What IRS Form 1120-REIT (2016) Is For

Form 1120-REIT is the federal income tax return used by Real Estate Investment Trusts (REITs) to report income, gains, losses, deductions, and credits. Any corporation, trust, or association electing REIT status must file this form for 2016, provided the election had not been terminated or revoked, and qualification standards were met under Internal Revenue Code Section 856.

When You’d Use Form 1120-REIT for 2016 (Late or Amended Filing)

You would file late if your REIT missed the April 15, 2017 deadline (for calendar-year filers) and later received IRS notices about unfiled returns. Amended filings correct errors in REIT qualification tests, dividends paid deduction, or income reporting. Refund claims are no longer allowed because the three-year statute expired on April 15, 2020, but compliance corrections remain important.

Key Rules Specific to 2016

• New due date: April 15, 2017 for calendar-year REITs (previously March 15)
  
  
• Minimum penalty for late filing over 60 days increased to $205
  
  
• Special tax provisions applied to qualified timber gains beginning in 2016
  
  
• REITs had to meet 90% distribution requirements based on taxable income calculations prior to 2017 law changes
  
  
• Income and asset test compliance remained central to REIT qualification
  
  

Step-by-Step (High Level)

• Gather tax account transcripts from the IRS to check notices, payments, and filing history
• Complete the official 2016 Form 1120-REIT—not current-year versions
• Attach schedules: Schedule A (Dividends Paid Deduction), Schedule J (Tax Computation), Schedule K (Other Information), Schedule L (Balance Sheets), and others like Schedule D for capital gains
• File with the proper IRS service center or through approved e-file providers (if still supported)
• Keep copies of the filed return, supporting schedules, and proof of mailing or e-filing

Common Mistakes and How to Avoid Them

• Filing Form 1120 instead of 1120-REIT in the first election year, which can jeopardize REIT status
  
  
• Miscalculating the 90% dividends paid deduction requirement—must be carefully computed against taxable income
  
  
• Violating the 75% and 95% income source tests or 25% taxable REIT subsidiary asset limit
  
  
• Lacking shareholder documentation to prove compliance with ownership rules
  
  
• Missing or misordered schedules—always attach in the correct IRS sequence to avoid delays
  
  
• Failing to retain evidence for qualification tests, which the IRS closely reviews
  
  

What Happens After You File

The IRS may take 6–12 months to process late-filed 2016 returns because of manual review requirements. You will receive acknowledgment of receipt, followed by acceptance or notices requesting clarification. Penalties and interest continue until full payment is made. Payment plans are available using Form 9465 or IRS.gov tools, and appeal rights exist if you disagree with assessments.

FAQs

What penalties apply to late 2016 REIT returns?

Late filing penalties equal 5% of unpaid tax per month, capped at 25%, with a $205 minimum if the return was more than 60 days late. A separate late payment penalty of 0.5% per month applies until taxes are paid. Interest accrues daily on both penalties and unpaid tax from the April 15, 2017 due date.

Can I still get transcripts for 2016?

Yes. The IRS maintains tax account transcripts indefinitely, which you can request online at IRS.gov, by calling 1-800-908-9946, or by filing Form 4506-T. These transcripts reveal filing history, assessments, and payments. Having transcripts ensures your 2016 filing matches IRS records and prevents unnecessary notices caused by incomplete or mismatched return data.

Is there a refund statute for 2016 amendments?

The three-year statute of limitations for refund claims expired on April 15, 2020. That means amended 2016 REIT returns filed today cannot generate refunds. However, they can still correct compliance issues, report additional tax owed, or resolve qualification problems. Filing even without refund eligibility helps reduce penalties and establishes accurate tax records with the IRS.

Should I amend my state REIT return too?

Yes, in most cases. Many states with corporate income taxes require conformity when a federal return is amended. If you file an amended Form 1120-REIT for 2016, you should check your state’s requirements and deadlines. State statutes of limitations often differ from federal rules, so timely amendments prevent penalties and maintain state compliance.

What if I filed Form 1120 instead of 1120-REIT in 2016?

Filing the wrong return is a serious issue that may jeopardize your REIT election. If you mistakenly filed Form 1120, you should amend with Form 1120-REIT for 2016. Depending on circumstances, you may need to request a private letter ruling from the IRS to confirm REIT election validity and avoid disqualification.

Can failure to file 2016 affect current REIT status?

Yes. The IRS requires continuous compliance with annual REIT filing obligations. Failure to file a 2016 return could trigger scrutiny of REIT qualification for all years, potentially disqualifying the entity. Unfiled returns also extend the statute of limitations indefinitely, leaving the REIT vulnerable to ongoing IRS assessments until compliance is restored.

What supporting documentation should I keep?

You should maintain complete records of REIT qualification, including ownership documentation proving 100+ shareholders, asset valuations, gross income calculations, and dividend distribution records. Supporting documents help confirm compliance with the 60% asset diversification, 75% income, 95% passive income, and 90% distribution requirements. Keep these records at least three years after filing, and longer for asset basis records.

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