IRS Form- 1120 H U.S. Income Tax Return for Homeowners Associations

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IRS Form- 1120 H  U.S. Income Tax Return for Homeowners Associations Powered By Docstoc
					Form   1120-H                                                    U.S. Income Tax Return
                                                                                                                                                                     OMB No. 1545-0127

Department of the Treasury
                                                              for Homeowners Associations                                                                                 2007
Internal Revenue Service
For calendar year 2007 or tax year beginning                                                          , 2007, and ending                                                        , 20
              Name                                                                                                         Employer identification number (see page 5)
 label.       Number, street, and room or suite no. (If a P.O. box, see page 5.)                                           Date association formed
 print or     City or town, state, and ZIP code

Check if:  (1)    Final return           (2)     Name change                  Address change
                                                                             (3)                                  (4)                                                  Amended return
 A Check type of homeowners association:                                      Residential real estate association
                                             Condominium management association                                                                                      Timeshare association
 B     Total exempt function income. Must meet 60% gross income test (see instructions)                         B
 C     Total expenditures made for purposes described in 90% expenditure test (see instructions)                C
 D     Association’s total expenditures for the tax year (see instructions)                                     D
 E     Tax-exempt interest received or accrued during the tax year                                              E
                                                    Gross Income (excluding exempt function income)
 1     Dividends                                                                                                                                           1
 2     Taxable interest                                                                                                                                    2
 3     Gross rents                                                                                                                                         3
 4     Gross royalties                                                                                                                                     4
 5     Capital gain net income (attach Schedule D (Form 1120))                                                                                             5
 6     Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797)                                                                              6
 7     Other income (excluding exempt function income) (attach schedule)                                                                                   7
 8     Gross income (excluding exempt function income). Add lines 1 through 7                                                                              8
          Deductions (directly connected to the production of gross income, excluding exempt function income)
 9     Salaries and wages                                                                                                                               9
10     Repairs and maintenance                                                                                                                         10
11     Rents                                                                                                                                           11
12     Taxes and licenses                                                                                                                              12
13     Interest                                                                                                                                        13
14     Depreciation (attach Form 4562)                                                                                                                 14
15     Other deductions (attach schedule)                                                                                                              15
16     Total deductions. Add lines 9 through 15                                                                                                        16
17     Taxable income before specific deduction of $100. Subtract line 16 from line 8                                                                  17
18     Specific deduction of $100                                                                                                                      18                    $100        00
                                                                             Tax and Payments
19     Taxable income. Subtract line 18 from line 17                                                                                                   19
20     Enter 30% of line 19. (Timeshare associations, enter 32% of line 19.)                                                                           20
21     Tax credits (see instructions)                                                                                                                  21
22     Total tax. Subtract line 21 from line 20. See instructions for recapture of certain credits                                                     22
23     Payments: a 2006 overpayment
                    credited to 2007               23a
                  b 2007 estimated tax payments 23b                             c Total   23c
                  d Tax deposited with Form 7004                                          23d
                  e Credit for tax paid on undistributed capital gains (attach Form 2439) 23e
                  f Credit for federal tax on fuels (attach Form 4136)                    23f
                g Add lines 23c through 23f                                                                                                           23g
24     Amount owed. Subtract line 23g from line 22 (see instructions)                                                                                  24
25     Overpayment. Subtract line 22 from line 23g                                                                                                     25
26     Enter amount of line 25 you want: Credited to 2008 estimated tax                                                          Refunded              26
            Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,
            correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Sign                                                                                                                                                           May the IRS discuss this return
Here                                                                                                                                                           with the preparer shown below
                                                                                                                                                               (see instructions)?  Yes     No
              Signature of officer                                              Date                 Title
                                                                                                      Date                                                     Preparer’s SSN or PTIN
Paid               Preparer’s                                                                                                     Check if
                   signature                                                                                                      self-employed
Preparer’s         Firm’s name (or                                                                                                      EIN
Use Only           yours if self-employed),
                                                                                                                                        Phone no.      (              )
                   address, and ZIP code
For Privacy Act and Paperwork Reduction Act Notice, see instructions.                                                         Cat. No. 11477H                       Form   1120-H       (2007)
Form 1120-H (2007)                                                                                                      Page   2

How To Get Forms                          Purpose of Form                            The tax rate for timeshare associations
and Publications                                                                     is 32%. These rates apply to both
                                          A homeowners association files Form        ordinary income and capital gains.
Internet. You can access the IRS          1120-H as its income tax return to
website 24 hours a day, 7 days a          take advantage of certain tax benefits.      If the association is tax exempt
week, at to:                  These benefits, in effect, allow the       under section 501(a), do not file Form
● Download forms, instructions, and       association to exclude exempt              1120-H. See section 6033 and related
publications                              function income (defined later) from its   regulations. If the association loses its
                                          gross income.                              exempt status, see Regulations
● Order IRS products online                                                          section 1.528-8(e).
● Research your tax questions online      Electing To File Form
● Search publications online by topic     1120-H                                     Definitions
or keyword                                A homeowners association elects to         Homeowners association. There are
● View Internal Revenue Bulletins         take advantage of the tax benefits         three types of homeowners
(IRBs) published in the last few years    provided by section 528 by filing a        associations.
● Sign up to receive local and national   properly completed Form 1120-H. The           1. A condominium management
tax news by email.                        election is made separately for each       association organized and operated to
                                          tax year and generally must be made        acquire, build, manage, maintain, and
IRS Tax Products CD/DVD. You can          by the due date, including extensions,     care for the property in a
order Pub. 1796, IRS Tax Products         of the income tax return.                  condominium project substantially all
CD/DVD, and obtain                           This extension does not extend the      of whose units are homes for
● Current year forms, instructions, and   time to pay the tax.                       individuals.
publications                                 Once Form 1120-H is filed, the             2. A residential real estate
● Prior-year forms, instructions, and     association cannot revoke its election     management association organized
publications                              for that year unless the IRS consents.     and operated to acquire, build,
                                          The association may request IRS            manage, maintain, and care for a
● Bonus: Historical Tax Products          consent by filing a ruling request. A      subdivision, development, or similar
CD/DVD - Ships with the final release     user fee must be paid with all ruling      area substantially all of whose lots or
● Tax Map: An electronic research         requests. For more information on          buildings are homes for individuals.
tool and finding aid                      ruling requests, see Rev. Proc.               3. A timeshare association (other
● Tax law frequently asked questions      2007-1. You can find this revenue          than a condominium management
● Tax topics from the IRS telephone       procedure on page 1 of Internal            association) organized and operated
response system                           Revenue Bulletin 2007-1 at                 to acquire, build, manage, maintain,
                                     and care for the property that has
● Fill-in, print, and save features for
most tax forms                               If the association does not elect to    members who hold a timeshare right
                                          use Form 1120-H, it must file the          to use, or a timeshare ownership
● Internal Revenue Bulletins
                                          applicable income tax return, for          interest in, real property of the
● Toll-free and email technical           example, Form 1120.                        timeshare association. A timeshare
support.                                                                             association cannot be a condominium
                                          Automatic 12-month extension to
   The CD/DVD is released twice           make election. If the homeowners           management association.
during the year.                          association fails to make the                 See Regulations section 1.528-4
   ● The first release will ship the      regulatory election to be treated as a     for information regarding the
   beginning of January 2008.             homeowners association, it can get an      “substantially all” test for
   ● The final release will ship the      automatic 12-month extension to            condominium management
   beginning of March 2008.               make the section 528 election,             associations and residential real
   Purchase the CD/DVD from National      provided corrective action is taken        estate management associations.
Technical Information Service at          within 12 months of the due date             To qualify as a homeowners for $35 (no          (including extension) of the return. See   association, the following must apply.
handling fee) or call 1-877-CDFORMS       Regulations section 301.9100-2 for
                                          more information.                          ● At least 60% of the association’s
(1-877-233-6767) toll free to buy the                                                gross income for the tax year must
CD/DVD for $35 (plus a $5 handling           A homeowners association should         consist of exempt function income
fee). Price is subject to change.         compare its total tax computed on          (defined later).
By phone and in person. You can           Form 1120-H with its total tax
                                          computed on Form 1120, U.S.                ● At least 90% of the association’s
order forms and publications by
                                          Corporation Income Tax Return. The         expenses for the tax year must
calling 1-800-TAX-FORM
                                          association may file the form that         consist of expenses to acquire,
(1-800-829-3676). You can also get
                                          results in the lowest tax.                 build, manage, maintain, or care for
most forms and publications at your
local IRS office.                         Tax rate. The taxable income of a          its property, and, in the case of a
                                          homeowners association that files its      timeshare association, for activities
General Instructions                      tax return on Form 1120-H is taxed at      provided to, or on behalf of,
Section references are to the Internal    a flat rate of 30% for condominium         members of the timeshare
Revenue Code unless otherwise noted.      management associations and                association.
                                          residential real estate associations.
Form 1120-H (2007)                                                                                                           Page   3

● No private shareholder or individual    a residential real estate management       and Other Returns, to request a
can profit from the association’s net     association, or (c) owners of timeshare    6-month extension of time to file.
earnings except by acquiring, building,   rights to use, or timeshare ownership
managing, or caring for association       interests in, real property in the case    Who Must Sign
property or by a rebate of excess         of a timeshare association. This           The return must be signed and dated
membership dues, fees, or                 income must come from the members          by the president, vice-president,
assessments.                              as owners, not as customers, of the        treasurer, assistant treasurer, chief
● The association must file Form          association’s services.                    accounting officer, or any other
1120-H to elect under section 528 to         Assessments or fees for a common        association officer (such as tax officer)
be treated as a homeowners                activity qualify but charges for           authorized to sign.
association.                              providing services do not qualify.            If a return is filed on behalf of an
Association property. Association         Examples. In general, exempt function      association by a receiver, trustee, or
property includes real and personal       income includes assessments made           assignee, the fiduciary must sign the
property that:                            to:                                        return, instead of the association
                                             1. Pay principal, interest, and real    officer. Returns and forms signed by a
   1. The association holds,
                                          estate taxes on association property.      receiver or trustee in bankruptcy on
   2. The association’s members hold                                                 behalf of an association must be
in common,                                   2. Maintain association property.       accompanied by a copy of the order
   3. The association’s members hold         3. Clear snow from public areas and     or instructions of the court authorizing
privately within the association, and     remove trash.                              signing of the return or form.
   4. Is owned by a governmental unit        Income that is not exempt function         If an association officer completes
and is used to benefit the unit’s         income includes:                           Form 1120-H, the paid preparer’s
residents.                                   1. Amounts that are not includible in   space should remain blank. Anyone
   Timeshare association property         the organization’s gross income other      who prepares Form 1120-H but does
includes property related to the          than under section 528 (for example,       not charge the association should not
timeshare project that the association    tax-exempt interest).                      complete that section. Generally,
or its members have rights to use.           2. Payments from nonmembers.            anyone who is paid to prepare the
These rights must arise out of                                                       return must sign it and fill in the “Paid
                                             3. Payments from members for            Preparer’s Use Only” area.
recorded easements, covenants, or         special use of the organization’s
other recorded instruments.                                                             The paid preparer must complete
                                          facilities, apart from the use generally   the required preparer information and:
   For more information, see              available to all members.
Regulations section 1.528-3.                                                         ● Sign the return in the space
                                             4. Interest on amounts in a sinking     provided for the preparer’s signature.
Taxable income. Taxable income is         fund.
the excess, if any, of:                                                              ● Give a copy of the return to the
                                             5. Payments for work done on            taxpayer.
   1. Gross income for the tax year,      nonassociation property.
excluding exempt function income,                                                    Note. A paid preparer may sign
                                             6. Members’ payments for                original or amended returns by rubber
over                                      transportation.                            stamp, mechanical device, or
   2. Allowed deductions directly            For more information, see               computer software program.
connected with producing any gross        Regulations section 1.528-9.
income except exempt function                                                        Where To File
income. Allowed deductions include a      When To File                               File the association’s return at the
specific $100 deduction. The following    Generally, an association must file
are not allowed:                                                                     address listed below.
                                          Form 1120-H by the 15th day of the
● Net operating loss deduction            3rd month after the end of its tax year.   If the association’s
(section 172).                                                                       principal business,
                                             If the due date falls on a Saturday,    office, or agency is    Use the following
● Deductions under part VIII of           Sunday, or legal holiday, the              located in:             address:
subchapter B (special deductions for      association may file on the next
corporations).                            business day.                              Delaware, District of
  If facilities are used (or personnel    Private delivery services. You can         Columbia, Illinois,
are employed) for both exempt and         use certain private delivery services      Indiana, Kentucky,
                                          designated by the IRS to meet the          Maine, Maryland,
nonexempt purposes, see Regulations                                                  Massachusetts,
section 1.528-10.                         “timely mailing as timely filing/paying”   Michigan, New
Exempt function income. Exempt            rule for tax returns and payments. See     Hampshire,            Department of the Treasury
function income consists of               the instructions for Form 1120 for         New Jersey, New         Internal Revenue Service
membership dues, fees, or                 details.                                   York, North Carolina, Cincinnati, OH 45999-0012
                                                                                     Ohio, Pennsylvania,
assessments from (a) owners of            Extension. File Form 7004,                 Rhode Island,
condominium housing units, (b)            Application for Automatic 6-Month          South Carolina,
owners of real property in the case of    Extension of Time To File Certain          Vermont, Virginia,
                                          Business Income Tax, Information,          West Virginia,
Form 1120-H (2007)                                                                                                                  Page   4

Alabama, Alaska,
                                                       Other Forms and Statements Rounding Off to Whole
Arizona, Arkansas,                                     That May Be Required       Dollars
California, Colorado,
Florida, Georgia,
                                                       See the Instructions for Form 1120        The association can round off cents to
Hawaii, Idaho, Iowa,                                   and Pub. 542, Corporations, for a list    whole dollars on its return and
Kansas, Louisiana,                                     of other forms and statements the         schedules. If the association does
Minnesota, Mississippi,                                association may be required to file.      round to whole dollars, it must round
Missouri, Montana,        Department of the Treasury                                             all amounts. To round, drop amounts
Nebraska, Nevada,         Internal Revenue Service     Assembling the Return                     under 50 cents and increase amounts
New Mexico, North         Ogden, UT 84201-0012
Dakota, Oklahoma,                                      Attach Form 4136, Credit for Federal      from 50 to 99 cents to the next dollar
Oregon, South Dakota,                                  Tax Paid on Fuels, to Form 1120-H.        (for example, $1.39 becomes $1 and
Tennessee, Texas,                                      Attach schedules in alphabetical order    $2.50 becomes $3).
Utah, Washington,                                      and additional forms in numerical            If two or more amounts must be
Wyoming                                                                                          added to figure the amount to enter
                                                       order after Form 4136.
                                                          Complete every applicable entry        on a line, include cents when adding
A foreign country or      Internal Revenue Service
U.S. possession           P.O. Box 409101              space on Form 1120-H. Do not write        the amounts and round off only the
                          Ogden, UT 84409              “See Attached” instead of completing      total.
                                                       the entry spaces. If more space is        Payment of Tax (Line 24)
                                                       needed on the forms or schedules,
Paid Preparer Authorization                            attach separate sheets using the same     The association must pay any tax due
If the association wants to allow the                  size and format as the printed forms.     in full no later than the 15th day of the
IRS to discuss its 2007 tax return with                If there are supporting statements and    3rd month after the end of the tax
the paid preparer who signed it, check                 attachments, arrange them in the          year. Do not include the payment with
the “Yes” box in the signature area of                 same order as the schedules or forms      the tax return. This payment must be
the return. This authorization applies                 they support and attach them last.        deposited using Form 8109 or EFTPS,
only to the individual whose signature                 Show the totals on the printed forms.     as discussed below.
appears in the “Paid Preparer’s Use                    Enter the association’s name and EIN      Electronic deposit requirement. The
Only” section of the return. It does not               on each supporting statement or           association must make electronic
apply to the firm, if any, shown in that               attachment.                               deposits of all depository taxes (such
section.                                                                                         as employment tax, excise tax, and
   If the “Yes” box is checked, the                    Accounting Methods                        corporate income tax) using the
association is authorizing the IRS to                  Figure taxable income using the           Electronic Federal Tax Payment
call the paid preparer to answer any                   method of accounting regularly used       System (EFTPS) in 2008 if:
questions that may arise during the                    in keeping the association’s books        ● The total deposits of such taxes in
processing of its return. The                          and records. In all cases, the method     2006 were more than $200,000 or
association is also authorizing the paid               used must clearly show taxable
preparer to:                                           income. Permissible methods include       ● The association was required to use
                                                       cash, accrual, or any other method        EFTPS in 2007.
● Give the IRS any information that is
                                                       authorized by the Internal Revenue           If the association is required to use
missing from the return,
                                                       Code.                                     EFTPS and fails to do so, it may be
● Call the IRS for information about                                                             subject to a 10% penalty. If the
the processing of the return or the                    Change in accounting method. To
                                                                                                 association is not required to use
status of any related refund or                        change its method of accounting used
                                                                                                 EFTPS, it may participate voluntarily.
payment(s), and                                        to report taxable income (for income
                                                                                                 To enroll in or get more information
                                                       as a whole or for any material item)
● Respond to certain IRS notices                       the association must file Form 3115,
                                                                                                 about EFTPS, call 1-800-555-4477. To
about math errors, offsets, and return                                                           enroll online, visit the EFTPS website
                                                       Application for Change in Accounting
preparation.                                                                                     at
                                                       Method. For more information, see
   The association is not authorizing                  Form 3115 and Pub. 538, Accounting           Depositing on time. For EFTPS
the paid preparer to receive any                       Periods and Methods.                      deposits to be made timely, the
refund check, bind the association to                                                            association must initiate the
anything (including any additional tax                 Change of Tax Year                        transaction at least 1 business day
liability), or otherwise represent the                 Generally, an association must get the    before the date the deposit is due.
association before the IRS.                            consent of the IRS before changing its    Deposits with Form 8109. If the
  The authorization will automatically                 tax year by filing Form 1128,             association does not use EFTPS,
end no later than the due date                         Application To Adopt, Change, or          deposit tax payments (and estimated
(excluding extension) for filing the                   Retain a Tax Year. However, under         tax payments) with Form 8109,
association’s 2008 tax return. If the                  certain conditions, an association can    Federal Tax Deposit Coupon. If you do
association wants to expand the paid                   change its tax year without getting the   not have a preprinted Form 8109, use
preparer’s authorization, see Pub. 947,                consent.                                  Form 8109-B to make deposits. You
Practice Before the IRS and Power of                     For more information on change of       can get this form by calling
Attorney.                                              tax year, see Form 1128, Regulations      1-800-829-4933 or visiting an IRS
                                                       section 1.442-1, and Pub. 538.            taxpayer assistance center. Have your
                                                                                                 EIN ready when you call or visit.
Form 1120-H (2007)                                                                                                          Page   5

  Do not send deposits directly to an       Late filing of return. In addition to           If the association receives its mail in
IRS office; otherwise, the association      losing the right to elect to file Form        care of a third party (such as an
may have to pay a penalty. Mail or          1120-H, a homeowners association              accountant or an attorney), enter on
deliver the completed Form 8109 with        that does not file its tax return by the      the street address line “C/O” followed
the payment to an authorized                due date, including extensions, may           by the third party’s name and street
depositary (a commercial bank or            be penalized 5% of the unpaid tax for         address or P.O. box.
other financial institution authorized to   each month or part of a month the             Employer identification number
accept federal tax deposits). Make          return is late, up to a maximum of            (EIN). Enter the association’s EIN. If
checks or money orders payable to           25% of the unpaid tax. The minimum            the association does not have an EIN,
the depositary.                             penalty for a return that is over 60          it must apply for one. An EIN may be
  If you prefer, you may mail the           days late is the smaller of the tax due       applied for:
coupon and payment to: Financial            or $100. The penalty will not be
Agent, Federal Tax Deposit                  imposed if the association can show            ● Online—Click on the Online EIN
Processing, P.O. Box 970030, St.            that the failure to file on time was due       Application link at The
Louis, MO 63197. Make the check or          to reasonable cause. Associations that         EIN is issued immediately once the
money order payable to “Financial           file late should attach a statement            application information is validated.
Agent.”                                     explaining the reasonable cause.               ● By telephone at 1-800-829-4933
                                            Late payment of tax. An association            from 7:00 a.m. to 10:00 p.m. in the
  To help ensure proper crediting,
                                            that does not pay the tax when due             association’s local time zone.
enter the association’s EIN, the tax
period to which the deposit applies,        generally may be penalized 1⁄ 2 of 1%          ● By mailing or faxing Form SS-4,
and “Form 1120-H” on the check or           of the unpaid tax for each month or            Application for Employer Identification
money order. Darken the “1120” box          part of a month the tax is not paid, up        Number.
under “Type of Tax” and the                 to a maximum of 25% of the unpaid                 If the association has not received
appropriate “Quarter” box under “Tax        tax. The penalty will not be imposed if       its EIN by the time the return is due,
Period” on the coupon. Records of           the association can show that the             write “Applied for” in the space for the
these deposits will be sent to the IRS.     failure to pay on time was due to             EIN.
For more information on deposits, see       reasonable cause.
                                                                                          Note. The online application process
the instructions in the coupon booklet      Other penalties. Other penalties can          is not yet available for associations
(Form 8109).                                be imposed for negligence, substantial        with addresses in foreign countries or
                                            understatement of tax, reportable             Puerto Rico.
Estimated Tax, Alternative                  transaction understatements, and
Minimum Tax, and Certain                                                                  Final return, name change, address
                                            fraud. See sections 6662, 6662A, and
                                                                                          change, or amended return.
Tax Credits                                 6663.
                                                                                          ● If the association ceases to exist,
These items do not apply to
homeowners associations electing to         Specific Instructions                         file Form 1120-H and check the “Final
                                            Period covered. File the 2007 return          return” box.
file Form 1120-H. See the instructions
for line 21, later, for a list of the tax   for calendar year 2007, and fiscal            ● If the association changed its name
credits that do not apply. However, a       years that begin in 2007 and end in           since it last filed a return, check the
homeowners association that does            2008. For a fiscal year return, fill in the   box for “Name change”.
not elect to file Form 1120-H may be        tax year space at the top of the form.        ● If the association has changed its
required to make payments of                                                              address since it last filed a return
                                                The 2007 Form 1120-H can also be
estimated tax. Because the election is                                                    (including a change to an “in care of”
                                            used if (a) the association has a tax
not made until the return is filed, Form                                                  address), check the box for “Address
                                            year of less than 12 months that
1120-H provides lines for estimated                                                       change”.
                                            begins and ends in 2008 and (b) the
tax payments and the crediting of                                                         ● To amend a previously filed Form
                                            2008 Form 1120-H is not available at
overpayments against estimated tax if                                                     1120-H, file a corrected Form 1120-H
                                            the time the association is required to
payments or overpayments apply.                                                           and check the “Amended return” box.
                                            file its return.
Interest and Penalties                         The association must show its 2008         Note. If a change in address occurs
Interest. Interest is charged on taxes      tax year on the 2007 Form 1120-H              after the return is filed, use Form
paid late even if an extension of time      and take into account any tax law             8822, Change of Address, to notify the
to file is granted. Interest is also        changes that are effective for tax            IRS of the new address.
charged on penalties imposed for            years beginning after 2007.                   Item A. Type of homeowners
failure to file, negligence, fraud,         Name and address. Print or type the           association. See Definitions on
substantial valuation misstatements,        association’s true name (as set forth in      page 2.
substantial understatements of tax,         the charter or other legal document           Item B. 60% gross income test. At
and reportable transaction                  creating it), address, and EIN on the         least 60% of the association’s gross
understatements from the due date           appropriate lines. Include the suite,         income for the tax year must consist
(including extensions) to the date of       room, or other unit number after the          of exempt function income. See
payment. The interest charge is             street address. If a preaddressed label       Exempt function income on page 3.
figured at a rate determined under          is used, include this information on the
section 6621.                               label. If the post office does not
                                            deliver mail to the street address and
                                            the association has a P.O. box, show
                                            the box number instead.
Form 1120-H (2007)                                                                                                        Page   6

Item C. 90% expenditure test. At          Line 15. Other deductions. Expenses,         Privacy Act and Paperwork
least 90% of the association’s            depreciation, and similar items must         Reduction Act Notice. We ask for the
expenditures for the tax year must        not only qualify as items of deduction,      information on this form to carry out
consist of expenses to acquire, build,    but must also be directly connected          the Internal Revenue laws of the
manage, maintain, and care for            with the production of gross income to       United States. You are required to
property, and in the case of a            be deductible in computing the               give us the information. We need it to
timeshare association, for activities     unrelated taxable income.                    ensure that you are complying with
provided to, or on behalf of, members                                                  these laws and to allow us to figure
of the timeshare association. Include     Line 21. Tax credits. The association        and collect the right amount of tax.
current and capital expenditures. Use     may qualify for the following tax            Section 6109 requires return preparers
the association’s accounting method       credits:                                     to provide their identifying numbers on
to figure the total.                      ● Foreign tax credit (Form 1118).            the return.
   Include:                               ● Qualified electric vehicle credit              You are not required to provide the
   1. Salary for an association manager   (Form 8834).                                 information requested on a form that
or secretary.                             ● General business credit (Form              is subject to the Paperwork Reduction
                                          3800). However, it does not include          Act unless the form displays a valid
   2. Expenses for gardening, paving,
                                          the investment credit.                       OMB control number. Books or
street signs, security guards, and
                                             Enter the total amount of credits on      records relating to a form or its
property taxes assessed on
                                          line 21 and attach the appropriate           instructions must be retained as long
association property.
                                          form(s).                                     as their contents may become material
   3. Current operating and capital                                                    in the administration of any Internal
expenditures for tennis courts,           Line 22. If the association must             Revenue law. Generally, tax returns
swimming pools, recreation halls, etc.    recapture any of the low-income              and return information are confidential,
   4. Replacement costs for common        housing credit (or the qualified electric    as required by section 6103.
buildings, heating, air conditioning,     vehicle or new markets credit), include          The time needed to complete and
elevators, etc.                           the amount of the recapture in the           file this form will vary depending on
                                          total for line 22. To the right of the       individual circumstances. The
   Do not include expenditures for
                                          entry space, write “LIH”, “QEV”, or          estimated average time is:
property that is not association
                                          “NMC”, “recapture”, and the amount.
property. Also, do not include                                                         Recordkeeping              11 hr., 57 min.
                                          For details, see Form 8611, Recapture
investments or transfers of funds held
                                          of Low-Income Housing Credit;                Learning about the
to meet future costs. An example
                                          Regulations section 1.30-1 (regarding        law or the form             5 hr., 19 min.
would be transfers to a sinking fund to
                                          the qualified electric vehicle credit); or   Preparing the form         13 hr., 12 min.
replace a roof, even if the roof is
                                          Form 8874, New Markets Credit.
association property.                                                                  Copying, assembling,
                                          Backup withholding. If the                   and sending the form
Item D. Enter the association’s total     association had income tax withheld
expenditures for the tax year including                                                to the IRS                   2 hr., 9 min.
                                          from any payments it received
those expenditures directly related to    because, for example, it failed to give         If you have comments concerning
exempt function income. Use the           the payer its correct EIN, include the       the accuracy of these time estimates
association’s accounting method to        amount withheld in the total for line        or suggestions for making this form
figure the entry for item D.              23g. This type of withholding is called      simpler, we would be happy to hear
Item E. Show any tax-exempt interest      backup withholding. Show the amount          from you. You can write to the Internal
received or accrued. Include any          withheld in the blank space in the           Revenue Service, Tax Products
exempt-interest dividend received as a    right-hand column between lines 22           Coordinating Committee,
shareholder in a mutual fund or other     and 23g, and write “Backup                   SE:W:CAR:MP:T:T:SP, 1111
regulated investment company.             Withholding”.                                Constitution Ave. NW, IR-6526,
                                                                                       Washington, DC 20224. Do not send
                                                                                       the tax form to this office. Instead, see
                                                                                       Where To File on page 3.

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