Form 1120H

[oceanlovin'ea]

I was rereading the instruction for the 1120H and started to question the way I had done my "one" homeowners association in the past.

They charge dues and have expenditures for steet lights, lawn maintenance, tax prep and corporate filing fee.The dues just cover their expenses for each year. They have a small cotingency fund in their checking account. They are not earning any interest or have any other income.

I have always listed the total of their expenses on Line C and Line D under the tax exempt function part of the return.

But I am questioning if the tax prep and corporate filing fee should be included there. If not, where do I put it. Is it included in D but not C?

Since I only do 1 each year, I forget my reasoning and if I looked this up before.

Thanks.

Linda F

[Uncle Sam]

Form 1120H

The accounting and corporation tax expenses I would definitely pick up in line D since it asks for "all expenses".
Since accounting and corporation taxes are considered administrative type expenses, I would NOT include them in line C - since they are not directly related to the operation of the exempt function of maintaining the property. The corporation would have to incur them regardless of what type of business it operates. If you wanted to stretch it somewhat, you could make an allocation of how much of each of the above are administrative vs exempt function.
I have done a couple of these condo associations (Common Interest Real Estate Associations) for a number of years.