I do one of these per year and very unfamiliar with it. What is the 90% test expenditure test all about? It says, "Total expenditures made for purposes described in 90% expenditure test." Any help will be appreciated.
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1120-H Homeowners Assn. 90% Expenditure Test?
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Refer to sec. 528
Requirements for Section IRC 528
Residential Test – at least 85% of units must be used as residences. 85% of lots zoned residential for HOA’s
60% Income Test – 60% of gross income must consist of exempt function income (Membership dues)
90% Expenditure Test – 90% of expenses must be qualifying expenses (For the direct benefit of the members)
Administrative expenses cannot exceed 10% or the 90% test fails.Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR
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Uncle Same
Originally posted by Uncle Sam View PostThis means that 90% of the expenses paid must directly relate to the operation of operating expenses for
the maintaining, improving, repairing the real property for which it was formed, and not pay for
strictly management expenses.
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I am not following you. If you say all the expenses were for pool repair, then that is qualifying expense.
How much did they pay for administrative services (salary and benefits of super etc.)Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR
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What Happens If They Don't?
Originally posted by Uncle Sam View PostThis means that 90% of the expenses paid must directly relate to the operation of operating expenses for
the maintaining, improving, repairing the real property for which it was formed, and not pay for
strictly management expenses.
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Schedule 1120 Instead of 1120-H
Originally posted by Uncle Sam View PostThis means that 90% of the expenses paid must directly relate to the operation of operating expenses for
the maintaining, improving, repairing the real property for which it was formed, and not pay for
strictly management expenses.
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Preparing several small HOA and/or Condo Associatiions 1120H, I am not following the original post and a some of the other information posted .
Most all of my HOA and Condos, do meet the 90% rule.
Why in this post is the Pool being allocated separately $ 2200 expenditures versus 228 Income , is not the pool part of the overall HOA or Condo Association reporting??? Where did the $$ to pay the $ 2200 expenditures dervie from
Is the post about not being a small HOA/condo and they do not even have an exempt status with the Secretary of State and the State taxing agency. I do believe they have to have an exempt status with the Feds, Secretary of State and also the State. Otherwise with none of that possibly an 1120
If they are filed with your state SOS and Fed/State, it would seem that you could possibly meet the HOA/Condo Assoc Fee Income with a 90% Expenditure for same, through Landscape, Pool, Utitilites, Maintenance, Insurance, etc
Sandy
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