Form 1120-H - U.s. Income Tax Return For Homeowners Associations

Form 1120-H (2005)

Page

How To Get Forms

effect, allow the association to

If the association is tax exempt

exclude exempt function income

under section 501(a), do not file

and Publications

(defined later) from its gross income.

Form 1120-H. See section 6033 and

Internet. You can access the IRS

related regulations. If the association

website 24 hours a day, 7 days a

Electing To File Form

loses its exempt status, see

week, at to:

Regulations section 1.528-8(e).

1120-H

● Download forms, instructions, and

A homeowners association elects to

publications;

Definitions

take advantage of the tax benefits

● Order IRS products online;

Homeowners association. There

provided by section 528 by filing a

● Search publications online by

are three kinds of homeowners

properly completed Form 1120-H.

topic or keyword; and

associations.

The election is made separately for

● Sign up to receive local and

each tax year and generally must be

1. A condominium management

national tax news by email.

made by the due date, including

association organized and operated

extensions, of the income tax return.

to acquire, build, manage, maintain,

CD-ROM. You can order Pub. 1796,

and care for the property in a

IRS Tax Products CD-ROM, and

This extension does not extend

condominium project substantially all

obtain:

the time to pay the tax.

of whose units are homes for

● A CD that is released twice so you

Once Form 1120-H is filed, the

individuals.

have the latest products. The first

association cannot revoke its

2. A residential real estate

release ships in late December and

election for that year unless the IRS

management association organized

the final release ships in late

consents. The association may

and operated to acquire, build,

February.

request IRS consent by filing a ruling

manage, maintain, and care for a

● Current year forms, instructions,

request. A user fee must be paid

subdivision, development, or similar

with all ruling requests. For more

and publications.

area substantially all of whose lots

information on ruling requests, see

● Prior year forms, instructions, and

or buildings are homes for

Rev. Proc. 2005-1. You can find this

publications.

individuals.

revenue procedure on page 1 of

● Tax Map: an electronic research

Internal Revenue Bulletin 2005-1 at

3. A timeshare association (other

tool and finding aid.

/pub/irs-irbs/irb05-01.pdf.

than a condominium management

● Tax law frequently asked

association), organized and operated

If the association does not elect to

questions (FAQs).

to acquire, build, manage, maintain,

use Form 1120-H, it must file the

● Tax topics from the IRS telephone

and care for the property that has

applicable income tax return (Form

response system.

members who hold a timeshare right

1120, etc.).

● Fill-in, print, and save features for

to use, or a timeshare ownership

Automatic 12-month extension to

interest in, real property of the

most tax forms.

make election. If the homeowners

timeshare association. A timeshare

● The Internal Revenue Bulletin.

association fails to make the

association cannot be a

● Toll-free and email technical

regulatory election to be treated as a

condominium management

homeowners association, it can get

support.

association.

an automatic 12-month extension to

Buy the CD-ROM on the Internet

To qualify as a homeowners

make the section 528 election

at /cdorders from the

association, the following must

provided corrective action is taken

National Technical Information

apply.

within 12 months of the due date

Service (NTIS) for $25 (no handling

(including extension) of the return.

See Regulations section 1.528-4

fee) or call 1-877-CDFORMS

See Regulations section 301.9100-2

for information regarding the

(1-877-233-6767) toll free to buy the

for more information.

“substantially all” test for

CD-ROM for $25 (plus a $5 handling

condominium management

A homeowners association should

fee).

associations and residential real

compare its total tax computed on

By phone and in person. You can

estate management associations.

Form 1120-H with its total tax

order forms and publications by

● At least 60% of the association’s

computed on either Form 1120, U.S.

calling 1-800-TAX-FORM

Corporation Income Tax Return, or

gross income for the tax year must

(1-800-829-3676). You can also get

Form 1120-A, U.S. Corporation

consist of exempt function income

most forms and publications at your

Short-Form Income Tax Return. The

(defined later).

local IRS office.

association may file the form that

● At least 90% of the association’s

results in the lowest tax.

expenses for the tax year must

General Instructions

Tax rate. The taxable income of a

consist of expenses to acquire,

Section references are to the Internal

homeowners association that files its

build, manage, maintain, or care for

Revenue Code unless otherwise

tax return on Form 1120-H is taxed

its property, and, in the case of a

noted.

at a flat rate of 30% for

timeshare association, for activities

condominium management

provided to, or on behalf of,

Purpose of Form

associations and residential real

members of the timeshare

A homeowners association files

estate associations. The tax rate for

association.

Form 1120-H as its income tax

● No private shareholder or

timeshare associations is 32%.

return to take advantage of certain

These rates apply to both ordinary

individual can profit from the

tax benefits. These benefits, in

income and capital gains.

association’s net earnings except by

Form 1120-H - U.s. Income Tax Return For Homeowners Associations - 2005

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