Fillable Printable 2006 Form 1120-H
Fillable Printable 2006 Form 1120-H
2006 Form 1120-H
OMB No. 1545-0127
U.S. Income Tax Return
for Homeowners Associations
1120-H
Form
Department of the Treasury
Internal Revenue Service
For calendar year 2006 or tax year beginning , 2006, and ending , 20
Employer identification number (see page 5)
Name
Use
IRS
label.
Other-
wise,
print or
type.
Number, street, and room or suite no. (If a P.O. box, see page 5.)
Date association formed
City or town, state, and ZIP code
Check if:
E
A
B
Total expenditures made for purposes described in 90% expenditure test (see instructions)
B
C
Association’s total expenditures for the tax year (see instructions)
C
Tax-exempt interest received or accrued during the tax year
D
D
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
Gross income (excluding exempt function income). Add lines 1 through 7
8
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
16
Total deductions. Add lines 9 through 15
17
Taxable income before specific deduction of $100. Subtract line 16 from line 8
17
$100
18
Specific deduction of $100
18
19
19
Taxable income. Subtract line 18 from line 17
Tax and Payments
20
20
Enter 30% of line 19. (Timeshare associations, enter 32% of line 19.)
Tax credits (see instructions)
21
21
Total tax. Subtract line 21 from line 20. See instructions for recapture of certain credits
22
22
23
23c
23d
2006 estimated tax payments
b
23e
Tax deposited with Form 7004
d
23f
Credit for tax paid on undistributed capital gains (attach Form 2439)
e
Credit for federal tax on fuels (attach Form 4136)
f
23h
Add lines 23c through 23g
h
24
Amount owed. Subtract line 23h from line 22. See instructions for depository method of tax payment
24
Overpayment. Subtract line 22 from line 23h
25
25
Enter amount of line 25 you want: Credited to 2007 estimated tax
©
26
Refunded
©
26
Form 1120-H (2006)
2005 overpayment
credited to 2006
Cat. No. 11477H
a
c Total
©
23a
23b
Payments:
(1)
Final return
(2)
Name change
(3)
Address change
00
Check type of homeowners association:
Residential real estate association
Timeshare association
E
Condominium management association
For Privacy Act and Paperwork Reduction Act Notice, see instructions.
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
Here
Title
Date
Signature of officer
Date
Preparer’s SSN or PTIN
Preparer’s
signature
Check if
self-employed
Paid
Preparer’s
Use Only
Firm’s name (or
yours if self-employed),
address, and ZIP code
EIN
Phone no. ( )
(4)
Amended return
©
©
©
©
20
06
May the IRS discuss this return
with the preparer shown below
(see instructions)?
Yes
No
Total exempt function income. Must meet 60% gross income test (see instructions)
23g
Credit for federal telephone excise tax paid (attach Form 8913)
g
Page 2
Form 1120-H (2006)
General Instructions
Section references are to the Internal
Revenue Code unless otherwise noted.
To qualify as a homeowners
association, the following must apply.
A homeowners association should
compare its total tax computed on
Form 1120-H with its total tax
computed on either Form 1120, U.S.
Corporation Income Tax Return, or
Form 1120-A, U.S. Corporation
Short-Form Income Tax Return. The
association may file the form that
results in the lowest tax.
Purpose of Form
1. A condominium management
association organized and operated to
acquire, build, manage, maintain, and
care for the property in a
condominium project substantially all
of whose units are homes for
individuals.
How To Get Forms
and Publications
A homeowners association elects to
take advantage of the tax benefits
provided by section 528 by filing a
properly completed Form 1120-H. The
election is made separately for each
tax year and generally must be made
by the due date, including extensions,
of the income tax return.
If the association does not elect to
use Form 1120-H, it must file the
applicable income tax return (Form
1120, etc.).
If the association is tax exempt
under section 501(a), do not file Form
1120-H. See section 6033 and related
regulations. If the association loses its
exempt status, see Regulations
section 1.528-8(e).
Definitions
Homeowners association. There are
three types of homeowners
associations.
● Download forms, instructions, and
publications;
● Search publications online by topic
or keyword; and
● Sign up to receive local and national
tax news by email.
● Current year forms, instructions, and
publications;
● Prior-year forms, instructions, and
publications;
Purchase the CD from National
Technical Information Service at
www.irs.gov/cdorders for $25 (no
handling fee) or call 1-877-CDFORMS
(1-877-233-6767) toll free to buy the
CD for $25 (plus a $5 handling fee).
Price is subject to change.
IRS Tax Products CD. You can order
Pub. 1796, IRS Tax Products CD, and
obtain:
Internet. You can access the IRS
website 24 hours a day, 7 days a
week, at www.irs.gov to:
● The Internal Revenue Bulletins; and
get most forms and publications at
your local IRS office.
This extension does not extend the
time to pay the tax.
Electing To File Form
1120-H
See Regulations section 1.528-4
for information regarding the
“substantially all” test for
condominium management
associations and residential real
estate management associations.
● Order IRS products online;
● Tax Map: An electronic research
tool and finding aid;
● Tax law frequently asked questions
(FAQs);
● Fill-in, print, and save features for
most tax forms;
● Toll-free and email technical
support.
Once Form 1120-H is filed, the
association cannot revoke its election
for that year unless the IRS consents.
The association may request IRS
consent by filing a ruling request. A
user fee must be paid with all ruling
requests. For more information on
ruling requests, see Rev. Proc.
2006-1. You can find this revenue
procedure on page 1 of Internal
Revenue Bulletin 2006-1 at
www.irs.gov/pub/irs-irbs/irb06-01.pdf.
3. A timeshare association (other
than a condominium management
association) organized and operated
to acquire, build, manage, maintain,
and care for the property that has
members who hold a timeshare right
to use, or a timeshare ownership
interest in, real property of the
timeshare association. A timeshare
association cannot be a condominium
management association.
Automatic 12-month extension to
make election. If the homeowners
association fails to make the
regulatory election to be treated as a
homeowners association, it can get an
automatic 12-month extension to
make the section 528 election,
provided corrective action is taken
within 12 months of the due date
(including extension) of the return. See
Regulations section 301.9100-2 for
more information.
● Tax topics from the IRS telephone
response system;
2. A residential real estate
management association organized
and operated to acquire, build,
manage, maintain, and care for a
subdivision, development, or similar
area substantially all of whose lots or
buildings are homes for individuals.
A homeowners association files Form
1120-H as its income tax return to
take advantage of certain tax benefits.
These benefits, in effect, allow the
association to exclude exempt
function income (defined later) from its
gross income.
The CD is released twice during the
year.
● The first release will ship the
beginning of January 2007.
● The final release will ship the
beginning of March 2007.
What’s New
● Homeowners associations can
request a credit for the federal
telephone excise tax paid for
nontaxable telephone service on
line 23g.
● Homeowners associations whose
principal business, office, or agency
are located in a foreign country or
U.S. possession must now file Form
1120-H at the Internal Revenue
Service Center, P.O. Box 409101,
Ogden, UT 84409.
● Research your tax questions online;
Tax rate. The taxable income of a
homeowners association that files its
tax return on Form 1120-H is taxed at
a flat rate of 30% for condominium
management associations and
residential real estate associations.
The tax rate for timeshare associations
is 32%. These rates apply to both
ordinary income and capital gains.
● At least 90% of the association’s
expenses for the tax year must
consist of expenses to acquire,
build, manage, maintain, or care for
its property, and, in the case of a
timeshare association, for activities
By phone and in person. You can
order forms and publications by
calling 1-800-TAX-FORM
(1-800-829-3676). You can also
● At least 60% of the association’s
gross income for the tax year must
consist of exempt function income
(defined later).
Page 3
Form 1120-H (2006)
Assessments or fees for a common
activity qualify but charges for
providing services do not qualify.
Examples. In general, exempt function
income includes assessments made
to:
1. Pay principal, interest, and real
estate taxes on association property.
2. Maintain association property.
3. Clear snow from public areas and
remove trash.
1. Amounts that are not includible in
the organization’s gross income other
than under section 528 (for example,
tax-exempt interest).
2. Payments from nonmembers.
3. Payments from members for
special use of the organization’s
facilities, apart from the use generally
available to all members.
4. Interest on amounts in a sinking
fund.
5. Payments for work done on
nonassociation property.
6. Members’ payments for
transportation.
Income that is not exempt function
income includes:
For more information, see
Regulations section 1.528-9.
When To File
Generally, an association must file
Form 1120-H by the 15th day of the
3rd month after the end of its tax year.
If the due date falls on a Saturday,
Sunday, or legal holiday, the
association may file on the next
business day.
Who Must Sign
If an association officer completes
Form 1120-H, the paid preparer’s
space should remain blank. Anyone
who prepares Form 1120-H but does
not charge the association should not
complete that section. Generally,
anyone who is paid to prepare the
return must sign it and fill in the “Paid
Preparer’s Use Only” area.
The paid preparer must complete
the required preparer information and:
● Sign the return in the space
provided for the preparer’s signature.
● Give a copy of the return to the
taxpayer.
Where To File
File the association’s return at the
applicable IRS address listed below.
If a return is filed on behalf of an
association by a receiver, trustee, or
assignee, the fiduciary must sign the
return, instead of the association
officer. Returns and forms signed by a
receiver or trustee in bankruptcy on
behalf of an association must be
accompanied by a copy of the order
or instructions of the court authorizing
signing of the return or form.
The return must be signed and dated
by the president, vice-president,
treasurer, assistant treasurer, chief
accounting officer, or any other
association officer (such as tax officer)
authorized to sign.
Cincinnati, OH
45999-0012
Note. A paid preparer may sign
original or amended returns by rubber
stamp, mechanical device, or
computer software program.
● Net operating loss deduction
(section 172).
● Deductions under part VIII of
subchapter B (special deductions for
corporations).
If facilities are used (or personnel
are employed) for both exempt and
nonexempt purposes, see Regulations
section 1.528-10.
Connecticut,
Delaware, District of
Columbia, Illinois,
Indiana, Kentucky,
Maine, Maryland,
Massachusetts,
Michigan, New
Hampshire,
New Jersey, New
York, North Carolina,
Ohio, Pennsylvania,
Rhode Island,
South Carolina,
Vermont, Virginia,
West Virginia,
Wisconsin
Use the following
Internal Revenue
Service Center
address:
Private delivery services. You can
use certain private delivery services
designated by the IRS to meet the
“timely mailing as timely filing/paying”
rule for tax returns and payments. See
the instructions for Form 1120 for
details.
● The association must file Form
1120-H to elect under section 528 to
be treated as a homeowners
association.
Association property. Association
property includes real and personal
property that:
1. The association holds,
2. The association’s members hold
in common,
3. The association’s members hold
privately within the association, and
4. Is owned by a governmental unit
and is used to benefit the unit’s
residents.
For more information, see
Regulations section 1.528-3.
Taxable income. Taxable income is
the excess, if any, of:
Timeshare association property
includes property related to the
timeshare project that the association
or its members have rights to use.
These rights must arise out of
recorded easements, covenants, or
other recorded instruments.
1. Gross income for the tax year,
excluding exempt function income,
over
2. Allowed deductions directly
connected with producing any gross
income except exempt function
income. Allowed deductions include a
specific $100 deduction. The following
are not allowed:
If the association’s
principal business,
office, or agency is
located in:
● No private shareholder or individual
can profit from the association’s net
earnings except by acquiring, building,
managing, or caring for association
property or by a rebate of excess
membership dues, fees, or
assessments.
provided to, or on behalf of, members
of the timeshare association.
Exempt function income. Exempt
function income consists of
membership dues, fees, or
assessments from (a) owners of
condominium housing units, (b)
owners of real property in the case of
Extension. File Form 7004,
Application for Automatic 6-Month
Extension of Time To File Certain
Business Income Tax, Information,
a residential real estate management
association, or (c) owners of timeshare
rights to use, or timeshare ownership
interests in, real property in the case
of a timeshare association. This
income must come from the members
as owners, not as customers, of the
association’s services.
and Other Returns, to request a
6-month extension of time to file.
Page 4
Form 1120-H (2006)
Accounting Methods
Figure taxable income using the
method of accounting regularly used
in keeping the association’s books
and records. In all cases, the method
used must clearly show taxable
income. Permissible methods include
cash, accrual, or any other method
authorized by the Internal Revenue
Code.
Rounding Off to Whole
Dollars
The association can round off cents to
whole dollars on its return and
schedules. If the association does
round to whole dollars, it must round
all amounts. To round, drop amounts
under 50 cents and increase amounts
from 50 to 99 cents to the next dollar
(for example, $1.39 becomes $1 and
$2.50 becomes $3).
Depository Methods of Tax
Payment
Change of Tax Year
Generally, an association must get the
consent of the IRS before changing its
tax year by filing Form 1128,
Application To Adopt, Change, or
Retain a Tax Year. However, under
certain conditions, an association can
change its tax year without getting the
consent.
Electronic deposit requirement. The
association must make electronic
deposits of all depository taxes (such
as employment tax, excise tax, and
corporate income tax) using the
Electronic Federal Tax Payment
System (EFTPS) in 2007 if:
Complete every applicable entry
space on Form 1120-H. Do not write
“See Attached” instead of completing
the entry spaces. If more space is
needed on the forms or schedules,
attach separate sheets using the same
size and format as the printed forms.
If there are supporting statements and
attachments, arrange them in the
same order as the schedules or forms
they support and attach them last.
Show the totals on the printed forms.
Enter the association’s name and EIN
on each supporting statement or
attachment.
● The total deposits of such taxes in
2005 were more than $200,000 or
● The association was required to use
EFTPS in 2006.
If the association is required to use
EFTPS and fails to do so, it may be
subject to a 10% penalty. If the
association is not required to use
EFTPS, it may participate voluntarily.
To enroll in or get more information
about EFTPS, call 1-800-555-4477. To
enroll online, visit the EFTPS website
at www.eftps.gov.
For more information on change of
tax year, see Form 1128, Regulations
section 1.442-1, and Pub. 538.
If two or more amounts must be
added to figure the amount to enter
on a line, include cents when adding
the amounts and round off only the
total.
Change in accounting method. To
change its method of accounting used
to report taxable income (for income
as a whole or for any material item)
the association must file Form 3115,
Application for Change in Accounting
Method. For more information, see
Form 3115 and Pub. 538, Accounting
Periods and Methods.
The association must pay any tax due
in full no later than the 15th day of the
3rd month after the end of the tax
year. The two methods of depositing
taxes are discussed below.
Alabama, Alaska,
Arizona, Arkansas,
California, Colorado,
Florida, Georgia,
Hawaii, Idaho, Iowa,
Kansas, Louisiana,
Minnesota,
Mississippi, Missouri,
Montana, Nebraska,
Nevada, New Mexico,
North Dakota,
Oklahoma, Oregon,
South Dakota,
Tennessee, Texas,
Utah, Washington,
Wyoming
Ogden, UT
84201-0012
Paid Preparer Authorization
If the association wants to allow the
IRS to discuss its 2006 tax return with
the paid preparer who signed it, check
the “Yes” box in the signature area of
the return. This authorization applies
only to the individual whose signature
appears in the “Paid Preparer’s Use
Only” section of the return. It does not
apply to the firm, if any, shown in that
section.
If the “Yes” box is checked, the
association is authorizing the IRS to
call the paid preparer to answer any
questions that may arise during the
processing of its return. The
association is also authorizing the paid
preparer to:
● Give the IRS any information that is
missing from the return,
● Call the IRS for information about
the processing of the return or the
status of any related refund or
payment(s), and
● Respond to certain IRS notices
about math errors, offsets, and return
preparation.
Other Forms and Statements
That May Be Required
See the Instructions for Forms 1120
and 1120-A and Pub. 542,
Corporations, for a list of other forms
and statements the association may
be required to file.
Assembling the Return
Attach Form 4136, Credit for Federal
Tax Paid on Fuels, to Form 1120-H.
Attach schedules in alphabetical order
and additional forms in numerical
order after Form 4136.
The association is not authorizing
the paid preparer to receive any
refund check, bind the association to
anything (including any additional tax
liability), or otherwise represent the
association before the IRS.
The authorization will automatically
end no later than the due date
(excluding extension) for filing the
association’s 2007 tax return. If the
association wants to expand the paid
preparer’s authorization, see Pub. 947,
Practice Before the IRS and Power of
Attorney.
A foreign country or
U.S. possession
P.O. Box 409101
Ogden, UT 84409
Depositing on time. For EFTPS
deposits to be made timely, the
association must initiate the
transaction at least 1 business day
before the date the deposit is due.
Deposits with Form 8109. If the
association does not use EFTPS,
deposit tax payments (and estimated
tax payments) with Form 8109,
Federal Tax Deposit Coupon. If you do
not have a preprinted Form 8109, use
Form 8109-B to make deposits. You
can get this form by calling
1-800-829-4933 or visiting an IRS
taxpayer assistance center. Have your
EIN ready when you call or visit.
Page 5
Form 1120-H (2006)
Specific Instructions
Name and address. Print or type the
association’s true name (as set forth in
the charter or other legal document
Period covered. File the 2006 return
for calendar year 2006, and fiscal
years that begin in 2006 and end in
2007. For a fiscal year return, fill in the
tax year space at the top of the form.
Employer identification number
(EIN). Enter the association’s EIN. If
the association does not have an EIN,
it must apply for one. An EIN may be
applied for:
The 2006 Form 1120-H can also be
used if (a) the association has a tax
year of less than 12 months that
begins and ends in 2007 and (b) the
2007 Form 1120-H is not available at
the time the association is required to
file its return.
The association must show its 2007
tax year on the 2006 Form 1120-H
and take into account any tax law
changes that are effective for tax
years beginning after 2006.
● Online—Click on the EIN link at
www.irs.gov/businesses/small. The EIN
is issued immediately once the
application information is validated.
● By telephone at 1-800-829-4933
from 7:00 a.m. to 10:00 p.m. in the
association’s local time zone.
● By mailing or faxing Form SS-4,
Application for Employer Identification
Number.
If the association receives its mail in
care of a third party (such as an
accountant or an attorney), enter on
the street address line “C/O” followed
by the third party’s name and street
address or P.O. box.
Do not send deposits directly to an
IRS office; otherwise, the association
may have to pay a penalty. Mail or
deliver the completed Form 8109 with
the payment to an authorized
depositary (a commercial bank or
other financial institution authorized to
accept federal tax deposits). Make
checks or money orders payable to
the depositary.
To help ensure proper crediting,
enter the association’s EIN, the tax
period to which the deposit applies,
and “Form 1120-H” on the check or
money order. Darken the “1120” box
under “Type of Tax” and the
appropriate “Quarter” box under “Tax
Period” on the coupon. Records of
these deposits will be sent to the IRS.
For more information, see “Marking
the Proper Tax Period” in the
instructions for Form 8109.
failure to file, negligence, fraud,
substantial valuation misstatements,
substantial understatements of tax,
and reportable transaction
understatements from the due date
(including extensions) to the date of
payment. The interest charge is
figured at a rate determined under
section 6621.
Estimated Tax, Alternative
Minimum Tax, and Certain
Tax Credits
These items do not apply to
homeowners associations electing to
file Form 1120-H. See the instructions
for line 21, later, for a list of the tax
credits that do not apply. However, a
homeowners association that does
not elect to file Form 1120-H may be
required to make payments of
estimated tax. Because the election is
not made until the return is filed, Form
1120-H provides lines for estimated
tax payments and the crediting of
overpayments against estimated tax if
payments or overpayments apply.
For more information on deposits,
see the instructions in the coupon
booklet (Form 8109) and Pub. 583,
Starting a Business and Keeping
Records.
If you prefer, you may mail the
coupon and payment to: Financial
Agent, Federal Tax Deposit
Processing, P.O. Box 970030, St.
Louis, MO 63197. Make the check or
money order payable to “Financial
Agent.”
Late filing of return. In addition to
losing the right to elect to file Form
1120-H, a homeowners association
that does not file its tax return by the
due date, including extensions, may
be penalized 5% of the unpaid tax for
each month or part of a month the
return is late, up to a maximum of
25% of the unpaid tax. The minimum
penalty for a return that is over 60
days late is the smaller of the tax due
or $100. The penalty will not be
imposed if the association can show
that the failure to file on time was due
to reasonable cause. Associations that
file late should attach a statement
explaining the reasonable cause.
Other penalties. Other penalties can
be imposed for negligence, substantial
understatement of tax, reportable
transaction understatements, and
fraud. See sections 6662, 6662A, and
6663.
Late payment of tax. An association
that does not pay the tax when due
generally may be penalized
1
⁄ 2 of 1%
of the unpaid tax for each month or
part of a month the tax is not paid, up
to a maximum of 25% of the unpaid
tax. The penalty will not be imposed if
the association can show that the
failure to pay on time was due to
reasonable cause.
Caution: If the association owes tax
when it files Form 1120-H, do not
include the payment with the tax
return. Instead, mail or deliver the
payment with Form 8109 to an
authorized depositary, or use EFTPS, if
applicable.
Interest. Interest is charged on taxes
paid late even if an extension of time
to file is granted. Interest is also
charged on penalties imposed for
Interest and Penalties
creating it), address, and EIN on the
appropriate lines. Include the suite,
room, or other unit number after the
street address. If a preaddressed label
is used, include this information on the
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.
● To amend a previously filed Form
1120-H, file a corrected Form 1120-H
and check the “Amended return” box.
Note. If a change in address occurs
after the return is filed, use Form
8822, Change of Address, to notify the
IRS of the new address.
● If the association has changed its
address since it last filed a return
(including a change to an “in care of”
address), check the box for “Address
change”.
● If the association changed its name
since it last filed a return, check the
box for “Name change”.
Final return, name change, address
change, or amended return.
If the association has not received
its EIN by the time the return is due,
write “Applied for” in the space for the
EIN. For more details, see Pub. 583.
Note. The online application process
is not yet available for associations
with addresses in foreign countries or
Puerto Rico.
● If the association ceases to exist,
file Form 1120-H and check the “Final
return” box.
Item A. Type of homeowners
association. See Definitions on
page 2.
Page 6
Form 1120-H (2006)
If you have comments concerning
the accuracy of these time estimates
or suggestions for making this form
simpler, we would be happy to hear
from you. You can write to the Internal
Revenue Service, Tax Products
Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111
Constitution Ave. NW, IR-6406,
Washington, DC 20224. Do not send
the tax form to this office. Instead, see
Where To File on page 3.
Item B. 60% gross income test. At
least 60% of the association’s gross
income for the tax year must consist
of exempt function income (see
Definitions on page 2).
Item C. 90% expenditure test. At
least 90% of the association’s
expenditures for the tax year must
consist of expenses to acquire, build,
manage, maintain, and care for
property, and in the case of a
timeshare association, for activities
provided to, or on behalf of, members
of the timeshare association. Include
current and capital expenditures. Use
the association’s accounting method
to figure the total.
Include:
1. Salary for an association manager
or secretary.
2. Expenses for gardening, paving,
street signs, security guards, and
property taxes assessed on
association property.
3. Current operating and capital
expenditures for tennis courts,
swimming pools, recreation halls, etc.
4. Replacement costs for common
buildings, heating, air conditioning,
elevators, etc.
Do not include expenditures for
property that is not association
property. Also, do not include
investments or transfers of funds held
to meet future costs. An example
would be transfers to a sinking fund to
replace a roof, even if the roof is
association property.
Line 22. If the association must
recapture any of the low-income
housing credit (or the qualified electric
vehicle or new markets credit), include
the amount of the recapture in the
total for line 22. To the right of the
entry space, write “LIH”, “QEV”, or
“NMC”, “recapture”, and the amount.
For details, see Form 8611, Recapture
of Low-Income Housing Credit;
Regulations section 1.30-1 (regarding
the qualified electric vehicle credit); or
Form 8874, New Markets Credit.
Enter the total amount of credits on
line 21 and attach the appropriate
form(s).
● General business credit (Form
3800). However, it does not include
the investment credit.
● Foreign tax credit (Form 1118).
● Qualified electric vehicle credit
(Form 8834).
Item E. Show any tax-exempt interest
received or accrued. Include any
exempt-interest dividend received as a
shareholder in a mutual fund or other
regulated investment company.
Line 15. Other deductions. Expenses,
depreciation, and similar items must
not only qualify as items of deduction,
but must also be directly connected
with the production of gross income to
be deductible in computing the
unrelated taxable income.
Line 21. Tax credits. The association
may qualify for the following tax
credits:
The time needed to complete and
file this form will vary depending on
individual circumstances. The
estimated average time is:
Recordkeeping 11 hr., 57 min.
Learning about the
law or the form 5 hr., 19 min.
Preparing the form 13 hr., 12 min.
Copying, assembling,
and sending the form
to the IRS 2 hr., 9 min.
Privacy Act and Paperwork
Reduction Act Notice. We ask for the
information on this form to carry out
the Internal Revenue laws of the
United States. You are required to
give us the information. We need it to
ensure that you are complying with
these laws and to allow us to figure
and collect the right amount of tax.
Section 6109 requires return preparers
to provide their identifying numbers on
the return.
You are not required to provide the
information requested on a form that
is subject to the Paperwork Reduction
Act unless the form displays a valid
OMB control number. Books or
records relating to a form or its
instructions must be retained as long
as their contents may become material
in the administration of any Internal
Revenue law. Generally, tax returns
and return information are confidential,
as required by section 6103.
Item D. Enter the association’s total
expenditures for the tax year including
those expenditures directly related to
exempt function income. Use the
association’s accounting method to
figure the entry for item D.
Line 23g. Credit for federal
telephone excise tax paid. If the
association was billed after February
28, 2003, and before August 1, 2006,
for the federal telephone excise tax on
long distance or bundled service, the
association may be able to request a
credit for the tax paid. The association
had bundled service if its local and
long distance service was provided
under a plan that does not separately
state the charge for local service. The
association cannot request the credit if
it has already received a credit or
refund from its service provider. If the
association requests the credit, it
cannot ask its service provider for a
credit or refund and must withdraw
any request previously submitted to its
provider.
Backup withholding. If the
association had income tax withheld
from any payments it received
because, for example, it failed to give
the payer its correct EIN, include the
amount withheld in the total for line
23h. This type of withholding is called
backup withholding. Show the amount
withheld in the blank space in the
right-hand column between lines 22
and 23h, and write “Backup
Withholding”.
The association can request the
credit by attaching Form 8913, Credit
for Federal Telephone Excise Tax
Paid, showing the actual amount the
association paid. The association also
may be able to request the credit
based on an estimate of the amount
paid. See Form 8913 for details. In
either case, the association must keep
records to substantiate the amount of
the credit requested.
