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Instructions for Form 1120-REIT 2006 Tax Year

General Instructions

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.

Purpose of Form

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.

Who Must File

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:

  • Must be a corporation, trust, or association.

  • Must be managed by one or more trustees or directors.

  • 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.)

  • Would otherwise be taxed as a domestic corporation.

  • Must be neither a financial institution (referred to in section 582(c)(2)), nor a subchapter L insurance company.

  • 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.

Other Requirements

  • The gross income and diversification of investment requirements of section 856(c) must be met.

  • The organization must:

    1. Have been treated as a REIT for all tax years beginning after February 28, 1986, or

    2. 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).

  • The organization must adopt a calendar tax year unless it first qualified for REIT status before October 5, 1976.

  • The deduction for dividends paid (excluding net capital gain dividends, if any) must equal or exceed:

    1. 90% of the REIT's taxable income (excluding the deduction for dividends paid and any net capital gain); plus

    2. 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

    3. Any excess noncash income as determined under section 857(e).

See sections 856 and 857, and the related regulations for details and exceptions.

Termination of Election

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:

  • The name, address, and employer identification number of the organization;

  • The tax year for which the election was made;

  • A statement that the organization (according to section 856(g)(2)) revokes its election under section 856(c)(1) to be a REIT; and

  • 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:

  • Limitations on income from a TRS that may be treated as rents from real property by the REIT (see section 856(d)(8)).

  • 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.

When To File

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.

  • Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First.

  • 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.

caution
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: And the total assets at the end of the tax year (Form 1120-REIT, page 1, item E) are: Use the following Internal Revenue Service Center address:
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


Less than $10 million




$10 million or more



Cincinnati, OH 45999-0012




Ogden, UT 84201-0012
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 Any amount
Ogden, UT 84201-0012
A foreign country or U.S. possession Any amount
P.O. Box 409101
Ogden, UT 84409

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.

Who Must Sign

The return must be signed and dated by:

  • The president, vice president, treasurer, assistant treasurer, chief accounting officer; or

  • 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:

  • Sign the return in the space provided for the preparer's signature; and

  • Give a copy of the return to the taxpayer.

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:

  • 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

  • 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.

Assembling the Return

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.

  1. Schedule N (Form 1120).

  2. Schedule O (Form 1120).

  3. Form 4626.

  4. Form 4136.

  5. Additional schedules in alphabetical order.

  6. 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:

  • The total deposits of such taxes in 2005 were more than $200,000 or

  • 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.

Deposits With Form 8109

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

P.O. Box 970030

St. Louis, MO 63197

Make the check or money order payable to “Financial Agent.

To help ensure proper crediting, enter:

  • the REIT's EIN;

  • the tax period to which the deposit applies; and

  • Form 1120-REIT” on the check or money order.

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.

Caution
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.

Estimated Tax Payments

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.

  • 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.

  • 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 and Penalties

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.

Accounting Methods

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:

  • Cash,

  • Accrual, or

  • Any other method authorized by the Internal Revenue Code.

Accrual Method

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:

  1. All the events have occurred that fix the right to receive the income, which is the earliest of the date:

    1. the required performance takes place,

    2. payment is due, or

    3. payment is received, and

  2. 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.

Accounting Period

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.

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.

Recordkeeping

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:
  1. Controlled a foreign partnership (i.e., owned more than a 50% direct or indirect interest in the partnership).

  2. Owned at least a 10% direct or indirect interest in a foreign partnership while U.S. persons controlled that partnership.

  3. Had an acquisition, disposition, or change in proportional interest in a foreign partnership that:

    • Increased its direct interest to at least 10% or reduced its direct interest of at least 10% to less than 10%.

    • Changed its direct interest by at least a 10% interest.

  4. 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.
  1. Any listed transaction, which is a transaction that is the same as, or substantially similar to, a tax avoidance transaction identified by the IRS.

  2. Any transaction offered under conditions of confidentiality for which the REIT paid an advisor a fee of at least $250,000.

  3. Certain transactions for which the REIT has contractual protection against disallowance of the tax benefits.

  4. Certain transactions resulting in a loss of at least $10 million in any single year or $20 million in any combination of years.

  5. Certain transactions resulting in a book-tax difference of more than $10 million on a gross basis.

  6. 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.

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.

Statements

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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