1120-h

[oceanlovin'ea]

I have one homeowners association that I do every year. I have always done it the same, which was the way it had been prepared by a CPA firm before me.

I just heard a couple of comments and wanted to make sure that I am doing it right.

They collect assessment per lot to take care of maintenance of lawn and lights. So all of this is Tax exempt function income, I believe.

The expenses they have are for lights and lawn maintenance, tax preparation fee and corporate filing fee. I have always put the total of all of this as expenditures for purposes described in the 90% expenditures. Is this correct?

Or should the tax prep fee and the corporate filing fee be listed in the deductions section? I really don't think so because these expenses are not connected to production of gross income. Really they don't have any gross income.

Thanks. I just like to make sure I am doing things right.

Linda F

[sea-tax]

Linda f,

i think you are correct . i also got my first 1120-h from a CPA and he too had prepared last year the same way. I did a little research in the instructions and us master tax guide and I think you are on the right track.

[oceanlovin'ea]

They also requested that I amend last year's return because they had listed $700 as part of the expenses to buy insurance to cover the directors. But the insurance was never purchased and so they want to amend the return to show this change.

Is it necessary to do the amended return? Since nothing is ever taxable, could I just make a note of it and keep it in case there was ever a question.

Linda F

[JON]

Interest income is

taxable. If you association does not have net interest income I think they will be in trouble quickly. Special assessments are really fun to collect.

[oceanlovin'ea]

Will check

I will have to check on interest income. They have never reported any interest income to me or on previous returns. They have a checking account, probably not interest bearing.

Linda F