Schedule M-1 — Instruction 1120-REIT

Reconciliation of Income (Loss) per Books With Income per Return

Line 5c. Travel and entertainment. Include any of the following.

Entertainment not deductible under section 274(a).
Entertainment-related meal expenses.
Non-entertainment meal expenses not deductible under section 274(n).

Line 4. Tax-exempt securities. Include on this line:

State and local government obligations, the interest on which is excludable from gross income under section 103(a), and
Employee achievement awards of nontangible or tangible property over $400 ($1,600 if part of a qualified plan).
Stock in a mutual fund or other RIC that distributed exempt-interest dividends during the tax year of the REIT.

Line 24. Adjustments to shareholders’ equity. Examples of adjustments to report on this line include:

Unrealized gains and losses on securities held “available for sale.”
Foreign currency translation adjustments.
The excess of additional pension liability over unrecognized prior service cost.
Guarantees of employee stock (ESOP) debt.
Compensation related to employee stock award plans. If the total adjustment to be entered on line 24 is a negative number, enter the amount in parentheses.
The cost of skyboxes.
Nondeductible club dues.
The part of luxury water travel not deductible under section 274(m).
Expenses for travel as a form of education.
Other nondeductible travel and entertainment expenses.

Line 7. Tax-exempt interest. Include as interest any exempt-interest dividends received by the REIT as a shareholder in a mutual fund or other RIC.

Paperwork Reduction Act Notice. We ask for the information on these forms to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

Estimates of Taxpayer Burden. The following tables show burden estimates based on current statutory requirements as of December 2025 for taxpayers filing 2024 Forms 1065, 1066, 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-S, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-REIT, 1120-RIC, 1120-POL, and related attachments. Time spent and out-of-pocket costs are presented separately. Time burden is broken out by taxpayer activity, with reporting representing the largest component. Out-of-pocket costs include any expenses incurred by taxpayers to prepare and submit their tax returns. Examples include tax return preparation and submission fees, postage and photocopying costs, and tax preparation software costs. While these estimates don’t include burden associated with post-filing activities, IRS operational data indicate that electronically prepared and filed returns have fewer arithmetic errors, implying lower post-filing burden.

Reported time and cost burdens are national averages and don’t necessarily reflect a “typical” case. Most taxpayers experience lower than average burden, with taxpayer burden varying considerably by taxpayer type.

The average burden for partnerships filing Forms 1065 and related attachments is about 60 hours and $5,300; the average burden for corporations filing Form 1120 and associated forms is about 90 hours and $8,600; and the average burden for Forms 1066, 1120-REIT, 1120-RIC, 1120-S, and all related attachments is about 60 hours and $4,800. Within each of these estimates, there is significant variation in taxpayer activity. Tax preparation fees and other out-of-pocket costs vary extensively depending on the tax situation of the taxpayer, the type of software or professional preparer used, and the geographic location. Third-party burden hours are not included in these estimates.

Instructions for Form 1120-REIT (2025) 21

Table 1 – Taxpayer Burden for Entities Taxed as Partnerships Forms 1065, 1066, and all attachments
Forms 1065, 1066, and all attachments
Primary Form Filed or Type of Taxpayer	Total Number of Returns (millions)	Average Time (hours)	Average Out-of-Pocket Cost ($)	Average Monetized Burden ($)
All Partnerships	5.5	60	5,300	8,700
Small	5.1	50	3,300	5,200
Large*	0.4	180	29,400	50,700
* A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and pass-through corporations. A small business is any business that doesn’t meet the definition of a large business.

Table 2 – Taxpayer Burden for Entities Taxed as Taxable Corporations Forms 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-POL, and all attachments
Forms 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-POL, and all attachments
Primary Form Filed or Type of Taxpayer	Total Number of Returns (millions)	Average Time (hours)	Average Out-of-Pocket Cost ($)	Average Monetized Burden ($)
All Taxable Corporations	2.3	90	8,600	15,700
Small	2.1	40	3,900	6,000
Large*	0.2	610	69,400	141,500
*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and pass-through corporations. A small business is any business that doesn’t meet the definition of a large business.

Table 3 – Taxpayer Burden for Entities Taxed as Pass-Through Corporations Forms 1120-REIT, 1120-RIC, 1120-S, and all attachments
Forms 1120-REIT, 1120-RIC, 1120-S, and all attachments
Primary Form Filed or Type of Taxpayer	Total Number of Returns (millions)	Average Time (hours)	Average Out-of-Pocket Cost ($)	Average Monetized Burden ($)
All Pass-Through Corporations	6.2	60	4,800	7,700
Small	6.1	50	4,200	6,500
Large*	0.1	290	42,600	76,600

Table 1 – Taxpayer Burden for Entities Taxed as Partnerships Forms 1065, 1066, and all attachments
*A large business is defined as one having end-of-year assets greater than $10 million. Total filers counts may not equal the total burden estimates table due to rounding.

Comments. If you have comments concerning the accuracy of these time estimates or suggestions for making these forms simpler, we would be happy to hear from you. You can send us comments from IRS.gov/FormComments . Or you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax form to this address. Instead, see Where To File , near the beginning of the instructions.

22 Instructions for Form 1120-REIT (2025)

Index

Accounting methods 5 Accounting period 5 Address change 8 Amended return 8 Assembling the return 3

Balance sheets 21 Built-in gains tax 18

Charitable contributions 12 Compensation of officers 10

Deduction for dividends paid 16 Deductions 9 Direct deposit of refund 15 Disclosure statement 7

Electronic deposit requirement 4 Employer identification number

(EIN) 8

Estimated tax payments 4 Extension of time to file 3

Fines and penalties 13 Foreclosure property 15 Foreign tax credit 17

General business credit 17 General Instructions 2 General requirements to qualify as a

REIT 2

Interest and penalties 5 Interest expense 11 Interest income 9

Net operating loss (NOL)

deduction 13

Other deductions 11 Other income 9

Reconciliation of income from books

to tax return 21

Source-of-Income requirements 16 Specific instructions 8

Tax and payments 14 Tax computation 16 Taxable REIT Subsidiaries (TRS) 2 Taxes and licenses 11 Taxpayer advocate service 1 Travel, meals, and entertainment 12

What’s new 1 When to file 3 Where to file 4