Instructions For Form 1120-Reit - 2004 (Page 9 of 13) in pdf

Entertainment facilities. The REIT cannot

disposition with the profit or loss from the

in the REIT’s income. Attach Form 2439 to

deduct an expense paid or incurred for a

activity. If the REIT has a net loss, it may be

Form 1120-REIT.

facility (such as a yacht or hunting lodge) used

limited because of the at-risk rules.

Line 24g. Enter the credit from Form 4136,

for an activity usually considered

Treat any loss from an activity not allowed

Credit for Federal Tax Paid on Fuels, if the

entertainment, amusement, or recreation.

for the tax year as a deduction allocable to the

REIT qualifies to claim this credit. Attach Form

Amounts treated as compensation.

activity in the next tax year.

4136 to Form 1120-REIT.

Generally, the REIT may be able to deduct

Line 21a. Net operating loss deduction. A

Line 24h. Add the amounts on lines 24d

otherwise nondeductible meals, travel, and

REIT can use the net operating loss (NOL)

through 24g and enter the total on line 24h.

entertainment expenses if the amounts are

incurred in one tax year to reduce its taxable

Backup withholding. If the REIT had income

treated as compensation to the recipient and

income in another tax year.

tax withheld from any payments it received

reported on Form W-2 for an employee or on

Generally, a REIT may carry an NOL over

because, for example, it failed to give the payer

Form 1099-MISC for an independent

to each of the 20 years (15 years for NOLs

its correct EIN, include the amount withheld in

contractor.

incurred in tax years beginning before August

the total for line 24h. This type of withholding is

However, if the recipient is an officer,

6, 1997) following the year of loss. REITs are

called “Backup Withholding.” Show the amount

director, or beneficial owner (directly or

not permitted to carry back an NOL to any year

withheld in the blank space in the right-hand

indirectly) of more than 10% of any class of

preceding the year of the loss. In addition, an

column between lines 23 and 24h, and enter

stock, the deduction for otherwise

NOL from a year that is not a REIT year may

“Backup Withholding.”

nondeductible meals, travel, and entertainment

not be carried back to any year that is a REIT

Line 25. Estimated tax penalty. A REIT that

expenses incurred after October 22, 2004, is

year.

does not make estimated tax payments when

limited to the amount treated as compensation.

Enter on line 21a the total NOL carryovers

due may be subject to an underpayment

See section 274(e)(2).

from other tax years, but do not enter more

penalty for the period of underpayment.

Deduction for clean-fuel vehicles and

than the REIT’s taxable income. The REIT’s

Generally, a REIT is subject to the penalty if its

certain refueling property. Section 179A

taxable income for purposes of the NOL

tax liability is $500 or more and it did not timely

allows a deduction for part of the cost of

deduction is taxable income (line 20) reduced

pay the smaller of:

•

qualified clean-fuel vehicle property and

by the dividends paid deduction (line 21b) and

Its alternative minimum tax minus the credit

qualified clean-fuel vehicle refueling property

the section 857(b)(2)(E) deduction (line 21c). If

for Federal tax paid on fuels for 2004 as shown

placed in service during the year. For more

this amount is less than zero, an NOL

on the return or

information, see Pub. 535, Business Expenses.

•

deduction cannot be taken for the tax year.

Its prior year’s tax (computed in the same

Attach a schedule showing the computation of

Lobbying expenses. Generally, lobbying

manner). See section 6655 for details and

the NOL deduction. Also complete item 9 on

expenses are not deductible. These expenses

exceptions, including special rules for large

Schedule K.

include:

corporations.

•

Amounts paid or incurred in connection with

If capital gain dividends are paid during any

Use Form 2220, Underpayment of

influencing federal or state legislation (but not

tax year, the amount of the net capital gain for

Estimated Tax by Corporations, to see if the

local legislation) or

such tax year (to the extent of the capital gain

•

REIT owes a penalty and to figure the amount

Amounts paid or incurred in connection with

dividends) is excluded in determining:

of the penalty. Generally, the REIT does not

any communication with certain federal

1. The NOL for the tax year and

have to file this form because the IRS can

executive branch officials in an attempt to

2. The amount of the NOL of any prior tax

figure the amount of any penalty and bill the

influence the official actions or positions of the

year that may be carried over to any

REIT for it. However, even if it does not owe

officials. See Regulations section 1.162-29 for

succeeding tax year.

the penalty, the REIT must complete and

the definition of “influencing legislation.”

attach Form 2220 if the annualized income or

Carryover rules. The NOL for the current

Dues and other similar amounts paid to

adjusted seasonal installment method is used,

year is computed using the REIT’s taxable

certain tax-exempt organizations may not be

or the REIT is a large corporation computing its

income before it is reduced by the dividends

deductible. See section 162(e)(3). If certain

first required installment based on the prior

paid deduction. After the REIT applies the NOL

in-house lobbying expenditures do not exceed

year’s tax. See the Instructions for Form 2220

to the first tax year to which it may be carried,

$2,000, they are deductible. For information on

for the definition of a large corporation.

the taxable income of that year must be

contributions to charitable organizations that

If Form 2220 is attached, check the box on

modified (as described by section 172(b) and

conduct lobbying activities, see section

line 25, page 1, Form 1120-REIT, and enter

the modified rules for REITs in section

170(f)(9).

the amount of any penalty on this line.

172(d)(6)) to determine how much of the

For more information on other deductions

remaining loss may be carried to other years.

that may apply to corporations, see Pub. 535.

Although the current year NOL is computed

Line 20. Taxable income before NOL

Part II—Tax on Net Income

without regard to the dividends paid deduction,

deduction, total deduction for dividends

an NOL carryover from a prior year is applied

From Foreclosure Property

paid, and section 857(b)(2)(E) deduction.

to the current year using taxable income after it

Generally, special at-risk rules under section

is reduced by the dividends paid deduction.

Complete Part II only if the gross income,

465 apply to closely held corporations engaged

The NOL amounts carried forward by the REIT

gains, losses, and deductions from foreclosure

in any activity as a trade or business or for the

are not reduced by subsequent year dividends

property (defined in section 856(e)) result in

production of income. These REITs that are

paid deductions. See Example 1 in Regulations

net income. If an overall net loss results, report

closely held may have to adjust the amount on

section 1.172-5(a)(4).

the gross income, gains, losses, and

line 20.

deductions from foreclosure property on the

Special NOL rules apply when:

The at-risk rules do not apply to:

•

appropriate lines of Part I.

•

An ownership change occurs, the amount of

Holding real property placed in service by

the taxable income of a loss REIT that may be

Property may be treated as foreclosure

the taxpayer before 1987;

offset by the pre-change NOL carryovers is

•

property only if it meets the requirements of

Equipment leasing under sections 465(c)(4),

limited (see section 382 and the related

section 856(e) and the REIT elects to treat the

(5), and (6); or

•

regulations). A loss REIT must file an

property as foreclosure property in the year it

Any qualifying business of a qualified REIT

information statement with its income tax return

was acquired. The property continues to be

under section 465(c)(7).

for each tax year that certain ownership shifts

foreclosure property until the close of the 3rd

However, the at-risk rules do apply to the

occur (see Temporary Regulations section

tax year following the tax year in which the

holding of mineral property.

1.382-2T(a)(2)(ii) for details). See Regulations

REIT acquired it. For more information, see

section 1.382-6(b) for details on how to make

section 856(e). However, if the foreclosure

If the at-risk rules apply, adjust the amount

the closing-of-the-books election.

property is qualified health care property, it will

on this line for any section 465(d) losses.

•

A REIT acquires control of another REIT (or

cease to be foreclosure property as of the

These losses are limited to the amount for

acquires its assets in a reorganization), the

close of the 2nd year following the tax year the

which the REIT is at risk for each separate

amount of pre-acquisition losses that may

REIT acquired it (although the REIT may

activity at the close of the tax year. If the REIT

offset recognized built-in gains is limited (see

request one or more extensions to this

is involved in one or more activities, any of

section 384).

two-year grace period not to extend beyond the

which incurs a loss for the year, report the

6th year). See section 856(e)(6) for details.

losses for each activity separately. Attach Form

Tax and Payments

6198, At-Risk Limitations, showing the amount

This election must be made by the due

at risk and gross income and deductions for

Line 24b. Estimated tax payments. Enter

date for filing Form 1120-REIT (including

the activities with the losses.

any estimated tax payments the REIT made for

extensions). To make the election, attach a

the tax year.

If the REIT sells or otherwise disposes of

statement that:

•

an asset or its interest (either total or partial) in

Line 24f. Enter the credit (from Form 2439) for

Indicates that the election under section

an activity to which the at-risk rules apply,

the REIT’s share of the tax paid by a regulated

856(e) is being made;

•

determine the net profit or loss from the activity

investment company or another REIT on

Identifies the property to which the election

by combining the gain or loss on the sale or

undistributed long-term capital gains included

applies;

-9-

Instructions For Form 1120-Reit - 2004 Page 9

Related Articles

Related forms

Related Categories