Instructions For Form 1120-Reit - 2001 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.

Changes To Note

Photographs of Missing

Contents

Page

Changes To Note . . . . . . . . . . . . . . . . 1

The Ticket to Work and Work Incentives

Children

Photographs of Missing Children . . . . 1

Improvement Act of 1999 made changes

The Internal Revenue Service is a proud

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

to the tax law for real estate investment

partner with the National Center for

How To Get Forms and

trusts (REITs). In general, these changes

Missing and Exploited Children.

Publications . . . . . . . . . . . . . . . . . . 2

are effective for tax years beginning after

Photographs of missing children selected

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

December 31, 2000. Some of these

by the Center may appear in instructions

changes are discussed below.

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

on pages that would otherwise be blank.

•

The REIT minimum dividend

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

You can help bring these children home

distribution requirement has changed

General Requirements to Qualify

by looking at the photographs and calling

from 95% to 90%. See page 2 for details.

as a REIT . . . . . . . . . . . . . . . . . . . . 2

1-800-THE-LOST (1-800-843-5678) if you

•

A REIT may own stock in a taxable

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

recognize a child.

REIT subsidiary (TRS). A TRS may

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

provide services to a REIT’s tenants

When To File . . . . . . . . . . . . . . . . . . . 2

Unresolved Tax Issues

without disqualifying the rents received by

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

If the REIT has attempted to deal with an

the REIT. See Taxable REIT

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

IRS problem unsuccessfully, it should

Subsidiaries on page 2 for details.

Where To File . . . . . . . . . . . . . . . . . . 3

•

contact the Taxpayer Advocate. The

The diversification tests of section

Other Forms, Returns,

Taxpayer Advocate independently

856(c) have changed. The changes

Schedules, and Statements

represents the REIT’s interests and

include a 10% valuation test for non-REIT

That May Be Required . . . . . . . . . 3-5

concerns within the IRS by protecting its

C corporation securities owned by the

rights and resolving problems that have

Assembling the Return . . . . . . . . . . . . 5

REIT and new exceptions for TRS and

not been fixed through normal channels.

Accounting Methods . . . . . . . . . . . . . . 5

certain other securities and a safe harbor

Accounting Periods . . . . . . . . . . . . . . 5

for straight debt. See section 856(c) for

While Taxpayer Advocates cannot

Rounding Off to Whole Dollars . . . . . . 5

details.

change the tax law or make a technical

•

Recordkeeping . . . . . . . . . . . . . . . . . . 5

Foreclosure property that is qualified

tax decision, they can clear up problems

Depository Method of Tax

health care property ceases to be

that resulted from previous contacts and

Payment . . . . . . . . . . . . . . . . . . . . 5

foreclosure property at the close of the

ensure that the REIT’s case is given a

Estimated Tax Payments . . . . . . . . . . 6

2nd year. An extension of the 2 year

complete and impartial review.

period may be granted not to extend

Interest and Penalties . . . . . . . . . . . . . 6

The REIT’s assigned personal

beyond the 6th year. See Part II — Tax

Specific Instructions . . . . . . . . . . . . 6

advocate will listen to its point of view and

on Net Income From Foreclosure

Period Covered . . . . . . . . . . . . . . . . . 6

will work with the REIT to address its

Property on page 11.

Name and Address . . . . . . . . . . . . . . 6

concerns. The REIT can expect the

•

The 15% REIT personal property rule

100%-owned Subsidiaries and

advocate to provide:

was changed to a fair market value

•

Personal Holding Companies . . . . . . 6

A “fresh look” at a new or on-going

comparison of property instead of

Employer Identification Number . . . . . . 6

problem.

adjusted basis. See Gross rents on

•

Date REIT Established . . . . . . . . . . . . 6

Timely acknowledgement.

page 7.

•

Total Assets . . . . . . . . . . . . . . . . . . . 7

The name and phone number of the

•

A new 100% excise tax may be

individual assigned to its case.

Final Return, Name Change,

•

imposed with regard to transactions

Updates on progress.

Address Change, or Amended

•

between a REIT and its TRS. See the

Timeframes for action.

Return . . . . . . . . . . . . . . . . . . . . . . 7

•

instructions for Schedule J, line 3e, on

Speedy resolution.

Part I — Real Estate Investment

•

page 12 for details.

Courteous service.

Trust Taxable Income . . . . . . . . . 7-11

Other changes that affect the REIT

When contacting the Taxpayer

Part II — Tax on Net Income

include the following items.

Advocate, the REIT should provide the

From Foreclosure Property . . . . . . 11

•

The REIT may need to mail its return to

following information:

Part III — Tax for Failure To Meet

•

a different service center this year

The REIT’s name, address, and

Certain Source-of-Income

because the IRS has changed the filing

employer identification number (EIN).

Requirements . . . . . . . . . . . . . . . . 11

•

location for several areas. If an envelope

The name and telephone number of an

Part IV — Tax on Net Income

was received with the tax package,

authorized contact person and the hours

From Prohibited Transactions

. . . 11

please use it. Otherwise, see Where To

he or she can be reached.

•

Schedule A . . . . . . . . . . . . . . . . . . . 11

File on page 3.

The type of tax return and year(s)

•

Schedule J and Worksheet for

involved.

If the REIT wants to allow the IRS to

•

Members of a Controlled

A detailed description of the problem.

discuss its 2001 tax return with the paid

•

Group . . . . . . . . . . . . . . . . . . . 11-14

preparer who signed it, check the “Yes”

Previous attempts to solve the problem

Schedule K . . . . . . . . . . . . . . . . . . . 14

and the office that had been contacted.

box in the area where the officer of the

•

Schedule L . . . . . . . . . . . . . . . . . . . 15

REIT signed the return. See page 3 for

A description of the hardship the REIT

Schedule M – 1 . . . . . . . . . . . . . . . . . 15

details.

is facing (if applicable).

Cat. No. 64243J

Instructions For Form 1120-Reit - 2001

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