Prepare a Homeowner's Association return using optimization
Homeowner's associations file Form 1120-H to take advantage of certain tax benefits. These benefits allow the association to exclude exempt function income and deductions from the determination of taxable income. If the association doesn't elect to use Form 1120-H, the association will need to file Form 1120, U.S. Corporation Income Tax Return (or other applicable income tax return).
Do the following to prepare a Homeowner's Association return and allow the application to compare the total tax calculated on Form 1120 with the total tax calculated on Form 1120-H and print the form that results in the lowest tax.
- Proforma or add a new client with the entity typeHomeowner's Association.
- Depending on the condition, do 1 of the following:
- If this is a new client, select theGeneralfolder in the folders block, go to the1120tab, then enter the information.
- If this was an existing client, select theGeneralfolder in the folders block, go to the1120tab, and review the information that was transferred from the prior-year client.
- Select theIncome and Deductionsfolder in the folders block and enter the income and deduction amounts.
- Select the1120Hfolder in the folders block, then select theHtab, and complete the following information:
- Total exempt function income— UltraTax CS transfers this amount to Form 1120-H, Line B.
- Total expenditures made for purposes described in 90% expenditure test— UltraTax CS transfers this amount to Form 1120-H, Line.
- Income— Enter any income that's not exempt function income in this data section. When these fields are left blank, UltraTax CS uses the corresponding totals from theIncome & Deductionfolder to complete theGross Incomesection of Form 1120-H.
- Deductions— Enter any deductions that are directly connected to the production of taxable gross income in this data section. UltraTax CS uses this information to complete theDeductionssection of Form 1120-H.
- Select thePaymentsfolder in the folders block, go to thePmtExttab, and enter the payment information. UltraTax CS uses this information to complete the Tax and Payments section of Form 1120-H.
- If Form 1120 results in the lowest tax, enter any additional information as needed to complete the supporting schedules required with this return.
