Schedule A—Deduction for Dividends Paid

Lines 1 through 5. Section 561 (taking into account sections 857(b)(9), 857(d)(3)(B), and 858(a)) determines the deduction for dividends paid.

Line 3. Dividends declared in October, November, or December and payable to shareholders of record in October, November, or December are treated by the REIT as paid on December 31 of that calendar year. The REIT is then eligible for the deduction for dividends paid for the year the dividends are declared even though they are not actually paid until January of the following calendar year.

If the REIT declared dividends in any of those months and actually paid them in January, as discussed above, enter on line 3 those dividends not already included on lines 1, 2, and 4 of Schedule A.

Line 7. If, for any tax year the REIT has net income from foreclosure property (as defined in section 857(b)(4)(B)), the deduction for dividends paid to be entered on line 6 (and on Part I, line 22b) is determined by multiplying the amount on line 5 by the following fraction.

REIT taxable income (determined without regard to the deduction for

dividends paid)

REIT taxable income (determined without regard to the deduction for

dividends paid) + (Net income from foreclosure property minus the tax on net income from

foreclosure property)