Information regarding preparing a Form 1120-H

[TAG]

I've never prepared a 1120-H. I've printed the IRS instructions (haven't read them yet).

Are there any short courses, booklets that could help me? I need a confidence builder.

Thanks,

TAG

[Catherine]

This is a super simple form for homeowner associations. The biggest thing is to get good records from the association itself.

For many associations, most all their receipts annually go to paying for common area items -- roof repairs, heat and chemicals for the pool, mowing, etc. Some of them put money aside annually for reserves. All that income and all those expenses go in the lettered section.

The "Gross Income (excluding exempt function income)" section is for interest, dividends (usually on the reserves), gain from sale of stuff (old riding lawnmower?)

Take a look at their books, and I bet you'll find most everything goes in the top section.

PM me if you need a walk-through.

Catherine

[TAG]

Thank you Cath.

[Catherine]

Any time!

[TaxCPANY]

I've never prepared a 1120-H. I've printed the IRS instructions (haven't read them yet).

Are there any short courses, booklets that could help me? I need a confidence builder.

Thanks,

TAG

While it can be quite simple, as Catherine says, it pays to compare it against reporting as a 'standard' C corp -- each year. I have reported a co-op housing client both ways, over the past couple of years, in order to minimize its tax burden. Not to sound patronizing, but, do prep both an 1120 and an -H, before you prescribe for your client.

VTY, TaxCPANY

[Catherine]

TaxCPANY's advice is good -- I have one association that I do as a C-corp (their non-member dues from pool memberships push that decision), but two others that are little condo associations (8 units and 4 units). All they have in "common" is lawn mowing, snow removal, and outdoor/hallway lighting.

For the little ones it's easy-peasy; they get some monthly fees, pay the electric bill, lawn/snow guys, get the fire alarm and sprinkler tested, pay for a couple of repairs. All on the lettered part. The interest on their savings account goes in the numbered part (with interest rates so low, that's next to nothing).

For the folks with the pool, there is payroll and depreciation and other things that looks/feels/(and acts) more like a corporation, even putting the member/non-member fee ratio aside.

Make sure to check your state requirements! Mass. has a special form for homeowner associations which is nothing like the 1120-H. And my little guys end up paying a couple bucks tax to the state on their earned interest.