Instructions For Form 1120-Ric - 2016 (Page 11 of 16) in pdf

Travel. The RIC cannot deduct travel

timely filing tax returns during the length of

Line 28f. Credit from Form 2439. Enter

expenses of any individual accompanying

the agreement.

the credit from Form 2439 for the RIC's

a corporate officer or employee unless:

share of the tax paid by another RIC or a

If the installment agreement is

That individual is an employee of the

Real Estate Investment Trust (REIT) on

accepted, the RIC will be charged a fee

RIC, and

undistributed long-term capital gains

and it will be subject to penalties and

His or her travel is for a bona fide

included in the RIC's income. Attach Form

interest on the amount of tax not paid by

business purpose that would otherwise be

2439 to Form 1120-RIC.

the due date of the return.

deductible by that individual.

Line 28g. Credit for federal tax on

Meals and entertainment.

Part II—Tax on

fuels. Complete and attach Form 4136,

Generally, the RIC can deduct only 50% of

Credit for Federal Tax Paid on Fuels, if the

Undistributed Net Capital

the amount otherwise allowable for meals

RIC qualifies to take this credit.

Gain Not Designated

and entertainment expenses paid or

Line 28h. Refundable credit from Form

incurred in its trade or business.

Under Section 852(b)(3)

8827. If the RIC elected to claim certain

Amounts treated as compensation.

(D)

minimum tax credits instead of any

Generally, the RIC may be able to deduct

additional first-year special depreciation

otherwise nondeductible entertainment,

Line 1. Enter the net capital gain from

allowance for eligible property, see the

amusement or recreation expenses if the

line 17 of Schedule D (Form 1120).

instructions for Form 8827. Enter on

amounts are treated as compensation to

line 28h the amount from line 8c of Form

Line 2. Enter the capital gain dividends

the recipient and reported on Form W-2

8827, if applicable.

from Schedule A, line 8b.

for an employee or on Form 1099-MISC

The RIC must use the refundable

for an independent contractor.

Line 4. Capital gains tax. Enter on line 4

credits from Form 8827 to reduce

the amount of qualified timber gain

However, if the recipient is an officer,

any built-in gains tax derived from

included in the total entered on line 3, Part

CAUTION

director, beneficial owner (directly or

property that it owned when it was a C

indirectly), or other “specified individual ”

corporation, before the credits can be

(as defined in section 274(e)(2)(B) and

Qualified timber gain. For tax years

used to reduce RIC taxable income. See

Regulations section 1.274-9(b)), special

beginning in 2016, a RIC with both net

the instructions for line h of the Built-in

rules apply. See section 274(e)(2), and

capital gain and qualified timber gain (as

Gains Tax Worksheet Instructions, later.

Regulations sections 1.274-9 and

defined in section 1201(b)(2)) may apply a

1.274-10.

Line 28i. Backup withholding. If the

23.8% alternative tax rate to the portion of

RIC had income tax withheld from any

the RIC’s taxable income attributable to

See section 274 and Pub. 463 for a

payments it received, because, for

the qualified timber gain. The reduced

more extensive discussion of these topics.

capital gain is reported on line 6.

example, it failed to give the payer its

Lobbying expenses. Generally,

correct EIN, include the amount withheld

For purposes of line 4, Part II, qualified

lobbying expenses are not deductible.

in the total for line 28i. Enter the amount

timber gain is the sum of the gains over

Examples of non-deductible expenses

withheld and the words “Backup

the loses described in section 631(a) and

include:

Withholding” in the blank space above the

(b). Only timber held more than 15 years

Amounts paid or incurred in connection

line 28i.

can be included in the determination of

with influencing federal or state legislation

qualified timber gain.

Line 29. Estimated tax penalty. A RIC

(but not local legislation) or

that does not make estimated tax

Amounts paid or incurred in connection

See sections 1201(b) and 631(a) for

payments when due may be subject to an

with any communication with certain

more information.

underpayment penalty for the period of

federal executive branch officials in an

underpayment. See the instructions for

attempt to influence the official actions or

Schedule A—Deduction

Form 2220, Underpayment of Estimated

positions of the officials. See Regulations

for Dividends Paid

Tax by Corporations, for more information.

section 1.162-29 for the definition of

“influencing legislation.”

Line 30. Amount owed. If the RIC

Column (a) is used to determine the

Dues and other similar amounts paid to

cannot pay the full amount of tax owed, it

deduction for dividends paid resulting from

certain tax-exempt organizations may not

can apply for an installment agreement

income derived from ordinary dividends.

be deductible. See section 162(e)(3).

online. The RIC can apply for an

Certain in-house lobbying expenditures

Column (b) is used to determine the

installment agreement online if:

that do not exceed $2,000 are deductible.

deduction for dividends paid resulting from

it cannot pay the full amount shown on

income derived from capital gain

line 30,

For more information on other

dividends.

the total amount owed is $25,000 or

deductions that may apply to RICs, see

less, and

Pub. 535.

Section 561 (taking into account

the RIC can pay the liability in full in 24

sections 852(b)(7), 852(c)(3)(B), and

Line 25a. Deductions for dividends

months.

855(a)) determines the deduction for

paid. Enter the amount from Schedule A,

To apply using the Online Payment

dividends paid. Do not take into account

line 8a.

Agreement Application, go to irs.gov,

exempt-interest dividends defined in

under “Tools,” then click on “Online

Line 25b. Section 851(d)(2) and sec-

section 852(b)(5) or any amount reported

Payment Agreement”.

tion 851(i) deductions. Enter the

for the tax year on Form 2438, line 9b. See

amount from Schedule J, line 2c.

section 852(b)(8) and Regulations section

Under an installment agreement, the

1.852-11 for definitions and information on

RIC can pay what it owes in monthly

Tax and Payments

post-October currency or capital losses.

installments. There are certain conditions

that must be met to enter into and

Line 28b. Estimated tax payments.

Line 3. Dividends, both ordinary and

maintain an installment agreement, such

Enter any estimated tax payments the RIC

capital gain, declared and payable to

as paying the liability within 24 months

made for the tax year.

shareholders of record in October,

and making all required deposits and

November, or December are treated as

-11-

Instructions For Form 1120-Ric - 2016 Page 11

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