1120-H line D items

We have always filed 1120-h and will do so for 2013 as well. However, during 2013 we had some non-exempt income that we knew we would have to pay taxes on. Since we are cash basis, we paid estimated state and Federal taxes to be sure we could deduct the state taxes on the 1120-H down in the non-exempt part. My question is does anyone know if we include the state and Federal estimated taxes paid on line D Total Expenditures?

Many small HOA's do thier own taxes and rarely would you need an actual CPA to do your taxes.

Line D is not used in computing any tax you may owe. Lines B through E are only used to determine if your association is qualified to file Form 1120-H. Since any estimated state taxes you paid are not qualified 90% expenses (because you paid them only because of non-exempt income) they should be included on line D, but not on line C. As long as line C is at least 90% of line D, you can file 1120-H. I have not run into your situation before. My advice is the same as others; to be certain, consult a CPA who has prepared 1120-H before (not all of them have).

I'm a new poster and I apologize if this is not the appropriate thread for my question.

My question concerns income and expenses reported on lines B through D on the 1120-H for our condominium management association.

Our CPA has been reporting the total amount of association fees collected on line B, tax exempt function income. Our association fees include assessments for operating expenses, reserve study, and a contingency fund for unanticipated operating or capital expenses; I think this is correct. However, my question is whether a special assessment for roof replacement should be included on this line. Our CPA did not include our special assessment and when I asked why, he said "the IRS is unclear", but from my limited research, primarily the 1120 H instructions and reading this forum, it seems to me that it should have been included. (FYI, our insurance carrier demanded that we expedite the replacement of our roofs from our reserve study or they would drop us and no other insurance company's proposal came in under the increased amount of our current carrier, so we proceeded with the assessment of an average of $2,500 per unit owner, for a total of $180,000 to make up the amount needed for the roofs and nearly depleting our reserve funds.)

On line C, the unanticipated expense of replacing a chimney ($9,235, half of the total expense that was paid in 2013) was not included in the amount of expenses on either line C or D. I'm thinking it should have been included on line C (the chimney had to be replaced because of fire damage that exposed mold in the chimney that the insurance company said was not due to the fire). I did not ask anymore questions because of his response to my first question about the special assessment. Also, the expense of the roofs was netted against the special assessment, so only part of the total roof expense of $208,750 was included in the amount reported on line C.

Does anyone know whether the CPA was correct and direct me to IRS regs or rulings that might be helpful to me in understanding why he reported the income and expenses in this manner? I am a retired CPA and a first time condo owner, board member and board treasurer and have no experience or training in preparing tax returns for a condominium association. The CPA and our PM company are the experts and I'm okay with relying on them; I felt that they did not want to spend the time to "school" me on this complicated matter and I would like to try and educate myself on the preparation of the 1120 H.

Any information or comments would be greatly appreciated!

unless you don't know how to DIY

DOH

I thought I could easily do this report "DIY" until I compared his report to our financials and how I would have prepared the report. We only pay $210 and the Board is okay with that.

My question is whether someone could tell me what they thought of how he prepared the report, agree/disagree?

Thank you for your reply!