HOA's and 1120-H

[Margaret CPA in OH]

A new client is a HOA, actually a condo owner's assn. They have existed since 1983 and filed each year. The one page form itself is simple and, apparently, the 60% and 90% requirements for income and expenses, respectively, have been met at least most of the time.

There is no balance sheet and so no assets listed for depreciation purposes. They keep a detailed spreadsheet showing beginning bank operating balances and assessments income and expenses throughout the year. There is also a Repair Fund. Is it required for an 1120-H to provide a balance sheet and have depreciation? The association does not have assets in excess of $250,000 but the entire building is worth much more. Each unit, however, is owned by individuals. What say you all who have experience with HOA's?

[Maribeth]

A new client is a HOA, actually a condo owner's assn. They have existed since 1983 and filed each year. The one page form itself is simple and, apparently, the 60% and 90% requirements for income and expenses, respectively, have been met at least most of the time.

There is no balance sheet and so no assets listed for depreciation purposes. They keep a detailed spreadsheet showing beginning bank operating balances and assessments income and expenses throughout the year. There is also a Repair Fund. Is it required for an 1120-H to provide a balance sheet and have depreciation? The association does not have assets in excess of $250,000 but the entire building is worth much more. Each unit, however, is owned by individuals. What say you all who have experience with HOA's?

I have several HOA's that are clients. Each has their accounting on QB. However, the "opening entries" were never prepared for their QB and I have no idea about the HOA's basis in any of the common areas. I look at each year, prepared the 1120-H or the 1120, if needed, and I have never put a balance sheet into either return.

Maribeth

[Margaret CPA in OH]

Thanks, Maribeth. I think it isn't needed because of the asset minimum but then wonder about depreciation for common area improvements, etc. More research but we are probably okay.