Instructions For Form 1120-Reit - 2004 printable pdf download

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Department of the Treasury

Internal Revenue Service

Instructions for Form

1120-REIT

U.S. Income Tax Return for Real Estate Investment Trusts

Section references are to the Internal Revenue Code unless otherwise noted.

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Contents

Page

The American Jobs Creation Act of 2004

and calling 1-800-THE-LOST (1-800-843-5678)

(AJCA) made several changes that affect

if you recognize a child.

What’s New . . . . . . . . . . . . . . . . . . . . . . 1

REITs and their shareholders for tax years

Photographs of Missing Children . . . . . . . . 1

Unresolved Tax Issues

beginning after October 22, 2004. These

Unresolved Tax Issues . . . . . . . . . . . . . . . 1

changes include the following provisions that

How To Get Forms and Publications

. . . . . 1

If the REIT has attempted to deal with an IRS

may affect your 2004 return. See Pub. 553,

How To Access the Internal Revenue

problem unsuccessfully, it should contact the

Highlights of 2004 Tax Changes, for more

Taxpayer Advocate. The Taxpayer Advocate

Bulletin (I.R.B.) . . . . . . . . . . . . . . . . . . . 2

information.

independently represents the REIT’s interests

General Instructions . . . . . . . . . . . . . . . . 2

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The AJCA revised the “straight debt ” safe

and concerns within the IRS by protecting its

Purpose of Form . . . . . . . . . . . . . . . . . . . 2

harbor to exempt certain debt instruments that

rights and resolving problems that have not

Who Must File . . . . . . . . . . . . . . . . . . . . . 2

are non-abusive from the 10% asset test. See

been fixed through normal channels.

General Requirements to Qualify as a

section 856(m) for details.

While Taxpayer Advocates cannot change

•

REIT . . . . . . . . . . . . . . . . . . . . . . . . . 2

The AJCA expanded the limited rent

the tax law or make a technical tax decision,

Termination of Election . . . . . . . . . . . . . . . 2

exception for rents received from a taxable

they can clear up problems that resulted from

Taxable REIT Subsidiaries . . . . . . . . . . . . 2

REIT subsidiary (TRS) to include testing the

previous contacts and ensure that the REIT’s

Where To File . . . . . . . . . . . . . . . . . . . . . 2

comparability of rents: (1) at the beginning of a

case is given a complete and impartial review.

When To File . . . . . . . . . . . . . . . . . . . . . 3

lease term, (2) upon a lease extension, and (3)

The REIT’s assigned personal advocate will

Who Must Sign . . . . . . . . . . . . . . . . . . . . 3

upon a lease renegotiation. This change is

listen to its point of view and will work with the

retroactive to tax years beginning after 2000.

Paid Preparer Authorization . . . . . . . . . . . . 3

REIT to address its concerns. The REIT can

See section 856(d)(8) for details.

Other Forms That May Be Required

. . . . 3-4

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expect the advocate to provide:

The AJCA eliminated the “safe harbor” that

Statements . . . . . . . . . . . . . . . . . . . . . . . 4

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A “fresh look” at a new or ongoing problem.

allowed rent received by a REIT to be exempt

Assembling the Return . . . . . . . . . . . . . . . 4

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Timely acknowledgement.

from the 100% excise tax if rents are from

Accounting Methods . . . . . . . . . . . . . . . . . 4

•

The name and phone number of the

customary services performed by a TRS. See

Accounting Periods . . . . . . . . . . . . . . . . . 4

individual assigned to its case.

section 857(b)(7) for details.

•

Rounding Off to Whole Dollars . . . . . . . . . . 4

•

Updates on progress.

The AJCA increased the percentage used to

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Recordkeeping . . . . . . . . . . . . . . . . . . . . 4

Timeframes for action.

compute the tax for failure to meet certain

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Depository Method of Tax Payment

. . . . . 4

Speedy resolution.

source-of-income requirements from 90% to

•

Estimated Tax Payments . . . . . . . . . . . . . 5

Courteous service.

95%. See section 857(b)(5)(a) for details.

Interest and Penalties . . . . . . . . . . . . . . . . 5

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When contacting the Taxpayer Advocate,

The AJCA modified rules for sales of timber

Specific Instructions . . . . . . . . . . . . . . . 5

the REIT should be prepared to provide the

by REITs for tax years beginning after October

Period Covered . . . . . . . . . . . . . . . . . . . . 5

following information.

22, 2004. Certain sales of timber will no longer

•

Name and Address . . . . . . . . . . . . . . . . . 5

The REIT’s name, address, and employer

trigger the 100% prohibited transactions tax.

100%-owned Subsidiaries and

identification number (EIN).

See new section 857(b)(6)(D) for details.

•

Personal Holding Companies . . . . . . . . . 5

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The name and telephone number of an

REITs can elect to deduct up to $10,000 of

Employer Identification Number . . . . . . . . . 5

authorized contact person and the hours he or

reforestation expenditures paid or incurred

she can be reached.

Date REIT Established . . . . . . . . . . . . . . . 5

after October 22, 2004. See section 194(b) for

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The type of tax return and year(s) involved.

Total Assets . . . . . . . . . . . . . . . . . . . . . . 6

details.

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A detailed description of the problem.

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Final Return, Name Change, Address

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The reforestation credit (see Form 3468)

Previous attempts to solve the problem and

Change, or Amended Return . . . . . . . . . 6

was repealed for expenses paid or incurred

the office that was contacted.

Part I — Real Estate Investment Trust

•

after October 22, 2004.

A description of the hardship the REIT is

•

Taxable Income . . . . . . . . . . . . . . . . . 6-9

REITs can elect to deduct up to $5,000 of

facing (if applicable).

Part II — Tax on Net Income From

business start-up and organizational costs paid

The REIT may contact a Taxpayer

Foreclosure Property . . . . . . . . . . . . . . . 9

or incurred after October 22, 2004. See section

Advocate by calling 1-877-777-4778 (toll free).

Part III — Tax for Failure To Meet

195(b) for details.

•

Persons who have access to TTY/TDD

Certain Source-of-Income

For charitable contributions of certain

equipment can call 1-800-829-4059 and ask for

Requirements . . . . . . . . . . . . . . . . . . 10

property made after June 3, 2004, a

Taxpayer Advocate assistance. If the REIT

Part IV — Tax on Net Income From

corporation must file Form 8283 and obtain a

prefers, it may call, write, or fax the Taxpayer

qualified appraisal if claiming a deduction of

Prohibited Transactions . . . . . . . . . . . . 10

Advocate office in its area. See Pub. 1546, The

more than $5,000. See new section 170(f)(11)

Schedule A . . . . . . . . . . . . . . . . . . . . . . 10

Taxpayer Advocate Service — How to Get Help

for details.

Schedule J . . . . . . . . . . . . . . . . . . . . 10-12

With Unresolved Tax Problems, for a list of

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For charitable contributions of patents and

Schedule K . . . . . . . . . . . . . . . . . . . . . . 12

addresses and fax numbers.

certain other intellectual property made after

Schedule L . . . . . . . . . . . . . . . . . . . . . . 13

June 3, 2004, REITs will receive a reduced

Schedule M-1 . . . . . . . . . . . . . . . . . . . . 13

How To Get Forms and

deduction but can deduct certain qualified

Publications

donee income. See section 170(m) for details.

What’s New

•

Personal computer

Photographs of Missing

Corporations with total assets of $10 million

or more on the last day of the tax year must

You can access the IRS website 24 hours a

Children

complete new Schedule M-3, Net Income

day, 7 days a week, at to:

•

(Loss) Reconciliation for Corporations With

The Internal Revenue Service is a proud

Order IRS products online.

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Total Assets of $10 Million or More, instead of

partner with the National Center for Missing

Download forms, instructions, and

Schedule M-1 in 2004. However, REITs that

and Exploited Children. Photographs of

publications.

•

file Form 1120-REIT are not required to

missing children selected by the Center may

See answers to frequently asked questions.

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complete this new schedule in 2004. Instead,

appear in instructions on pages that would

Search publications online by topic or

they should continue to complete Schedule

otherwise be blank. You can help bring these

keyword.

•

M-1 of Form 1120-REIT, as required.

children home by looking at the photographs

Send us comments or request help by email.

Cat. No. 64243J

Instructions For Form 1120-Reit - 2004

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