1120H tax question

Started by SidneyP • 3 replies • 1128 views

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SidneyP (Florida)
Posts: 302

Posted:

When a 1120H is filled out...on the income line do you put in the amount that our assessment "would" bring in if all assessments were paid or do we put in the exact amount that was taken in...(14 delinquents)...and expenditures are not listed at all if you use the 90% expenditure test?
Trying to understand the tax report I have in front of me...thanks

DeeB (Arizona)
Posts: 18

Posted:

Sidney,

It depends on what accounting method you are using. If this your first year filing, you can choose, but if not you need to go by how you filed last year or submit Form 3115, Request for change in accounting method.

For the cash method, you would only include the assessments that you actually received before the end of your tax year. It doesn't matter if some are delinquent. But then you also can only include as expenditures those that were actually paid.

If you report on the accrual method, you report the assessments that were assessed to all home owners, regardless if they paid them or not. This should come close to your budgeted amount. All expenses incurred for the year whether paid or not are included.

The 60% and 90% tests are tests to see if you qualify to file the 1120H. If you don't meet these tests you can't use the Form 1120H to file your tax return.

I am not sure what you meant by "and expenditures are not listed at all if you use the 90% expenditure test?", but if you don't meet that 90% test you can't use the 1120H.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Sydney,

When a CPA prepares a corp. tax return he/she uses the year-end financial statement to obtain the figures and this is what you should be doing. However, I would suggest having a CPA do this for you. Not that I think you aren't qualified to do it, I just think it's prudent for an HOA -- whether self-managed or contracting with a mgmt co. -- to have a professional prepare the tax returns. The CPA can also do the 1099's and prepare a compilation, review or audit (whatever the Board prefers or the gov docs or state law requires) at the same time.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Dee,

I would think if the HOA wants to change their method of accounting they would have to request the change long b/4 the time to file. IMO, it's at the IRS' discretion to approve the change or not. I haven't worked in the accounting field for quite a while, so please correct me if I'm wrong.

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