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

Form 1120-H (2005)

Page

● If the association changed its

Item D. Enter the association’s total

total for line 23g. This type of

expenditures for the tax year

name since it last filed a return,

withholding is called backup

including those expenditures directly

check the box for “Name change.”

withholding. Show the amount

● If the association has changed its

related to exempt function income.

withheld in the blank space in the

Use the association’s accounting

address since it last filed a return

right-hand column between lines 22

method to figure the entry for

(including a change to an “in care

and 23g, and write “Backup

item D.

of” address), check the box for

Withholding.”

“Address change.”

Item E. Show any tax-exempt

● To amend a previously filed Form

Privacy Act and Paperwork

interest received or accrued. Include

Reduction Act Notice. We ask for

1120-H, file a corrected Form

any exempt-interest dividend

the information on this form to carry

1120-H and check the “Amended

received as a shareholder in a

out the Internal Revenue laws of the

return” box.

mutual fund or other regulated

United States. You are required to

investment company.

Note. If a change in address occurs

give us the information. We need it

Line 15. Other deductions.

after the return is filed, use Form

to ensure that you are complying

Expenses, depreciation and similar

8822, Change of Address, to notify

with these laws and to allow us to

items must not only qualify as items

the IRS of the new address.

figure and collect the right amount

of deduction, but must also be

Item B. 60% gross income test. At

of tax. Section 6109 requires return

directly connected with the

least 60% of the association’s gross

preparers to provide their identifying

production of gross income to be

income for the tax year must consist

numbers on the return.

deductible in computing the

of exempt function income (see

You are not required to provide

unrelated taxable income.

Definitions on page 2).

the information requested on a form

Line 21. Tax credits. The

Item C. 90% expenditure test. At

that is subject to the Paperwork

association may qualify for the

least 90% of the association’s

Reduction Act unless the form

following tax credits:

expenditures for the tax year must

displays a valid OMB control

● Foreign tax credit (Form 1118).

consist of expenses to acquire,

number. Books or records relating to

● Nonconventional source fuel credit

build, manage, maintain, and care

a form or its instructions must be

for property, and in the case of a

(Form 8907).

retained as long as their contents

timeshare association, for activities

● Qualified electric vehicle credit

may become material in the

provided to, or on behalf of,

(Form 8834).

administration of any Internal

members of the timeshare

● General business credit (Form

Revenue law. Generally, tax returns

association. Include current and

and return information are

3800). However, it does not include

capital expenditures. Use the

confidential, as required by section

the investment credit.

association’s accounting method to

6103.

Enter the total amount of credits

figure the total.

The time needed to complete and

on line 21 and attach the

Include:

file this form will vary depending on

appropriate form(s).

1. Salary for an association

individual circumstances. The

Line 22. If the association must

manager or secretary.

estimated average time is:

recapture any of the low-income

2. Expenses for gardening, paving,

Recordkeeping

11 hr., 43 min.

housing credit (or the qualified

street signs, security guards, and

Learning about the

electric vehicle or new markets

property taxes assessed on

law or the form

5 hr., 19 min.

credit), include the amount of the

association property.

recapture in the total for line 22. To

Preparing the form

13 hr., 12 min.

3. Current operating and capital

the right of the entry space, write

Copying, assembling,

expenditures for tennis courts,

“LIH,” “QEV,” or “NMC,”

and sending the form

swimming pools, recreation halls,

“recapture,” and the amount. For

to the IRS

2 hr., 9 min.

etc.

details, see Form 8611, Recapture

If you have comments concerning

4. Replacement costs for common

of Low-Income Housing Credit;

the accuracy of these time estimates

buildings, heating, air conditioning,

Regulations section 1.30-1

or suggestions for making this form

elevators, etc.

(regarding the qualified electric

simpler, we would be happy to hear

vehicle credit); or Form 8874, New

Do not include expenditures for

from you. You can write to the

Markets Credit.

property that is not association

Internal Revenue Service, Tax

property. Also, do not include

Backup withholding. If the

Products Coordinating Committee,

investments or transfers of funds

association had income tax withheld

SE:W:CAR:MP:T:T:SP, 1111

held to meet future costs. An

from any payments it received

Constitution Ave. NW, IR-6406,

example would be transfers to a

because, for example, it failed to

Washington, DC 20224. Do not send

sinking fund to replace a roof, even

give the payer its correct EIN,

the tax form to this office. Instead,

if the roof is association property.

include the amount withheld in the

see Where To File on page 3.

Form 1120-H - U.s. Income Tax Return For Homeowners Associations - 2005 Page 5

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