Instructions For Form 1120-Reit - 2003 (Page 2 of 12) in pdf

REIT does not have to meet this requirement

by the REIT. See section 856(l) for details,

signature, and give a copy of the return to the

until its 2nd tax year.)

including certain restrictions on the type of

taxpayer.

•

Would otherwise be taxed as a domestic

business activities a TRS may perform. Also,

Paid Preparer Authorization

corporation.

not more than 20% of the fair market value of a

•

Must be neither a financial institution

REIT’s total assets may be securities of one or

If the REIT wants to allow the IRS to discuss its

(referred to in section 582(c)(2)), nor a

more TRS (see section 856(c)(4) for details).

2003 tax return with the paid preparer who

subchapter L insurance company.

Transactions between a TRS and its

•

signed it, check the “Yes” box in the signature

Cannot be closely held, as defined in section

associated REIT must be at arm’s length. A

area of the return. This authorization applies

856(h). (The REIT does not have to meet this

REIT may be subject to a 100% excise tax to

only to the individual whose signature appears

requirement until its 2nd tax year).

the extent it improperly allocates income and

in the “Paid Preparer’s Use Only” section of the

deductions between the REIT and the TRS

Important: If a REIT meets the requirement

return. It does not apply to the firm, if any,

(see section 857(b)(7) for details). Additional

for ascertaining actual ownership (see

shown in that section.

limitations on transactions between a TRS and

Regulations section 1.857-8 for details), and

If the “Yes” box is checked, the REIT is

its associated REIT include:

did not know (after exercising reasonable

•

authorizing the IRS to call the paid preparer to

Limitations on income from a TRS that may

diligence), or have reason to know, that it was

answer any questions that may arise during the

be treated as rents from real property by the

closely held, it will be treated as meeting the

processing of its return. The REIT is also

REIT (see section 856(d)(8)).

requirement that it is not closely held.

•

authorizing the paid preparer to:

Limitations on a TRS’s deduction for interest

Other requirements

•

Give the IRS any information that is missing

paid to its associated REIT (see section

•

The gross income and diversification of

from the return,

163(j)).

investment requirements of section 856(c)

•

Call the IRS for information about the

To elect to have an eligible corporation

must be met.

processing of the REIT’s return or the status of

•

treated as a TRS, the corporation and the REIT

The organization must:

any related refund or payment(s), and

must jointly file Form 8875, Taxable REIT

•

1. Have been treated as a REIT for all tax

Respond to certain IRS notices that the

Subsidiary Election.

years beginning after February 28, 1986, or

REIT has shared with the preparer about math

2. Had, at the end of the tax year, no

errors, offsets, and return preparation. The

When To File

accumulated earnings and profits from any tax

notices will not be sent to the preparer.

Generally, a REIT must file its income tax

year that it was not a REIT.

The REIT is not authorizing the paid

return by the 15th day of the 3rd month after

Note: For this purpose, distributions are

preparer to receive any refund check, bind the

the end of its tax year. A new REIT filing a

treated as made from the earliest earnings and

REIT to anything (including any additional tax

short period return must generally file by the

profits accumulated in any non-REIT tax year.

liability), or otherwise represent the REIT

15th day of the 3rd month after the short period

See section 857(d)(3).

before the IRS. If the REIT wants to expand

ends. A REIT that has dissolved must

•

The organization must adopt a calendar tax

the paid preparer’s authorization, see Pub.

generally file by the 15th day of the 3rd month

year unless it first qualified for REIT status

947, Practice Before the IRS and Power of

after the date it dissolved.

before October 5, 1976.

Attorney.

•

If the due date falls on a Saturday, Sunday,

The deduction for dividends paid (excluding

The authorization cannot be revoked.

or legal holiday, the REIT may file on the next

net capital gain dividends, if any) must equal or

However, the authorization will automatically

business day.

exceed:

end no later than the due date (without regard

Private delivery services. REITs can use

1. 90% of the REIT’s taxable income

to extensions) for filing the REIT’s 2004 tax

certain private delivery services designated by

(excluding the deduction for dividends paid and

return.

the IRS to meet the “timely mailing as timely

any net capital gain); plus

filing/paying” rule for tax returns and payments.

2. 90% of the excess of the REIT’s net

Other Forms and Statements

The most recent list of designated private

income from foreclosure property over the tax

delivery services was published by the IRS in

That May Be Required

imposed on that income by section

September 2002.

857(b)(4)(A); less

The REIT may have to file some of the

3. Any excess noncash income as

The list includes only the following.

following forms. See the applicable forms for

•

determined under section 857(e).

Airborne Express (Airborne): Overnight Air

more information.

Express Service, Next Afternoon Service, and

See sections 856, 857, and the related

Form W-2, Wage and Tax Statement, and

Second Day Service.

regulations for details and exceptions.

•

Form W-3, Transmittal of Wage and Tax

DHL Worldwide Express (DHL): DHL “Same

Statements. Use these forms to report wages,

Termination of Election

Day” Service, and DHL USA Overnight.

•

tips, and other compensation, and withheld

Federal Express (FedEx): FedEx Priority

The election to be treated as a REIT remains in

income, social security, and Medicare taxes for

Overnight, FedEx Standard Overnight, FedEx

effect until terminated or revoked. It terminates

employees.

2Day, FedEx International Priority, and FedEx

automatically for any tax year in which the

International First.

Form W-2G, Certain Gambling Winnings.

corporation, trust, or association is not a

•

United Parcel Service (UPS): UPS Next Day

Report gambling winnings from horse racing,

qualified REIT.

Air, UPS Next Day Air Saver, UPS 2nd Day

dog racing, jai alai, lotteries, keno, bingo, slot

The organization may revoke the election

Air, UPS 2nd Day Air A.M., UPS Worldwide

machines, sweepstakes, wagering pools, etc.

for any tax year after the 1st tax year the

Express Plus, and UPS Worldwide Express.

Form 926, Return by a U.S. Transferor of

election is effective by filing a statement with

The private delivery service can tell you

Property to a Foreign Corporation, is filed to

the service center where it files its income tax

how to get written proof of the mailing date.

report certain transfers to foreign corporations

return. The statement must be filed on or

under section 6038B.

Extension. File Form 7004, Application for

before the 90th day after the 1st day of the tax

Automatic Extension of Time To File

year for which the revocation is to be effective.

Form 940 or Form 940-EZ, Employer’s

Corporation Income Tax Return, to request a

Annual Federal Unemployment (FUTA) Tax

The statement must include the following:

•

6-month extension of time to file.

The name, address, and employer

Return, is filed to report annual Federal

unemployment (FUTA) tax if the REIT either

identification number of the organization;

Who Must Sign

•

The tax year for which the election was

(a) paid wages of $1,500 or more in any

calendar quarter in 2002 or 2003 or (b) had

made;

The return must be signed and dated by the

•

one or more employee who worked for the

A statement that the organization (according

president, vice president, treasurer, assistant

to section 856(g)(2)) revokes its election under

REIT for at least some part of a day in any 20

treasurer, chief accounting officer, or any other

or more different weeks in 2002 or 20 or more

section 856(c)(1) to be a REIT; and

corporate officer (such as tax officer)

•

The signature of an official authorized to sign

different weeks in 2003.

authorized to sign. Receivers, trustees, or

the income tax return of the organization.

assignees must also sign and date any return

Form 941, Employer’s Quarterly Federal Tax

filed on behalf of a REIT.

The organization may not make a new

Return, is filed to report income tax withheld

election to be taxed as a REIT during the 4

and employer and employee social security

If an employee of the REIT completes Form

years following the 1st year for which the

and Medicare taxes. Also, see Trust fund

1120-REIT, the paid preparer’s space should

termination or revocation is effective. See

recovery penalty on page 5.

remain blank. Anyone who prepares Form

section 856(g)(4) for exceptions.

1120-REIT but does not charge the REIT

Form 945, Annual Return of Withheld Federal

should not complete that section. Generally,

Income Tax. File Form 945 to report income

Taxable REIT Subsidiaries

anyone who is paid to prepare the return must

tax withheld from nonpayroll distributions or

sign it and fill in the “Paid Preparer’s Use Only”

A REIT may own up to 100% of the stock in

payments, such as the following income:

•

area.

one or more taxable REIT subsidiaries (TRS).

Pensions, annuities, IRAs, military

A TRS must be a corporation (other than a

The paid preparer must complete the

retirement, gambling winnings, and

•

REIT) and may provide services to the REIT’s

required preparer information, sign the return in

Indian gaming profits and backup

tenants without disqualifying the rent received

the space provided for the preparer’s

withholding.

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Instructions For Form 1120-Reit - 2003 Page 2

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