Instructions For Form 1120-Reit - 2016 (Page 18 of 19) in pdf

group and the parent corporation of

An individual who is a citizen or resident

Stock in a mutual fund or other RIC that

another.

of a U.S. possession (but who is not a

distributed exempt-interest dividends

U.S. citizen or resident).

during the tax year of the REIT.

Note. If the REIT is an “excluded

A foreign partnership.

Line 24. Adjustments to shareholders'

member” of a controlled group (see

A foreign corporation.

equity. Examples of adjustments to

section 1563(b)(2)), it is still considered a

Any foreign estate or trust within the

report on this line include:

member of a controlled group for this

meaning of section 7701(a)(31).

Unrealized gains and losses on

purpose.

A foreign government (or one of its

securities held “available for sale.”

agencies or instrumentalities) if it is

Parent-subsidiary controlled group.

Foreign currency translation

engaged in the conduct of a commercial

The term “parent-subsidiary controlled

adjustments.

activity as described in section 892.

group” means one or more chains of

The excess of additional pension

corporations connected through stock

Owner's country. For individuals, the

liability over unrecognized prior service

ownership (section 1563(a)(1)). Both of

term “owner's country” means the country

cost.

the following requirements must be met:

of residence. For all others, it is the

Guarantees of employee stock (ESOP)

country where incorporated, organized,

debt.

1. At least 80% of the total combined

created, or administered.

Compensation related to employee

voting power of all classes of voting stock

stock award plans.

entitled to vote or at least 80% of the total

Requirement to file Form 5472. If the

value of all classes of stock of each

If the total adjustment to be entered on

REIT checked “Yes” to line 5, it may have

corporation in the group (except the

line 24 is a negative number, enter the

to file Form 5472. Generally, a 25%

parent) must be owned by one or more of

amount in parentheses.

foreign-owned corporation that had a

the other corporations in the group and

reportable transaction with a foreign or

2. The common parent must own at

domestic related party during the tax year

Schedule M-1

least 80% of the total combined voting

must file Form 5472.

power of all classes of stock entitled to

Reconciliation of Income (Loss)

See Form 5472 for filing instructions

vote or at least 80% of the total value of all

and penalties for failure to file.

per Books With Income per

classes of stock of one or more of the

Item 8

Return

other corporations in the group. Stock

owned directly by other members of the

Tax-exempt interest. Show any

Line 5c. Travel and entertainment.

group is not counted when computing the

tax-exempt interest received or accrued.

Include any of the following:

voting power or value.

Include any exempt-interest dividends

Meals and entertainment not deductible

received as a shareholder in a mutual fund

under section 274(n).

See section 1563(d)(1) for the

or other RIC.

Expenses for the use of an

definition of “stock” for purposes of

entertainment facility.

determining stock ownership above.

Item 9

The part of business gifts over $25.

Question 5

Enter the amount of the net operating loss

Expenses of an individual over $2,000,

(NOL) carryover to the tax year from prior

Check the “Yes” box if one foreign person

which are allocable to conventions on

years, even if some of the loss is used to

owned at least 25% of (a) the total voting

cruise ships.

offset income on this return. The amount

power of all classes of stock of the REIT

Employee achievement awards over

to enter is the total of all NOLs generated

entitled to vote, or (b) the total value of all

$400.

in prior years but not used to offset income

classes of stock of the REIT.

The cost of entertainment tickets over

in a tax year prior to 2016. Do not reduce

face value (also subject to 50% limit under

The constructive ownership rules of

the amount by any NOL deduction

section 274(n)).

section 318 apply in determining if a REIT

reported on line 21a.

The cost of skyboxes over the face

is foreign owned. See section 6038A(c)(5)

value of nonluxury box seat tickets.

and the related regulations.

The part of luxury water travel not

Schedule L–Balance

Enter on line 5a the percentage owned

deductible under section 274(m).

Sheets per Books

by the foreign person specified in line 5.

Expenses for travel as a form of

On line 5b, enter the name of the owner's

education.

The balance sheets should agree with the

country.

Other nondeductible travel and

REIT's books and records.

entertainment expenses.

Note. If there is more than one

Line 1. Cash. Include certificates of

For more information, see Pub. 542,

25%-or-more foreign owner, complete

deposits as cash on line 1.

Corporations.

lines 5a and 5b for the foreign person with

Line 4. Tax-exempt securities. Include

the highest percentage of ownership.

Line 7. Tax-exempt interest. Include as

on this line:

interest any exempt-interest dividends

Foreign person. The term “foreign

State and local government obligations,

received by the REIT as a shareholder in a

person” means:

the interest on which is excludable from

mutual fund or other RIC.

A foreign citizen or nonresident alien.

gross income under section 103(a), and

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Instructions For Form 1120-Reit - 2016 Page 18

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