Section 277 Election

[Zee]

IRS Section 277 allows a membership community association and other non-exempts to elect a rollover of excess membership dues into the next year and avoid taxation with certain provisions.

Is there a specific form for this election? Or, should a statement be attached to the 1120? Or, is it sufficient simply to show the deduction as an "Other Deduction" with the notation "Section 277 Adjustment"?

[Uncle Sam]

There is no regulation I see from looking at my tax research software that explains exactly how to treat it.
I would expect tax software program to have an election form to state such, and zero out the taxable income to not be taxed on it.

[Gretel]

IRS Section 277 allows a membership community association and other non-exempts to elect a rollover of excess membership dues into the next year and avoid taxation with certain provisions.

Is there a specific form for this election? Or, should a statement be attached to the 1120? Or, is it sufficient simply to show the deduction as an "Other Deduction" with the notation "Section 277 Adjustment"?

Zee, I have filed this election with one small Homeowners ***. since two years, follwing the guidance of the previous preparer for them. Under "other deductions" I have a line for "deferred income (Rev.Ruling 70-604) and under "other current liabilities I have "deferred income (Rev.....). for the change of the balance.

In years when the expense are higher then the income it will be "other income".

After the research I have done I feel that the most important thing is that the board needs to vote for this election every year if they have too much income OR to vote for a "blanket 70-604 election". Otherwise the IRS would probably disallow upon audit.

[Zee]

Zee, I have filed this election with one small Homeowners ***. since two years, follwing the guidance of the previous preparer for them. Under "other deductions" I have a line for "deferred income (Rev.Ruling 70-604) and under "other current liabilities I have "deferred income (Rev.....). for the change of the balance.

In years when the expense are higher then the income it will be "other income".

After the research I have done I feel that the most important thing is that the board needs to vote for this election every year if they have too much income OR to vote for a "blanket 70-604 election". Otherwise the IRS would probably disallow upon audit.

Thanks for the input. Florida Condominium Law requires an annual election each year, and the rollover income must be fully utilized in the next year.