Instructions For Form 1120-Reit - 2004 (Page 8 of 13) in pdf

taxable income computed without regard to the

claimed value of more than $500. See section

after the contribution and notifies the donor of

following:

170(f)(12).

the contribution. For more details, see section

•

Any deduction for contributions.

170(e)(6)(C).

Reduced deduction for contributions of

•

The special deductions on line 21b, relating

For contributions of property reacquired by

certain property. For a charitable

to dividends paid.

the manufacturer of the property, the 3-year

contribution of property, the REIT must reduce

•

The deduction allowed under section 249,

period begins on the date that the original

the contribution by the sum of:

•

relating to any premium paid or incurred upon

construction of the property was substantially

The ordinary income and short-term capital

the repurchase of a convertible bond.

completed. Also, the original use of the

gain that would have resulted if the property

•

Any net operating loss (NOL) carryback to

property may be by someone other than the

were sold at its FMV and

•

the tax year under section 172.

donor or the donee.

For certain contributions, the long-term

•

Any capital loss carryback to the tax year

capital gain that would have resulted if the

Pension, profit-sharing, etc., plans. Include

under section 1212(a)(1).

property were sold at its FMV.

the deduction for contributions to qualified

Carryover. Charitable contributions over

pension, profit-sharing, or other funded

The reduction for the long-term capital gain

the 10% limitation cannot be deducted for the

deferred compensation plans. Employers who

applies to:

•

tax year but may be carried over to the next 5

maintain such a plan generally must file one of

Contributions of tangible personal property

tax years.

the forms listed below, even if the plan is not a

for use by an exempt organization for a

qualified plan under the Internal Revenue

Special rules apply if the REIT has an NOL

purpose or function unrelated to the basis for

Code. The filing requirement applies even if the

carryover to the tax year. In figuring the

its exemption and

•

REIT does not claim a deduction for the current

charitable contributions deduction for the tax

Contributions of any property to or for the

tax year. There are penalties for failure to file

year, the 10% limit is applied using the taxable

use of certain private foundations except for

these forms on time and for overstating the

income after taking into account any deduction

stock for which market quotations are readily

pension plan deduction. See sections 6652(e)

for the NOL.

available (section 170(e)(5)).

and 6662(f).

To figure the amount of any remaining NOL

Larger deduction. A larger deduction is

Form 5500, Annual Return/Report of

carryover to later years, taxable income must

allowed for certain contributions of:

•

Employee Benefit Plan. File this form for a plan

be modified (see section 172(b)). To the extent

Inventory and other property to certain

that is not a one-participant plan (see below).

that contributions are used to reduce taxable

organizations for use in the care of the ill,

income for this purpose and increase an NOL

needy, or infants (see section 170(e)(3) and

Form 5500-EZ, Annual Return of

carryover, a contributions carryover is not

One-Participant (Owners and Their Spouses)

Regulations section 1.170A-4A);

•

allowed. See section 170(d)(2)(B).

Retirement Plan. File this form for a plan that

Scientific equipment used for research to

only covers the owner (or the owner and his or

institutions of higher learning or to certain

Substantiation requirements. Generally,

scientific research organizations (other than by

her spouse) but only if the owner (or the owner

no deduction is allowed for any contributions of

personal holding companies and service

and his or her spouse) owns the entire

$250 or more unless the REIT gets a written

organizations) (see section 170(e)(4)); and

business.

acknowledgment from the donee organization

•

Computer technology and equipment for

that shows the amount of cash contributed,

Travel, meals, and entertainment. Subject

educational purposes.

describes any property contributed, and gives

to limitations and restrictions discussed below,

a description and a good faith estimate of the

Contributions of computer technology

a REIT can deduct ordinary and necessary

value of any goods or services provided in

travel, meals, and entertainment expenses

and equipment for educational purposes. A

return for the contribution or states that no

paid or incurred in its trade or business. Also,

REIT may take an increased deduction under

goods or services were provided in return for

section 170(e)(6) for qualified contributions of

special rules apply to deductions for gifts,

the contribution. The acknowledgment must be

computer technology or equipment for

skybox rentals, luxury water travel, convention

obtained by the due date (including extensions)

educational purposes. The term “Computer

expenses, and entertainment tickets. See

of the REIT’s return, or, if earlier, the date the

technology or equipment” means computer

section 274 and Pub. 463 for more details.

return is filed. Do not attach the

software, computer or peripheral equipment,

Travel. A REIT cannot deduct travel

acknowledgment to the tax return, but keep it

and fiber optic cable related to computer use.

expenses of any individual accompanying a

with the REIT’s records. These rules apply in

A contribution is a qualified contribution if:

corporate officer or employee, including a

•

addition to the filing requirements for Form

spouse or dependent of the officer or

It is made to an eligible donee (see below);

•

8283, Noncash Charitable Contributions,

employee, unless:

Substantially all of the donee property’s use

•

described below.

That individual is an employee of the REIT,

is:

For more information on substantiation and

and

1. Related to the purpose or function of the

•

recordkeeping requirements, see section 170

His or her travel is for a bona fide business

donee,

and the related regulations and Pub. 526,

purpose and would otherwise be deductible by

2. For use within the United States, and

Charitable Contributions.

that individual.

3. For educational purposes.

•

Contributions of property other than

Meals and entertainment. Generally, the

The contribution is made not later than 3

cash. If a REIT (other than a closely held

years after the date the taxpayer acquired or

REIT can deduct only 50% of the amount

REIT, see below) contributes property other

substantially completed the construction of the

otherwise allowable for meals and

than cash and claims over a $500 deduction

entertainment expenses paid or incurred in its

property;

•

for the property, it must attach a schedule to

trade or business. In addition (subject to

The original use of the property is by the

the return describing the kind of property

exceptions under section 274(k)(2)):

donor or the donee;

•

contributed and the method used to determine

Meals must not be lavish or extravagant;

The property is not transferred by the donee

•

its fair market value (FMV). A closely held

for money, service, or other property, except

A bona fide business discussion must occur

REIT must complete Form 8283 and attach it

for shipping, transfer, and installation costs;

during, immediately before, or immediately

•

to its return. All other REITs generally must

after the meal; and

The property fits productively into the

•

complete and attach Form 8283 to their returns

An employee of the REIT must be present at

donee’s education plan; and

•

for contributions of property (other than money)

the meal.

The property meets standards, if any, that

if the total claimed deduction for all property

may be prescribed by future regulations to

See section 274(n)(3) for a special rule that

contributed was more than $5,000.

assure it meets minimum functionality and

applies to expenses for meals consumed by

suitability for educational purposes.

If the REIT made a “qualified conservation

individuals subject to the hours of service limits

contribution” under section 170(h), also include

Eligible donee. The term “eligible donee”

of the Department of Transportation.

the FMV of the underlying property before and

means:

Membership dues. The REIT can deduct

•

after the donation, as well as the type of legal

An educational organization that normally

amounts paid or incurred for membership dues

interest contributed, and describe the

maintains a regular faculty and curriculum and

in civic or public service organizations,

conservation purpose benefited by the

has a regularly enrolled body of pupils in

professional organizations (such as bar and

donation. If a contribution carryover is included,

attendance at the place where its educational

medical associations), business leagues, trade

show the amount and how it was determined.

activities are regularly conducted,

associations, chambers of commerce, boards

•

A section 501(c)(3) entity organized primarily

Contributions after June 3, 2004. For

of trade, and real estate boards. However, no

for purposes of supporting elementary and

contributions of certain property made after

deduction is allowed if a principal purpose of

June 3, 2004, a REIT must file Form 8283 and

secondary education, or

the organization is to entertain, or provide

•

get a qualified appraisal if claiming a deduction

A public library (as described in section

entertainment facilities for, members or their

of more than $5,000. Do not attach the

170(e)(6)(B)(i)(III)).

guests. In addition, a REIT cannot deduct

appraisal to the tax return unless claiming a

Exceptions. The following exceptions

membership dues in any club organized for

deduction of more than $500,000 or, for art, a

apply to the above rules for computer

business, pleasure, recreation, or other social

deduction of $20,000 or more. See Form 8283.

technology and equipment:

purpose. This includes country clubs, golf and

•

Contributions of used vehicles. Special

Contributions to private foundations may

athletic clubs, airline and hotel clubs, and clubs

rules apply to contributions after 2004 of used

qualify if the foundation contributes the

operated to provide meals under conditions

motor vehicles, boats, or airplanes with a

property to an eligible donee within 30 days

favorable to business discussion.

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Instructions For Form 1120-Reit - 2004 Page 8

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