Instructions For Form 1120-Reit - 2016 (Page 16 of 19) in pdf

“Section 197” and the amount. See

gains tax under section 1374 unless the C

Recapture of low-income housing

section 197(f)(9)(B)(ii).

corporation elects deemed sale treatment

credit. If the REIT disposed of property

on the transferred property. Generally, if

(or there was a reduction in the qualified

Line 3a–Foreign Tax Credit

the C corporation does not make this

basis of the property) for which it took the

To find out when a REIT can claim the

election for tax years beginning in 2016,

low-income housing credit and the REIT

foreign tax credit for payment of income

the REIT must pay tax on the net

did not follow the procedures that would

tax to a foreign country or U.S.

recognized built-in gain during the 5-year

have prevented recapture of the credit, it

possession, see Form 1118, Foreign Tax

period beginning on its first day as a REIT

may owe a tax. See Form 8611,

Credit–Corporations.

or the day it acquired the property.

Recapture of Low-Income Housing Credit.

Line 3b–Credit from Form 8834

Interest due under the look-back meth-

A REIT’s recognition period for

Enter any qualified electric vehicle passive

ods. If the REIT used the look-back

conversion transactions that occur on or

activity credits from prior years allowed for

method under section 460(b)(2) for certain

after August 8, 2016 and on or before

long-term contracts, use Form 8697,

the current tax year from Form 8834,

February 17, 2017, is the 10-year period

Interest Computation Under the

Qualified Electric Vehicle Credit, line 7.

beginning on its first day as a REIT or the

Look-Back Method for Completed

day the REIT acquired the property, as

Line 3c–General Business

Long-Term Contracts, to figure the interest

described in Temporary Regulations

Credit

the REIT may have to include. See the

section 1.337(d)-7(T)(b)(2)(iii), as in effect

Instructions for Form 8697.

The REIT is required to file Form 3800,

on August 8, 2016. However, under the

General Business Credit, to claim most

provisions of final Regulations section

The REIT may also have to include

business credits. For a list of allowable

interest due under the look-back method

1.337(d)-7(g)(2)(iii), a REIT may choose to

credits, see Form 3800. Enter the

apply a 5-year recognition period to

for property depreciated under the income

allowable credit from Part II, line 38, of

conversion transactions that occur on or

forecast method. Use Form 8866, Interest

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

after August 8, 2016 and on or before

Computation Under the Look-Back

applicable credit form and its instructions.

February 17, 2017. See final Regulations

Method for Property Depreciated Under

See Form 3800 for a complete listing of

section 1.337(d)-7 and Temporary

the Income Forecast Method, to figure any

general business credits.

Regulations section 1.337(d)-7T for

interest due or to be refunded. See the

details.

Instructions for Form 8866.

Line 3d–Other Credits

Other. Additional taxes and interest

Include any allowable credits not reported

For conversion transactions on or after

amounts can be included in the total

above, such as the Credit for Prior Year

June 7, 2016, that follow a related section

entered on line 7. Check the box for

Minimum Tax–Corporations (Form 8827).

355 distribution, the C corporation is

“Other” if the REIT includes any of the

Attach a statement that identifies the type

treated as making an election to recognize

taxes and interest discussed below. See

and amount for each credit. Attach the

gain and loss as if it had sold all of the

How to report, for the line 7 instructions for

applicable credit form to the return.

converted property to an unrelated party at

details on reporting these amounts on an

fair market value on the deemed sale date.

Bond credits from Form 8912. Enter

attached schedule.

And, for a conversion that occurs before

the allowable credits from Form 8912,

Recapture of Indian employment credit.

June 7, 2016, followed by a related

Credit to Holders of Tax Credit Bonds,

Generally, if an employer terminates the

section 355 distribution after June 7, 2016,

line 18.

employment of a qualified employee less

a REIT, for which a deemed sale election

than 1 year after the date of initial

Line 5–Personal Holding

has not been made, recognizes any

employment, any Indian employment

remaining unrecognized built-in gains and

Company Tax

credit allowed for a prior tax year because

losses resulting from the conversion

A REIT is taxed as a personal holding

of wages paid or incurred to that employee

transaction (after taking into account the

company under section 542 if:

must be recaptured. For details, see Form

impact of section 1374 in the interim

At least 60% of its adjusted ordinary

8845 and section 45A.

period). See Regulations sections

Recapture of new markets credit (see

gross income for the tax year is personal

1.337(d)-7 and 1.337(d)-7T for details.

Form 8874 and Form 8874-B).

holding company income, and

At any time during the last half of the tax

Recapture of employer-provided

Recognized built-in gains and losses

year more than 50% in value of its

childcare facilities and services credit (see

generally retain their character (for

Form 8882).

outstanding stock is owned, directly or

example, ordinary income or capital gain)

Interest due on deferred tax attributable

indirectly, by five or fewer individuals.

and are treated the same as other gains or

to (a) installment sales of certain

losses of the REIT. The REIT's tax on net

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

timeshares and residential lots (section

recognized built-in gain is treated as a loss

Personal Holding Company (PHC) Tax,

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

incurred by the REIT during the same tax

for definitions and details on how to figure

installment obligations (section 453A(c)).

year (see the instructions for line i of the

the tax.

Interest due on deferred gain (section

Built-in Gains Tax Worksheet, later). See

1260(b)).

Line 6–Other Taxes

Regulations section 1.337(d)-7 for details.

Interest due under section 1291(c)(3).

Include any of the following taxes and

See Form 8621 and the Instructions for

interest in the total on line 7. Check the

Different rules apply to elections to be a

Form 8621.

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

REIT and transfers of property in a

used to compute the total.

carryover basis transaction that occurred

Built-in Gains Tax

prior to January 2, 2002. For REIT

Recapture of investment credit. If the

elections and property transfers before

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

REIT disposed of investment credit

this date, the C corporation is subject to

a C corporation becomes property of a

property or changed its use before the end

deemed sale treatment on the transferred

REIT by either: (a) the qualification of the

of its useful life or recovery period, it may

property unless the REIT elects section

C corporation as a REIT; or (b) the

owe a tax. See Form 4255, Recapture of

1374 treatment. See Regulations section

transfer of such property to a REIT, then

Investment Credit, for details.

1.337(d)-6 for information on how to make

the REIT will be subject to the built-in

the election and figure the tax for REIT

-16-

Instructions For Form 1120-Reit - 2016 Page 16

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