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

Members of a Controlled Group below

adjustments and tax preference items

Tax Rate Schedule

for this purpose.

listed on Form 4626. The REIT must file

If taxable income (line 22, page 1) is:

Form 4626 if its taxable income (loss)

Lines 1 and 2

combined with these adjustments and tax

Of the

But not

amount

preference items is more than the smaller

Members of a controlled group. A

Over —

over —

Tax is:

over —

of:

member of a controlled group, as defined

•

$40,000 or

in section 1563, must check the box on

$50,000

15%

•

The REIT’s allowable exemption

line 1 and complete lines 2a and 2b of

50,000

75,000

$ 7,500 + 25%

50,000

amount (from Form 4626).

Schedule J.

75,000

100,000

13,750 + 34%

75,000

For this purpose, taxable income does

Line 2a. Members of a controlled group

100,000

335,000

22,250 + 39%

100,000

not include the NOL deduction. See Form

are entitled to one $50,000, one $25,000,

335,000

10,000,000

113,900 + 34%

335,000

4626 for details.

and one $9,925,000 taxable income

10,000,000

15,000,000

3,400,000 + 35%

10,000,000

Exemption for small corporations.

bracket amount (in that order) on line 2a.

15,000,000

18,333,333

5,150,000 + 38%

15,000,000

A REIT is treated as a small corporation

When a controlled group adopts or

18,333,333

- - - - -

35%

exempt from the AMT for its tax year

later amends an apportionment plan,

beginning in 2002 if that year is the

each member must attach to its tax return

Tax Computation Worksheet for

REIT’s first tax year in existence

a copy of its consent to this plan. The

Members of a Controlled Group (keep

(regardless of its gross receipts) or:

copy (or an attached statement) must

for your records)

1. It was treated as a small

show the part of the amount in each

corporation exempt from the AMT for all

taxable income bracket apportioned to

Note: Each member of a controlled group must compute the

tax using this worksheet.

prior tax years beginning after 1997 and

that member. See Regulations section

2. Its average annual gross receipts

1.1561-3(b) for other requirements and

1. Enter REIT taxable income (line 22, page 1)

for the 3-tax-year period (or portion

for the time and manner of making the

2. Enter line 1 or the REIT’s share of the

thereof during which the REIT was in

consent.

$50,000 taxable income bracket, whichever

existence) ending before its tax year

is less . . . . . . . . . . . . . . . . . . . . .

Unequal apportionment plan.

beginning in 2002 did not exceed $7.5

Members of a controlled group may elect

3. Subtract line 2 from line 1 . . . . . . . . . .

million ($5 million if the REIT had only 1

an unequal apportionment plan and divide

4. Enter line 3 or the REIT’s share of the

prior tax year).

the taxable income brackets as they want.

$25,000 taxable income bracket, whichever

There is no need for consistency between

is less . . . . . . . . . . . . . . . . . . . . .

For more details, see the Instructions

taxable income brackets. Any member

for Form 4626.

5. Subtract line 4 from line 3 . . . . . . . . . .

may be entitled to all, some, or none of

Line 3g–Income Tax

6. Enter line 5 or the REIT’s share of the

the taxable income brackets. However,

$9,925,000 taxable income bracket,

the total amount for all members cannot

Deferred tax under section 1291. If the

whichever is less . . . . . . . . . . . . . . .

be more than the total amount in each

REIT was a shareholder in a passive

7. Subtract line 6 from line 5 . . . . . . . . . .

taxable income bracket.

foreign investment company (PFIC) and

8. Multiply line 2 by 15% . . . . . . . . . . . . .

Equal apportionment plan. If no

received an excess distribution or

apportionment plan is adopted, the

disposed of its investment in the PFIC

9. Multiply line 4 by 25% . . . . . . . . . . . . .

members of the controlled group must

during the year, it must include the

10. Multiply line 6 by 34% . . . . . . . . . . . . .

divide the amount in each taxable income

increase in taxes due under section

bracket equally among themselves. For

1291(c)(2) in the total for line 3g. On the

11. Multiply line 7 by 35% . . . . . . . . . . . . .

example, Controlled Group AB consists of

dotted line to the left of line 3g, write

12. If the taxable income of the controlled group

Corporation A and Corporation B. They

“Section 1291” and the amount.

exceeds $100,000, enter this member’s

do not elect an apportionment plan.

share of the smaller of: 5% of the taxable

Do not include on line 3g any interest

income in excess of $100,000, or $11,750.

Therefore, each corporation is entitled to:

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

(See the instructions for line 2b above.) . . .

•

$25,000 (one-half of $50,000) on line

show the amount of interest owed in the

13. If the taxable income of the controlled group

2a(1);

bottom margin of page 1, Form

•

exceeds $15 million, enter this member’s

$12,500 (one-half of $25,000) on line

share of the smaller of 3% of the taxable

1120-REIT, and write “Section 1291

2a(2); and

income in excess of $15 million, or $100,000.

interest.” For details, see Form 8621.

•

(See the instructions for line 2b above.) . . .

$4,962,500 (one-half of $9,925,000) on

Additional tax under section 197(f). A

line 2a(3).

14. Total. Add lines 8 through 13. Enter here and

corporation that elects to pay tax on the

on line 3a, Schedule J . . . . . . . . . . . .

Line 2b. Members of a controlled group

gain from the sale of an intangible under

are treated as one corporation to figure

the related person exception to the

Line 3e

the applicability of the additional 5% tax

anti-churning rules should include any

and the additional 3% tax. If an additional

Enter the amount of the 100% excise tax

additional tax due under section

tax applies, each member will pay that tax

imposed on the following:

197(f)(9)(B) in the total for line 3g. On the

•

based on the part of the amount used in

Income of a taxable REIT subsidiary

dotted line next to line 3g, write “Section

each taxable income bracket to reduce

(TRS) for services provided to the REIT’s

197” and the amount. For more

that member’s tax. See section 1561(a). If

tenants that is improperly included in

information, see Pub. 535, Business

an additional tax applies, attach a

rents from real property reported by the

Expenses.

schedule showing the taxable income of

REIT instead of being reported by the

Line 4a–Foreign Tax Credit

the entire group and how the corporation

TRS.

•

figured its share of the additional tax.

To find out when a REIT can take the

Deductions that are improperly

Line 2b(1). Enter the corporation’s

foreign tax credit for payment of income

allocated between the REIT to its TRS.

•

share of the additional 5% tax on line

tax to a foreign country or U.S.

Interest deductions of a TRS to the

2b(1).

possession, see Form 1118, Foreign Tax

extent that interest payments to its REIT

Credit – Corporations.

are in excess of a rate that is

Line 2b(2). Enter the corporation’s

commercially reasonable.

share of the additional 3% tax on line

Line 4b

See section 857(b)(7) for details and

2b(2).

If the REIT can take either of the following

exceptions.

Line 3a–Tax on REIT Taxable

credits, check the appropriate box(es)

Line 3f–Alternative Minimum

Income

and include the amount of the credits in

Tax (AMT)

the total for line 4b.

Most REITs figure their tax by using the

Tax Rate Schedule below. An exception

Unless the REIT is treated as a small

Nonconventional source fuel credit. A

applies to members of a controlled group

corporation exempt from the AMT, it may

credit is allowed for the sale of qualified

(see worksheet below).

owe the AMT if it has any of the

fuels produced from a nonconventional

-12-

Instructions For Form 1120-Reit - U.s. Income Tax Return For Real Estate Investment Trusts - 2002 Page 12

Related Articles

Related forms

Related Categories