Looking for a Form 1120-reit Templates? Download it for free!

•

in the blank space in the right-hand

Identifies the property to which the

imposed to prevent a REIT from retaining

column between lines 23 and 24h, and

election applies;

any profit from ordinary retailing activities

•

write “Backup Withholding.”

Includes the name, address, and EIN of

such as sales to customers of

the REIT, the date the property was

condominium units or subdivided lots in a

Line 25. Estimated tax penalty. A REIT

acquired, and a brief description of how

development tract.

that does not make estimated tax

the property was acquired (including the

Line 1. Gain from sale or other

payments when due may be subject to an

name of the person from whom the

disposition of property. Include only

underpayment penalty for the period of

property was acquired); and

gain from the sale or other disposition of

underpayment. Generally, a REIT is

•

Gives a description of the lease or debt

property described in section 1221(a)(1)

subject to the penalty if its tax liability is

with respect to which default occurred or

that is not foreclosure property and that

$500 or more and it did not timely pay the

was imminent.

does not qualify as an exception. See

smaller of:

•

The REIT can revoke the election by

section 857(b)(6)(C) for information on

Its alternative minimum tax minus the

filing a revocation on or before the due

certain sales that do not qualify as

credit for Federal tax paid on fuels for

date (including extensions) for filing Form

prohibited transactions. See section

2002 as shown on the return or

•

1120-REIT. See section 856(e) for more

856(j) for a special rule regarding a

Its prior year’s tax (computed in the

details.

shared appreciation mortgage.

same manner). See section 6655 for

Line 2. Gross income from foreclosure

details and exceptions, including special

Do not net losses from prohibited

property. Do not include income that

rules for large corporations.

transactions against gains in determining

qualifies under the REIT’s 75% gross

Use Form 2220, Underpayment of

the amount to enter on line 1. Enter

income test under section 856(c)(3)(A),

Estimated Tax by Corporations, to see if

losses from prohibited transactions on the

(B), (C), (D), (E), or (G). These amounts

the REIT owes a penalty and to figure the

appropriate line in Part I.

must be reported in Part I.

amount of the penalty. Generally, the

Line 2. Deductions. Deduct only those

REIT does not have to file this form

Line 4. Deductions. Deduct only those

expenses that have a proximate and

because the IRS can figure the amount of

expenses that have a proximate and

primary relationship to the earning of the

any penalty and bill the REIT for it.

primary relationship to earning the income

income shown on line 1. Do not deduct

However, even if it does not owe the

shown on line 3. This includes:

general overhead and administrative

•

penalty, the REIT must complete and

Depreciation on foreclosure property;

expenses in Part IV.

•

attach Form 2220 if the annualized

Interest paid or accrued on debt of the

income or adjusted seasonal installment

REIT that is attributable to the carrying of

method is used, or the REIT is a large

the property;

Schedule A—Deduction

•

corporation computing its first required

Real estate taxes; and

•

for Dividends Paid

installment based on the prior year’s tax.

Fees charged by an independent

See the Instructions for Form 2220 for the

contractor to manage such property.

Lines 1 through 5. Section 561 (taking

definition of a large corporation.

Do not deduct general overhead and

into account sections 857(b)(8),

administrative expenses in Part II.

If Form 2220 is attached, check the

857(d)(3)(B), and 858(a)) determines the

box on line 25, page 1, Form 1120-REIT,

deduction for dividends paid.

and enter the amount of any penalty on

Part III—Tax for Failure To

Line 3. Dividends declared in October,

this line.

November, or December and payable to

Meet Certain

shareholders of record in October,

November, or December are treated by

Source-of-Income

Part II—Tax on Net Income

the REIT as paid on December 31 of that

Requirements

From Foreclosure Property

calendar year. The REIT is then eligible

for the deduction for dividends paid for

All REITs must complete lines 1a through

Complete Part II only if the gross income,

the year the dividends are declared even

8 of Part III. If line 8 is zero, do not

gains, losses, and deductions from

though they are not actually paid until

complete the rest of Part III. The tax

foreclosure property (defined in section

January of the following calendar year.

imposed under section 857(b)(5) does not

856(e)) result in net income. If an overall

apply. If line 8 is greater than zero,

If the REIT declared dividends in any

net loss results, report the gross income,

complete the rest of Part III. Enter the tax

of those months and actually paid them in

gains, losses, and deductions from

from line 16 on Schedule J, line 3c.

January, as discussed above, enter on

foreclosure property on the appropriate

line 3 those dividends not already

lines of Part I.

If line 8 is greater than zero, the REIT

included on lines 1, 2, and 4 of Schedule

must:

Property may be treated as foreclosure

•

Attach a schedule listing the nature and

property only if it meets the requirements

amount of each item of its gross income

Line 6. If, for any tax year the REIT has

of section 856(e) and the REIT elects to

described in section 856(c)(2) and (3);

net income from foreclosure property (as

treat the property as foreclosure property

•

Not have fraudulently included any

defined in section 857(b)(4)(B)), the

in the year it was acquired. The property

incorrect information in the attached

deduction for dividends paid to be entered

continues to be foreclosure property until

schedule; and

on line 6 (and on line 21b, page 1) is

the close of the 3rd tax year following the

•

Have reasonable cause for not meeting

determined by multiplying the amount on

tax year in which the REIT acquired it. For

the requirements of section 856(c)(2) and

line 5 by the following fraction:

more information, see section 856(e).

(3).

However, if the foreclosure property is

REIT taxable income (determined without regard to the

Important: Failure to meet the three

deduction for dividends paid)

qualified health care property, it will cease

conditions above will terminate the

to be foreclosure property as of the close

REIT taxable income (determined without regard to the

election to be treated as a REIT effective

of the 2nd year following the tax year the

deduction for dividends paid) +

(Net income from foreclosure property minus the tax on net

for this tax year and all succeeding tax

REIT acquired it (although the REIT may

income from foreclosure property)

years.

request one or more extensions to this

two year grace period not to extend

beyond the 6th year). See section

Schedule J—Tax

Part IV—Tax on Net

856(e)(6) for details.

Computation

Income From Prohibited

This election must be made by the

due date for filing Form 1120-REIT

Note: Members of a controlled group

Transactions

(including extensions). To make the

must attach to Form 1120-REIT a

election, attach a statement that:

Section 857(b)(6) imposes a tax equal to

statement showing the computation of the

•

Indicates that the election under

100% of the net income derived from

tax entered on line 3a. You may use the

section 856(e) is being made;

prohibited transactions. The 100% tax is

Tax Computation Worksheet for

-11-

Instructions For Form 1120-Reit - U.s. Income Tax Return For Real Estate Investment Trusts - 2002 Page 11

Related Articles

Related forms

Related Categories