Can I take a loss from a prior year (1120H) and carry it into the year I am doing that has a small gain?

[shf1957]

I am new on the 1120H form. If I understand correctly the federal and nys forms for the HOA can not be efiled and have to be mail ins.  

My main issue is over the past numerous years they've has losses.  But in the year I am doing there is a small gain.  ( They collected a little more money than what some repairs were to cost)   Can the loss from 2020 be carried over into 2021 to wipe that gain out?  And if so how?   The gain was around 2700 and it is showing a federal tax liability of around 800 and state around 200.   

I've been doing taxes for over 30 years but this is my first HOA  (1120H).

Thank you in advance for any and ALL help you can offer me.  

[Terry53029]

Note that dues are exempt income. See this link, and study it carefully:  https://www.law.cornell.edu/uscode/text/26/528

[shf1957]

When I put the income down on line B for exempt income     Then below in the other section put their deductions.. it comes up with a loss of all the deductions.   Example:  HOA collected 81000.  and their deductions were 79000.     I put down the 81000   and broke down all their deductions and it comes out with a taxable income of a Loss of 79000.   I have to be doing something wrong.

[Terry53029]

You normally put expenses in line C if expenses meet 90% requirement. here are instructions: https://www.irs.gov/pub/irs-pdf/i1120h.pdf

You are probably listing expenses in other expenses which is incorrect for most HOA. That is for expenses directly connected with other (not exempt income) income 

[shf1957]

I am just concerned because when i put the association dues collected under the tax exempt and the brake down all the expenses it shows a loss of the total of expenses in the box showing taxable income.  Such as -79000.    This bothers me because it was not a loss of any amount... shouldn't it just show 0 for being taxable?

[Terry53029]

Haven't done a HOA in a lot of years. AS I remember there is not much of a gain or loss (less than $100). I suspect the previous years were done wrong for your HOA. Suggest you read all info for form instructions, and code 528. Maybe someone else can provide you more help. Good luck

[Taxes-by-Rocky]

Generally, "B to D" for exempt function activities....and "Gross Income and Deductions" for taxable activities.  As noted by the other commentator, you need to review the Instructions to Form 1120-H in detail.  From your comments, you might start by determining if any of your gross income is other than exempt function income (or tax-exempt interest) and subject to taxation.....then you can determine where to put the deductions (above or below).  Hope that helps.

[shf1957]

I sincerely believe you are right.   They came to me for help because the other busn is very questionable.  I can go on about it, but that's their issue charging for preparing returns, never efiling them, but charging the customers for a completed efiled return.. and now people are finding out with the IDME that they have never been efiled and were waiting for their refunds.. just thinking the irs was slow.   ( Legally called Theft of Service).  One party that they did efile, was married and living with his wife and kids and to make that story short she filed head of household for each and gave them both a couple of the kids... then like this one I am trying to do ( which I was honest, have never filed for a HOA.. turns out she said they were real estate residences when it's really condo's.  So I am documenting everything I do with back up .. but if I read it right, there is no need to file  and yes all those expenses I was first entering.. the fine print said do not include any expenses from income that is tax exempt.  I asked the person in charge to look for something stating they are a 501(a)...  so we know for sure that it's not required to file..  

[shf1957]

It's condo's and owned by the individuals that live there.   They pay dues to cover the expenses of repairs and maintenance...and when they need something big they re assess the new amount that would be due and divide it between them all.. like sealing the parking lot.  They do have a bank account with a small amount of reserve in it for a new roof they will need in a few years.   I know the interest is taxable.. 

[dd4vols · Accepted solution]

I do about ten 1120-H for HOA's. For many years.  You are making this WAAAAAAY too hard. 

 Put the dues received on Line B.  Put the total expenditures on LIne C AND Line D.

There is no need at all to have a list of expenditures.  Unless, you did something like play the Lotto and win, etc.  all expenditures that meet the 90% test __which is usually all of them are then on line D.  

There is NO profit/loss unless you do non-HOA transactions.  Well, except the $100 exemption, which was mentioned above by @Terry53029    So you end up with a $100 net loss.

[shf1957]

Thank you so very much... I seriously was not trying to make this harder than it is.. I was just following how that past preparer was filing the past 3 yrs before she closed shop and did what I explained in an earlier conversation.  (So many screw ups and not efiling and collecting the fee for prep/efiling and not doing it.. just taking the money and running).    I figured she might have atleast knew more than I did.. but I see she did not for sure.. she filed those 2017-2019 taxes wrong..   Guess all I can do is file the 2020 and 2021 as you have educated me.   AND I THANK YOU FOR THAT SINCERELY!!     Between staying up to 2am each night trying to correct alot of the returns she had done for others incorrectly. Then my sewer leach field stopped working and my husband was called by the cancer hospital (MSKCC) to come down and meet with an oncologist..for something they found in an eye exam...but earliest appointment is a month from now..Just nerve racking.  He is a survivor from an earlier cancer he had 12yrs ago (stage 4b rectal cancer)  and now bi annually catscan/mri watch for  a spot on his pancrease   So I am under a lot of stress and this HOA paperwork, that I didn't understand, was just adding to it.   I did put the figure of hoa dues collected on "B" and the expenses they occured and paid on "D".    THANK YOU AGAIN.

[shf1957]

One last thing, it states it can't be efiled because it's a 1120H form...   Do I just mail that into the IRS and mail in the State (CT 3 with zero ) ??

[dd4vols]

Yes... You have to mail in. And don't forget to put the expenditures on line C also.  Line C & D should be the same amount on them.

department of the treasury

Internal revenue service

Kansas City, MO 64999-0012

As for CT... I noted there was an option on the form to Check that an 1120H was filed, but it looks like the minimum fee is $250.  HOA/s are exempt from our Franchise & Excise return in Tennessee, and  not required to file a return with our dept to revenue. They do pay an annual $100 fee to our Secretary of State for corporation license renewal.  

Oh, and prayers for you and your family.

Don't hesitate to post questions in this forum.  There are some brilliant and experienced people in this forum.   I lean on this forum so much for help throughout the year.

[shf1957]

I can not THANK YOU ENOUGH..  This is one last stress off of me!!!   THANK YOU.