Instructions for Form 1120-REIT |
2006 Tax Year |
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
Use Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts, to report the income, gains, losses, deductions,
credits, and to
figure the income tax liability of a REIT.
A corporation, trust, or association that meets certain conditions (discussed below) must file Form 1120-REIT if it elects
to be treated as a REIT
for the tax year (or has made that election for a prior tax year and the election has not been terminated or revoked). The
election is made by
figuring taxable income as a REIT on Form 1120-REIT.
General Requirements To Qualify as a REIT
To qualify as a REIT, an organization:
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Must be a corporation, trust, or association.
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Must be managed by one or more trustees or directors.
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Must have beneficial ownership: (a) evidenced by transferable shares, or by transferable certificates of beneficial interest; and
(b) held by 100 or more persons. (The REIT does not have to meet this requirement until its 2nd tax year.)
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Would otherwise be taxed as a domestic corporation.
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Must be neither a financial institution (referred to in section 582(c)(2)), nor a subchapter L insurance company.
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Cannot be closely held, as defined in section 856(h). (The REIT does not have to meet this requirement until its 2nd tax year).
If a REIT meets the requirement for ascertaining actual ownership (see Regulations section 1.857-8 for details), and did not
know (after exercising
reasonable diligence), or have reason to know, that it was closely held, it will be treated as meeting the requirement that
it is not closely held.
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The gross income and diversification of investment requirements of section 856(c) must be met.
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The organization must:
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Have been treated as a REIT for all tax years beginning after February 28, 1986, or
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Had, at the end of the tax year, no accumulated earnings and profits from any tax year that it was not a REIT.
For this purpose, distributions are treated as made from the earliest earnings and profits accumulated in any non-REIT tax
year. See section
857(d)(3).
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The organization must adopt a calendar tax year unless it first qualified for REIT status before October 5, 1976.
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The deduction for dividends paid (excluding net capital gain dividends, if any) must equal or exceed:
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90% of the REIT's taxable income (excluding the deduction for dividends paid and any net capital gain); plus
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90% of the excess of the REIT's net income from foreclosure property over the tax imposed on that income by section 857(b)(4)(A);
less
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Any excess noncash income as determined under section 857(e).
See sections 856 and 857, and the related regulations for details and exceptions.
The election to be treated as a REIT remains in effect until terminated, revoked, or the REIT has failed to meet the requirements
of the statutory
relief provisions. It terminates automatically for any tax year in which the corporation, trust, or association is not a qualified
REIT.
The organization may revoke the election for any tax year after the 1st tax year the election is effective by filing a statement
with the service
center where it files its income tax return. The statement must be filed on or before the 90th day after the 1st day of the
tax year for which the
revocation is to be effective. The statement must include the following:
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The name, address, and employer identification number of the organization;
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The tax year for which the election was made;
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A statement that the organization (according to section 856(g)(2)) revokes its election under section 856(c)(1) to be a REIT;
and
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The signature of an official authorized to sign the income tax return of the organization.
The organization may not make a new election to be taxed as a REIT during the 4 years following the 1st year for which the
termination or
revocation is effective. See section 856(g)(4) for exceptions.
Taxable REIT Subsidiaries (TRS)
A REIT may own up to 100% of the stock in one or more taxable REIT subsidiaries (TRS). A TRS must be a corporation (other
than a REIT or a
qualified REIT subsidiary) and may provide services to the REIT's tenants without disqualifying the rent received by the REIT.
See section 856(l) for
details, including certain restrictions on the type of business activities a TRS may perform. Also, not more than 20% of the
fair market value (FMV)
of a REIT's total assets may be securities of one or more TRSs (see section 856(c)(4) for details).
Transactions between a TRS and its associated REIT must be at arm's length. A REIT may be subject to a 100% tax to the extent
it improperly
allocates income and deductions between the REIT and the TRS (see section 857(b)(7) for details). Additional limitations on
transactions between a TRS
and its associated REIT include:
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Limitations on income from a TRS that may be treated as rents from real property by the REIT (see section 856(d)(8)).
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Limitations on a TRS's deduction for interest paid to its associated REIT (see section 163(j)).
To elect to have an eligible corporation treated as a TRS, the corporation and the REIT must jointly file Form 8875, Taxable
REIT Subsidiary
Election.
Generally, a REIT must file its income tax return by the 15th day of the 3rd month after the end of its tax year. A new REIT
filing a short period
return must generally file by the 15th day of the 3rd month after the short period ends. A REIT that has dissolved must generally
file by the 15th day
of the 3rd month after the date it dissolved.
If the due date falls on a Saturday, Sunday, or legal holiday, the REIT can file on the next business day.
Private delivery services
REITs can use certain private delivery services designated by the IRS to meet the “timely mailing as timely filing/paying” rule for tax
returns and payments.
These private delivery services include only the following.
-
DHL Express (DHL): DHL Same Day Service, DHL Next Day 10:30 am, DHL Next Day 12:00 pm, DHL Next Day 3:00 pm, and DHL 2nd Day
Service.
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Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and
FedEx
International First.
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United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide
Express Plus,
and UPS Worldwide Express.
The private delivery service can tell you how to get written proof of the mailing date.
Private delivery services cannot deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an
IRS P.O. box address.
Extension of Time To File
File Form 7004, Application for Automatic 6-month Extension of Time To File Certain Business Income Tax, Information, and
Other Returns, to request
a 6-month extension of time to file. Generally, file Form 7004 by the regular due date of the REIT's income tax return.
File the REIT's return at the applicable IRS address listed below.
If the REIT's principal business, office, or agency is located in:
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And the total assets at the end of the tax year (Form 1120-REIT, page 1, item E) are:
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Use the following Internal Revenue Service Center address:
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Connecticut, Delaware, District of Columbia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New
Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, West
Virginia, Wisconsin
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Less than $10 million
$10 million or more
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Cincinnati, OH 45999-0012
Ogden, UT 84201-0012
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Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota,
Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, Texas,
Utah, Washington,
Wyoming
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Any amount
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Ogden, UT 84201-0012
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A foreign country or U.S. possession
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Any amount
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P.O. Box 409101
Ogden, UT 84409
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A group of corporations with members located in more than one service center area will often keep all the books and records
at the principal office
of the managing corporation. In this case, the tax returns of the corporations may be filed with the service center for the
area in which the
principal office of the managing corporation is located.
The return must be signed and dated by:
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The president, vice president, treasurer, assistant treasurer, chief accounting officer; or
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Any other corporate officer (such as tax officer) authorized to sign.
If a return is filed on behalf of a REIT by a receiver, trustee, or assignee, the fiduciary must sign the return, instead
of the corporate
officer. Returns and forms signed by a receiver or trustee in bankruptcy on behalf of a REIT must be accompanied by a copy
of the order or
instructions of the court authorizing signing of the return or form.
If an employee of the REIT completes Form 1120-REIT, the paid preparer's space should remain blank. Anyone who prepares Form
1120-REIT but does not
charge the REIT should not complete that section. Generally, anyone who is paid to prepare the return must sign it and fill
in the “Paid Preparer's
Use Only” area.
The paid preparer must complete the required preparer information and:
Note.
A paid preparer may sign original returns, amended returns, or requests for filing extensions by rubber stamp, mechanical
device, or computer
software program.
Paid Preparer Authorization
If the REIT wants to allow the IRS to discuss its 2006 tax return with the paid preparer who signed it, check the “Yes” box in the signature
area of the return. This authorization applies only to the individual whose signature appears in the “Paid Preparer's Use Only” section of the
REIT's return. It does not apply to the firm, if any, shown in that section.
If the “Yes” box is checked, the REIT is authorizing the IRS to call the paid preparer to answer any questions that may arise during
the
processing of its return. The REIT is also authorizing the paid preparer to:
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Give the IRS any information that is missing from the return,
-
Call the IRS for information about the processing of the REIT's return or the status of any related refund or payment(s),
and
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Respond to certain IRS notices about math errors, offsets, and return preparation.
The REIT is not authorizing the paid preparer to receive any refund check, bind the REIT to anything (including any additional
tax liability), or
otherwise represent the corporation before the IRS.
The authorization will automatically end no later than the due date (without regard to extensions) for filing the REIT's 2007
tax return. If the
REIT wants to expand the paid preparer's authorization, see Pub. 947, Practice Before the IRS and Power of Attorney.
To ensure that the REIT's tax return is correctly processed, attach all schedules and other forms after page 4, Form 1120-REIT,
and in the
following order.
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Schedule N (Form 1120).
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Schedule O (Form 1120).
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Form 4626.
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Form 4136.
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Additional schedules in alphabetical order.
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Additional forms in numerical order.
Complete every applicable entry space on Form 1120-REIT. Do not enter “See attached” instead of completing the entry spaces. If more space is
needed on the forms or schedules, attach separate sheets using the same size and format as the printed forms. If there are
supporting statements and
attachments, arrange them in the same order as the schedules or forms they support and attach them last. Show the totals on
the printed forms. Enter
the REIT's name and EIN on each supporting statement or attachment.
Depository Methods of Tax Payment
The REIT must pay the tax due in full no later than the 15th day of the 3rd month after the end of the tax year. Generally,
this date falls on
March 15th after the close of the REIT's tax year, unless the REIT has maintained a fiscal year. The two methods of depositing
REIT income taxes,
including the capital gains tax, are discussed below.
Electronic Deposit Requirement
The REIT must make electronic deposits of all depository taxes (such as employment tax, excise tax, and REIT income tax) using
the Electronic
Federal Tax Payment System (EFTPS) in 2007 if:
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The total deposits of such taxes in 2005 were more than $200,000 or
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The REIT was required to use EFTPS in 2006.
If the REIT is required to use EFTPS and fails to do so, it may be subject to a 10% penalty. If the REIT is not required to
use EFTPS, it may
participate voluntarily. To enroll in or receive more information about EFTPS, call 1-800-555-4477. To enroll online, visit
www.eftps.gov.
Depositing on time.
For EFTPS deposits to be made timely, the REIT must initiate the transaction at least 1 business day before the date
the deposit is due.
If the REIT does not use EFTPS, deposit REIT income tax payments (and estimated tax payments) with Form 8109, Federal Tax
Deposit Coupon. If the
REIT does not have a preprinted Form 8109, use Form 8109-B to make deposits. You can get this form by calling 1-800-829-4933
or by visiting an IRS
taxpayer assistance center. Have the REIT's EIN available when you call or visit.
Do not send deposits directly to an IRS office; otherwise, the REIT may have to pay a penalty. Mail or deliver the completed
Form 8109 with the
payment to an authorized depositary (a commercial bank or other financial institution authorized to accept federal tax deposits).
Make checks or money
orders payable to the depositary.
If the REIT prefers, it can mail the coupon and payment to:
Financial Agent, Federal Tax Deposit Processing
Make the check or money order payable to “Financial Agent.”
To help ensure proper crediting, enter:
Darken the “1120” box under “Type of Tax” and the appropriate “Quarter” box under “Tax Period” on the coupon. Records of
these deposits will be sent to the IRS. For more information, see “Marking the Proper Tax Period” in the instructions for Form 8109.
For more information on deposits, see the instructions in the coupon booklet (Form 8109) and Pub. 583, Starting a Business
and Keeping Records.
If the REIT owes tax when it files Form 1120-REIT, do not include the payment with the tax return. Instead, mail or deliver
the payment with Form
8109 to an authorized depositary or use EFTPS, if applicable.
Generally, the following rules apply to the REIT's payments of estimated tax.
-
The REIT must make installment payments of estimated tax if it expects its total tax for the year (less applicable credits)
to be $500 or
more.
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The installments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If any date falls on a Saturday,
Sunday, or
legal holiday, the installment is due on the next regular business day.
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Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to compute estimated tax.
-
If the REIT does not use EFTPS, use the deposit coupons (Forms 8109) to make deposits of estimated tax.
-
If the REIT overpaid its estimated tax, it may be able to get a quick refund by filing Form 4466, Corporation Application
for Quick Refund
of Overpaid Estimated Tax. The overpayment must be at least 10% of the REIT's expected income tax liability and at least $500.
For more information, including penalties, see the Line 25. Estimated Tax Penalty instructions.
Interest.
Interest is charged on taxes paid late even if an extension of time to file is granted. Interest is also charged on
penalties imposed for failure
to file, negligence, fraud, substantial valuation misstatements, and substantial understatements of tax from the due date
(including extensions) to
the date of payment. The interest charge is figured at a rate determined under section 6621.
Late filing of return.
A REIT that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid
tax for each month or part of a
month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that is over 60 days
late is the smaller of the
tax due or $100. The penalty will not be imposed if the REIT can show that the failure to file on time was due to reasonable
cause. REITs that file
late must attach a statement explaining the reasonable cause.
Late payment of tax.
A REIT that does not pay the tax when due generally may be penalized ½ of 1% of the unpaid tax for each month or part
of a month the
tax is not paid, up to a maximum of 25% of the unpaid tax. The penalty will not be imposed if the REIT can show that the failure
to pay on time was
due to reasonable cause.
Trust fund recovery penalty.
This penalty may apply if certain excise, income, social security, and Medicare taxes that must be collected or withheld
are not collected or
withheld, or these taxes are not paid. These taxes are generally reported on:
-
Form 720, Quarterly Federal Excise Tax Return;
-
Form 941, Employer's Quarterly Federal Tax Return;
-
Form 943, Employer Annual Federal Tax Return for Agricultural Employees; or
-
Form 945, Annual Return of Withheld Federal Income Tax.
The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to have been responsible
for collecting, accounting
for, and paying over these taxes, and who acted willfully in not doing so. The penalty is equal to the unpaid trust fund tax.
See the Instructions for
Form 720, or Publication 15 (Circular E), Employer's Tax Guide.
Failure to ascertain ownership.
If the REIT fails to comply with Regulations section 1.857-8 for ascertaining ownership and maintaining factual ownership
records for a tax year,
it must pay a $25,000 penalty ($50,000 for intentional disregard) upon notice and demand by the IRS. If the REIT can show
that the failure was due to
reasonable cause, the penalty may not be imposed. For more information, see section 857(f).
Other penalties.
Other penalties can be imposed for negligence, substantial understatement of tax, and fraud. See sections 6662 and
6663.
An accounting method is a set of rules used to determine when and how income and expenses are reported. Figure taxable income
using the method of
accounting regularly used in keeping the REIT's books and records. In all cases, the method used must clearly show taxable
income.
Generally, permissible methods include:
Generally, a REIT must use the accrual method of accounting if its average annual gross receipts exceed $5 million. See section
448(c).
Under the accrual method, an amount is includible in income when:
-
All the events have occurred that fix the right to receive the income, which is the earliest of the date:
-
the required performance takes place,
-
payment is due, or
-
payment is received, and
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The amount can be determined with reasonable accuracy.
See Regulations section 1.451-1(a) for details and Publication 538, Accounting Periods and Methods.
Change in accounting method.
To change its method of accounting used to report taxable income (for income as a whole or for the treatment of any
material item), the REIT must
file Form 3115, Application for Change in Accounting Method. For more information, see Form 3115 and Pub. 538, Accounting
Periods and Methods.
Section 481(a) adjustment.
The REIT may have to make an adjustment under section 481(a) to prevent amounts of income or expenses from being duplicated
or omitted. This is
referred to as a “ section 481(a) adjustment.” The section 481(a) adjustment period is generally 1 year for a net negative adjustment and 4 years
for a net positive adjustment. However, a REIT may elect to use a 1-year adjustment period if the net section 481(a) adjustment
for the change is less
than $25,000. The REIT must complete the appropriate lines of Form 3115 to make the election.
Include any net positive section 481(a) adjustment on page 1, line 7. Report any negative adjustment on page 1, line
18.
A REIT must figure its taxable income on the basis of a tax year. A tax year is the annual accounting period a REIT uses to
keep its records and
report its income and expenses. A REIT adopts a tax year when it files its first income tax return. It must adopt a tax year
by the due date (not
including extensions) of its initial income tax return.
Note.
A REIT must adopt a calendar year unless it first qualified for REIT status before October 5, 1976.
Change of tax year.
A REIT may not change its tax year to any tax year other than the calendar year. Generally, a REIT must receive consent
from the IRS before
changing its tax year by filing Form 1128, Application To Adopt, Change, or Retain a Tax Year.
However, upon electing to be taxed as a REIT, an entity that has not engaged in any active trade or business may change
its tax year to a calendar
year without obtaining the consent.
For more information on change of tax year, see Form 1128, Regulations section 1.442-1, and Pub. 538.
Rounding Off to Whole Dollars
The REIT may round off cents to whole dollars on its returns and schedules. If the REIT does round to whole dollars, it must
round all amounts. To
round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar (for example, $1.39 becomes
$1 and $2.50 becomes $3).
If two or more amounts must be added to figure the amount to enter on a line, include cents when adding the amounts and round
off only the total.
Keep the REIT's records for as long as they may be needed for the administration of any provision of the Internal Revenue
Code. Usually, records
that support an item of income, deduction, or credit on the return must be kept for 3 years from the date the return is due
or filed, whichever is
later. Keep records that verify the REIT's basis in property for as long as they are needed to figure the basis of the original
or replacement
property.
The REIT should also keep copies of all filed returns. They help in preparing future and amended returns.
Other Forms That May Be Required
The REIT may have to file other forms. See Publication 542, Corporations.
Form 926,
Return by a U.S. Transferor of Property to a Foreign Corporation, is filed to report certain transfers to foreign
corporations under section
6038B.
Form 966,
Corporate Dissolution or Liquidation, is used to report the adoption of a resolution or plan to dissolve the corporation
or liquidate any of its
stock.
Forms 1042,1042-S, and 1042-T,
Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, Form 1042-S, Foreign Person's U.S. Source
Income Subject to Withholding,
and Form 1042-T, Annual Summary and Transmittal of Forms 1042-S. Use these forms to report and send withheld tax on payments
or distributions made to
nonresident alien individuals, foreign partnerships, or foreign corporations to the extent these payments constitute gross
income from sources within
the United States (see sections 861 through 865).
Also, see sections 1441 and 1442, and Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities.
Form 2438,
Undistributed Capital Gains Tax Return, must be filed by the REIT if it designates undistributed net long-term capital
gains under section
857(b)(3)(D).
Form 2439,
Notice to Shareholder of Undistributed Long-Term Capital Gains, must be completed and a copy given to each shareholder
for whom the REIT paid tax
on undistributed net long-term capital gains under section 857(b)(3)(D).
Form 3520,
Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, is required either
if the REIT received a
distribution from a foreign trust or if the REIT was a grantor of, transferor of, or transferor to a foreign trust that existed
during the tax year.
See Question 5 of Schedule N (Form 1120).
Form 5471,
Information Return of U.S. Persons With Respect to Certain Foreign Corporations, is required if the REIT controls
a foreign corporation; acquires,
disposes of, or owns 10% or more in value or vote of the outstanding stock of a foreign corporation; or had control of a foreign
corporation for an
uninterrupted period of at least 30 days during the annual accounting period of the foreign corporation. See Question 4 of
Schedule N (Form 1120).
Form 5472,
Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.
This form is filed if the
REIT is 25% or more foreign owned. See the instructions for Question 5, Schedule K, on page 12.
Form 8275,
Disclosure Statement, and Form 8275-R, Regulation Disclosure Statement, are used to disclose items or positions taken
on a tax return that are not
otherwise adequately disclosed on a tax return or that are contrary to Treasury regulations (to avoid parts of the accuracy-related
penalty or certain
preparer penalties).
Form 8300,
Report of Cash Payments Over $10,000 Received in a Trade or Business. Use this form to report the receipt of more
than $10,000 in cash or foreign
currency in one transaction or a series of related transactions.
Form 8612,
Return of Excise Tax on Undistributed Income of Real Estate Investment Trusts, is filed if the REIT is liable for
the 4% excise tax on
undistributed income imposed under section 4981.
Form 8621,
Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. Use this form to make
certain elections by shareholders
in a passive foreign investment company and to figure certain deferred taxes.
Form 8842,
Election To Use Different Annualization Periods for Corporate Estimated Tax, is filed to elect one of the annualization
periods in section
6655(e)(2)(C) to figure estimated tax payments under the annualized income installment method.
Form 8865,
Return of U.S. Persons With Respect To Certain Foreign Partnerships. A REIT may have to file Form 8865 if it:
-
Controlled a foreign partnership (i.e., owned more than a 50% direct or indirect interest in the partnership).
-
Owned at least a 10% direct or indirect interest in a foreign partnership while U.S. persons controlled that partnership.
-
Had an acquisition, disposition, or change in proportional interest in a foreign partnership that:
-
Contributed property to a foreign partnership in exchange for a partnership interest if:
-
Immediately after the contribution, the REIT owned, directly or indirectly, at least a 10% interest in the foreign partnership;
or
-
The FMV of the property the REIT contributed to the foreign partnership in exchange for a partnership interest, when added
to other
contributions of property made to the foreign partnership during the preceding 12-month period, exceeds $100,000.
Also, the REIT may have to file Form 8865 to report certain dispositions by a foreign partnership of property it previously
contributed to that
foreign partnership if it was a partner at the time of the disposition. For more details, including penalties for failing
to file Form 8865, see Form
8865 and its separate instructions.
Form 8875,
Taxable REIT Subsidiary Election, is filed jointly by a corporation and a REIT to have the corporation treated as
a taxable REIT subsidiary.
Form 8886,
Reportable Transaction Disclosure Statement. Use this form to disclose information for each reportable transaction
in which the REIT participated.
Form 8886 must be filed for each tax year that the federal income tax liability of the REIT is affected by its participation
in the transaction. The
following are reportable transactions.
-
Any listed transaction, which is a transaction that is the same as, or substantially similar to, a tax avoidance transaction
identified by
the IRS.
-
Any transaction offered under conditions of confidentiality for which the REIT paid an advisor a fee of at least $250,000.
-
Certain transactions for which the REIT has contractual protection against disallowance of the tax benefits.
-
Certain transactions resulting in a loss of at least $10 million in any single year or $20 million in any combination of years.
-
Certain transactions resulting in a book-tax difference of more than $10 million on a gross basis.
-
Certain transactions resulting in a tax credit of more than $250,000, if the REIT held the asset generating the credit for
45 days or
less.
Note.
The REIT may have to pay a penalty if it is required to file Form 8886 and fails to do so. See the Instructions for Form 8886
for details and
filing requirements.
Transfers to a corporation controlled by the transferor.
If a person receives stock of a corporation in exchange for property, and no gain or loss is recognized under section
351, the person (transferor)
and the transferee must each attach to their tax returns the information required by Regulations section 1.351-3.
Reportable transactions by material advisors.
Until further guidance is issued, material advisors who provide material aid, assistance, or advice with respect to
any reportable transaction,
must use Form 8264, Application for Registration of a Tax Shelter, to disclose reportable transactions in accordance with
interim guidance provided in
Notice 2004-80, 2004-50 I.R.B. 963; Notice 2005-17, 2005-8 I.R.B. 606; and Notice 2005-22, 2005-12 I.R.B. 756.
Dual consolidated losses.
If a domestic corporation incurs a dual consolidated loss (as defined in Regulations section 1.1503-2(c)(5)), the
corporation (or consolidated
group) may need to attach an elective relief agreement and/or an annual certification as provided in Temporary Regulations
section 1.1503-2T(g)(2).
Election to reduce basis under section 362(e)(2)(C).
The transferor and transferee in certain section 351 transactions can make a joint election under section 362(e)(2)(C)
to limit the transferor's
basis in the stock received instead of the transferee's basis in the transferred property. The transferor and transferee may
make the election by
attaching the statement as provided in Notice 2005-70, 2005-41 I.R.B. 694, to their tax returns filed by the due date (including
extensions) for the
tax year in which the transaction occurred. Once made, the election is irrevocable. See section 362(e)(2)(C) and Notice 2005-70.
Other forms and statements.
See Pub. 542 for a list of other forms and statements a corporation may need to file in addition to the forms and
statements discussed throughout
these instructions.
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