms for

special rules for possession income

Form 8926, Disqualified Corporate

more information. Do not include salaries

taxes).

Interest Expense Disallowed Under

•

and wages deductible elsewhere on the

Taxes not imposed on the REIT.

Section 163(j) and Related Information,

•

return, such as amounts included in

Taxes, including state or local sales

and the related Instructions.

•

officer’s compensation, elective

taxes, that are paid or incurred in

Interest on which no tax is imposed

contributions to a section 401(k) cash or

connection with an acquisition or

(see section 163(j));

•

deferred arrangement, or amounts

disposition of property (these taxes must

Foregone interest on certain

contributed under a salary reduction SEP

be treated as a part of the cost of the

below-market-rate loans (see section

agreement or a SIMPLE IRA plan.

acquired property or, in the case of a

7872); and

-9-

Instructions For Form 1120-Reit - 2010 Page 9

Related Articles

Related forms

Related Categories