Instructions For Form 1120-Reit - 2011 (Page 14 of 16) in pdf

Line 3c–General Business

Tax – Corporations. The REIT must file

Other. Additional taxes and interest

Form 4626 if its taxable income (loss)

amounts can be included in the total

Credit

combined with these adjustments and tax

entered on line 7. Check the box for

The REIT is required to file Form 3800,

preference items is more than the smaller

“Other” if the REIT includes any of the

General Business Credit, to claim most

of:

taxes and interest discussed below. See

business credits. For a list of allowable

•

$40,000 or

How to report, for the line 7 instructions

credits, see Form 3800. Enter the

•

The REIT’s allowable exemption

for details on reporting these amounts on

allowable credit from Part II, line 38, of

amount (from Form 4626).

an attached schedule.

Form 3800, on line 3c. Also, see the

1. Recapture of qualified electric

For this purpose, taxable income does

applicable credit form and its instructions.

not include the NOL deduction. See Form

vehicle (QEV) credit. The REIT must

See Form 3800 for a complete listing of

4626 for details.

recapture part of the QEV credit it claimed

general business credits.

in a prior year if, within 3 years of the date

Exemption for small corporations.

Line 3d–Other credits

the vehicle was placed in service, it

A REIT is treated as a small corporation

ceases to qualify for the credit. See

exempt from the AMT for its tax year

Include any allowable credits not reported

Regulations section 1.30-1 for details on

beginning in 2011 if that year is the

above, such as the Credit for Prior Year

how to figure the recapture.

REIT’s first tax year in existence

Minimum Tax – Corporations (Form 8827).

2. Recapture of Indian employment

(regardless of its gross receipts) or:

Attach a statement that identifies the type

credit. Generally, if an employer

and amount for each credit. Attach the

1. It was treated as a small

terminates the employment of a qualified

applicable credit form to the return.

corporation exempt from the AMT for all

employee less than 1 year after the date

prior tax years beginning after 1997 and

Bond credits from Form 8912. Enter

of initial employment, any Indian

2. Its average annual gross receipts

the allowable credits from Form 8912,

employment credit allowed for a prior tax

for the 3-year tax period (or portion

Credit to Holders of Tax Credit Bonds,

year because of wages paid or incurred to

thereof during which the REIT was in

line 12.

that employee must be recaptured. For

existence) ending before its tax year

details, see Form 8845 and section 45A.

Line 5–Personal Holding

beginning in 2011 did not exceed $7.5

3. Recapture of new markets credit

Company Tax

million ($5 million if the REIT had only 1

(see Form 8874).

prior tax year).

A REIT is taxed as a personal holding

4. Recapture of employer-provided

company under section 542 if:

childcare facilities and services credit

For more details, see the Instructions

•

At least 60% of its adjusted ordinary

(see Form 8882).

for Form 4626.

gross income for the tax year is personal

5. Interest due on deferred tax

Line 2h–Income Tax

holding company income, and

attributable to (a) installment sales of

•

At any time during the last half of the

certain timeshares and residential lots

Deferred tax under section 1291. If the

tax year more than 50% in value of its

(section 453(l)(3)) and (b) certain

REIT was a shareholder in a passive

outstanding stock is owned, directly or

nondealer installment obligations (section

foreign investment company (PFIC) and

indirectly, by five or fewer individuals.

453A(c)).

received an excess distribution or

6. Interest due on deferred gain

See Schedule PH (Form 1120), U.S.

disposed of its investment in the PFIC

(section 1260(b)).

Personal Holding Company (PHC) Tax,

during the year, it must include the

for definitions and details on how to figure

increase in taxes due under section

the tax.

Built-in Gains Tax

1291(c)(2) (from Form 8621, Part IV, line

11e) in the total for line 2h. On the dotted

If, on or after January 2, 2002, property of

Line 6–Other Taxes

line to the left of line 2h, enter “Section

a C corporation becomes property of a

Include any of the following taxes and

1291” and the amount.

REIT by either: (a) the qualification of the

interest in the total on line 7. Check the

Do not include on line 2h any interest

C corporation as a REIT; or (b) the

appropriate box(es) for the form, if any,

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

transfer of such property to a REIT, then

used to compute the total.

show the amount of interest owed in the

the REIT will be subject to the built-in

Recapture of investment credit. If the

bottom margin of page 1, Form

gains tax under section 1374 unless the C

REIT disposed of investment credit

1120-REIT, and enter “Section 1291

corporation elects deemed sale treatment

property or changed its use before the

interest.”

on the transferred property. If the C

end of its useful life or recovery period, it

corporation does not make this election,

See the Instructions for Form 8621,

may owe a tax. See Form 4255,

the REIT must pay tax on the net

Part IV, lines 11e and 11f.

Recapture of Investment Credit, for

recognized built-in gain during the

Additional tax under section 197(f). A

details.

10-year period beginning on its first day

corporation that elects to pay tax on the

as a REIT or the day it acquired the

Recapture of low-income housing

gain from the sale of an intangible under

property (for tax years beginning in 2011,

credit. If the REIT disposed of property

the related person exception to the

see the Built-in Gains Tax Worksheet

(or there was a reduction in the qualified

anti-churning rules should include any

Instructions below, for an exception).

basis of the property) for which it took the

additional tax due under section

low-income housing credit, it may owe a

197(f)(9)(B) in the total for line 2h. On the

Recognized built-in gains and losses

tax. See Form 8611, Recapture of

dotted line next to line 2h, enter “Section

generally retain their character (for

Low-Income Housing Credit.

197” and the amount. For more

example, ordinary income or capital gain)

information, see Pub. 535.

and are treated the same as other gains

Interest due under the look-back

or losses of the REIT. The REIT’s tax on

methods. If the REIT used the look-back

Line 3a–Foreign Tax Credit

net recognized built-in gain is treated as a

method for certain long-term contracts,

To find out when a REIT can claim the

loss incurred by the REIT during the

see Form 8697, Interest Computation

foreign tax credit for payment of income

same tax year (see the instructions for

Under the Look-Back Method for

tax to a foreign country or U.S.

line i of the Built-in Gains Tax Worksheet

Completed Long-Term Contracts, for

possession, see Form 1118, Foreign Tax

on this page). See Regulations section

information on figuring the interest the

Credit – Corporations.

1.337(d)-7 for details.

REIT may have to include.

Line 3b–Credit from Form 8834,

The REIT may also have to include

Different rules apply to elections to be

line 30

interest due under the look-back method

a REIT and transfers of property in a

Enter any qualified electric vehicle

for property depreciated under the income

carryover basis transaction that occurred

passive activity credits from prior years

forecast method. See Form 8866, Interest

prior to January 2, 2002. For REIT

allowed for the current tax year from Form

Computation Under the Look-Back

elections and property transfers before

8834, Qualified Plug-In Electric and

Method for Property Depreciated Under

this date, the C corporation is subject to

Electric Vehicle Credit, line 30.

the Income Forecast Method.

deemed sale treatment on the transferred

-14-

Instructions For Form 1120-Reit - 2011 Page 14

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