Q&A with the Pennsylvania Department of Revenue
Scenario: The REIT may have PA modifications to federal taxable income
For CNIT purposes, a corporate REIT is entitled to a dividends-paid deduction that usually results in federal taxable income of $0. However, the REIT may have PA modifications to federal taxable income. If the net modifications result in PA taxable income, would REIT have a CNIT liability?
In most cases, this will not happen, but if they have PA modifications after taking the dividends then they would be subject to any liabilities, the same as any other corporation.