Instructions For Form 1120-H - 2004 printable pdf download

Form 1120-H (2004)

Page

How To Get Forms

See Regulations section 301.9100-2

To qualify as a homeowners

for information on a 12-month extension

association, the following must apply.

and Publications

of time to make the election. This

See Regulations section 1.528-4 for

Personal computer. You can access

extension does not extend the time to

information regarding the “substantially

the IRS website 24 hours a day, 7 days

pay the tax. Once Form 1120-H is filed,

all” test for condominium management

a week, at to:

the association cannot revoke its

associations and residential real estate

election for that year unless the IRS

● Order IRS products online.

management associations.

consents. The association may request

● Download forms, instructions, and

● At least 60% of the association’s

IRS consent by filing a ruling request. A

publications.

gross income for the tax year must

user fee must be paid with all ruling

consist of exempt function income (see

● See answers to frequently asked tax

requests. For more information on ruling

below).

questions.

requests, see Rev. Proc. 2004-1. You

● At least 90% of the association’s

can find this revenue procedure on page

● Search publications online by topic or

1 of Internal Revenue Bulletin 2004-1 at

expenses for the tax year must consist

keyword.

/pub/irs-irbs/irb04-01.pdf.

of expenses to acquire, build, manage,

● Send us comments or request help by

maintain, or care for its property, and, in

If the association does not elect to

email.

the case of a timeshare association, for

use Form 1120-H, it must file the

● Sign up to receive local and national

activities provided to, or on behalf of,

applicable income tax return (Form 1120,

tax news by email.

members of the timeshare association.

etc.).

● No private shareholder or individual

CD-ROM. Order Pub. 1796, IRS Federal

A homeowners association should

Tax Products CD-ROM, and get:

can profit from the association’s net

compare its total tax computed on Form

earnings except by acquiring, building,

● Current year forms, instructions, and

1120-H with its total tax computed on

managing, or caring for association

publications.

either Form 1120, U.S. Corporation

property or by a rebate of excess

Income Tax Return, or Form 1120-A,

● Prior year forms and instructions.

membership dues, fees, or assessments.

U.S. Corporation Short-Form Income

● Frequently requested tax forms that

● The association must file Form 1120-H

Tax Return. The association may file the

may be filled in electronically, printed out

form that results in the lowest tax.

to elect under section 528 to be treated

for submission, and saved for

as a homeowners association.

Tax rate. The taxable income of a

recordkeeping.

Association property. Association

homeowners association that files its tax

● The Internal Revenue Bulletin.

return on Form 1120-H is taxed at a flat

property includes real and personal

Buy the CD-ROM on the Internet at

rate of 30% for condominium

property that:

/cdorders from the National

management associations and

1. The association holds,

Technical Information Service (NTIS) for

residential real estate associations. The

2. The association’s members hold in

$22 (no handling fee) or call

tax rate for timeshare associations is

common,

1-877-CDFORMS (1-877-233-6767) toll

32%. These rates apply to both ordinary

free to buy the CD-ROM for $22 (plus a

income and capital gains.

3. The association’s members hold

$5 handling fee).

privately within the association, and

If the association is tax exempt under

By phone and in person. You can order

section 501(a), do not file Form 1120-H.

4. Is owned by a governmental unit

forms and publications by calling

See section 6033 and related

and is used to benefit the unit’s

1-800-TAX-FORM (1-800-829-3676). You

residents.

regulations. If the association loses its

can also get most forms and

exempt status, see Regulations section

Timeshare association property

publications at your local IRS office.

1.528-8(e).

includes property related to the

timeshare project that the association or

General Instructions

Definitions

its members have rights to use. These

rights must arise out of recorded

Section references are to the Internal

Homeowners association. There are

easements, covenants, or other recorded

Revenue Code unless otherwise noted.

three kinds of homeowners associations.

instruments.

1. A condominium management

Purpose of Form

For more information, see Regulations

association organized and operated to

section 1.528-3.

acquire, build, manage, maintain, and

A homeowners association files Form

care for the property in a condominium

1120-H as its income tax return to take

Taxable income. Taxable income is the

project substantially all of whose units

advantage of certain tax benefits. These

excess, if any, of:

are homes for individuals.

benefits, in effect, allow the association

1. Gross income for the tax year,

to exclude exempt function income

2. A residential real estate

excluding exempt function income, over:

(defined below) from its gross income.

management association organized and

2. Allowed deductions directly

operated to acquire, build, manage,

connected with producing any gross

Electing To File Form

maintain, and care for a subdivision,

income except exempt function income.

1120-H

development, or similar area

Allowed deductions include a specific

substantially all of whose lots or

$100 deduction. The following are not

A homeowners association elects to take

buildings are homes for individuals.

allowed:

advantage of the tax benefits provided

3. A timeshare association (other than

by section 528 by filing a properly

● Net operating loss deduction (section

a condominium management

completed Form 1120-H. The election is

172).

association), organized and operated to

made separately for each tax year and

● Deductions under part VIII of

acquire, build, manage, maintain, and

generally must be made by the due

subchapter B (special deductions for

care for the property that has members

date, including extensions, of the income

corporations).

who hold a timeshare right to use, or a

tax return.

timeshare ownership interest in, real

If facilities are used (or personnel are

property of the timeshare association. A

employed) for both exempt and

timeshare asociation cannot be a

nonexempt purposes, see Regulations

condominium management association.

section 1.528-10.

Instructions For Form 1120-H - 2004

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