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Department of the Treasury
Internal Revenue Service
2023

Instructions for

Form 1120-H

U.S. Income Tax Return for Homeowners Associations

Section references are to the Internal Revenue Code TAS also works to resolve large-scale or systemic
unless otherwise noted. problems that affect many taxpayers. If the association
knows of one of these broad issues, report it to TAS
Future Developments through the Systemic Advocacy Management System at
For the latest information about developments related to IRS.gov/SAMS.
Form 1120-H and its separate instructions, such as
legislation enacted after they were published, go to For more information, go to TaxpayerAdvocate.IRS.gov.
IRS.gov/Form1120H.
How To Get Forms and Publications
What’s New Internet. You can access the IRS website 24 hours a day,
Increase in penalty for failure to file. For tax returns 7 days a week, at IRS.gov to:
required to be filed in 2024, the minimum penalty for • Download forms, instructions, and publications;
failure to file a return that is over 60 days late has been • Order IRS products online;
increased to the smaller of the tax due or $485. See Late • Research your tax questions online;
filing of return, later. • Search publications online by topic or keyword; and
Elective payment election. Applicable entities and • Sign up to receive local and national tax news by email.
electing taxpayers can elect to treat certain credits as Tax forms and publications. The association can
elective payments. Any resulting overpayment may result download or print all of the forms and publications it may
in refunds. See the instructions for line 23f. Also, see the need on IRS.gov/Forms.
Instructions for Form 3800. Otherwise, the association can go to IRS.gov/
OrderForms to place an order and have forms mailed to it.
Photographs of Missing Children
The IRS will process your order for forms and publications
The IRS is a proud partner with the National Center for as soon as possible.
Missing & Exploited Children® (NCMEC). Photographs of
missing children selected by the Center may appear in
instructions on pages that would otherwise be blank. You General Instructions
can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST Purpose of Form
(1-800-843-5678) if you recognize a child. A homeowners association files Form 1120-H as its
income tax return to take advantage of certain tax
The Taxpayer Advocate Service benefits. These benefits, in effect, allow the association to
The Taxpayer Advocate Service (TAS) is an independent exclude exempt function income (defined later) from its
organization within the IRS that helps taxpayers and gross income.
protects taxpayer rights. TAS strives to ensure that every
taxpayer is treated fairly and that you know and Electing To File Form 1120-H
understand your rights under the Taxpayer Bill of Rights. A homeowners association elects to take advantage of the
tax benefits provided by section 528 by filing a properly
As a taxpayer, the association has rights that the IRS completed Form 1120-H. The election is made separately
must abide by in its dealings with the association. TAS can for each tax year and must generally be made by the due
help the association if: date, including extensions, of the income tax return.
• A problem is causing financial difficulty for the
association; This extension does not extend the time to pay the tax.
• The association is facing immediate threat of adverse
Once Form 1120-H is filed, the association cannot
action; or
revoke its election for that year unless the IRS consents.
• The association has tried repeatedly to contact the IRS
The association may request IRS consent by filing a ruling
but no one has responded, or the IRS hasn’t responded
request. A user fee must be paid with all ruling requests.
by the date promised.
For more information on ruling requests, see Rev. Proc.
TAS has offices in every state, the District of Columbia, 2023-1, 2023-1 I.R.B. 1 (or any successor), available at
and Puerto Rico. Local advocates’ numbers are in their IRS.gov/irb/2023-01_IRB#RP-2023-01.
local directories and at TaxpayerAdvocate.IRS.gov/ If the association does not elect to use Form 1120-H, it
Contact-Us. The association can also call TAS at must file the applicable income tax return, for example,
877-777-4778. Form 1120, U.S. Corporation Income Tax Return.

Dec 14, 2023 Cat. No. 24935G

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  A homeowners association should compare its total tax       • The association must file Form 1120-H to elect under 
computed on Form 1120-H with its total tax computed on        section 528 to be treated as a homeowners association.
Form 1120. The association may file the form that results 
                                                              Association property. Association property includes 
in the lowest tax.
                                                              real and personal property that:
Automatic 12-month extension to make election.           If     1. The association holds,
the homeowners association fails to make the regulatory 
                                                                2. The association's members hold in common,
election to be treated as a homeowners association, it can 
get an automatic 12-month extension to make the section         3. The association's members hold privately within the 
528 election, provided corrective action is taken within 12   association, and
months of the due date (including extension) of the return.     4. Is owned by a governmental unit and is used to 
See Regulations section 301.9100-2 for more information.      benefit the unit's residents.
Tax rate. The taxable income of a homeowners                    Timeshare association property includes property 
association that files its tax return on Form 1120-H is       related to the timeshare project that the association or its 
taxed at a flat rate of 30% for condominium management        members have rights to use. These rights must arise out 
associations and residential real estate associations. The    of recorded easements, covenants, or other recorded 
tax rate for timeshare associations is 32%. These rates       instruments.
apply to both ordinary income and capital gains.                For more information, see Regulations section 1.528-3.
  If the association is tax exempt under section 501(a), 
do not file Form 1120-H. See section 6033 and related         Taxable income.  Taxable income is the excess, if any, of:
regulations. If the association loses its exempt status, see    1. Gross income for the tax year, excluding exempt 
Regulations section 1.528-8(e).                               function income, over
                                                                2. Allowed deductions directly connected with 
Definitions                                                   producing any gross income except exempt function 
Homeowners association.  There are three types of             income. Allowed deductions include a specific $100 
homeowners associations.                                      deduction. The following are not allowed.
  1. A condominium management association organized           • Net operating loss deduction (section 172).
and operated to acquire, build, manage, maintain, and         • Deductions under Part VIII of subchapter B (special 
                                                              deductions for corporations).
care for the property in a condominium project 
substantially all of whose units are homes for individuals.     If facilities are used (or personnel are employed) for 
  2. A residential real estate management association         both exempt and nonexempt purposes, see Regulations 
organized and operated to acquire, build, manage,             section 1.528-10.
maintain, and care for a subdivision, development, or         Exempt function income.      Exempt function income 
similar area substantially all of whose lots or buildings are consists of membership dues, fees, or assessments from
homes for individuals.                                        (a) owners of condominium housing units; (b) owners of 
  3. A timeshare association (other than a condominium        real property in the case of a residential real estate 
management association) organized and operated to             management association; or (c) owners of timeshare 
acquire, build, manage, maintain, and care for the            rights to use, or timeshare ownership interests in, real 
property that has members who hold a timeshare right to       property in the case of a timeshare association. This 
use, or a timeshare ownership interest in, real property of   income must come from the members as owners, not as 
the timeshare association. A timeshare association cannot     customers, of the association's services.
be a condominium management association.                        Assessments or fees for a common activity qualify but 
  See Regulations section 1.528-4 for information             charges for providing services don’t qualify.
regarding the “substantially all” test for condominium        Examples.   In general, exempt function income includes 
management associations and residential real estate           assessments made to:
management associations.
                                                                1. Pay principal, interest, and real estate taxes on 
  To qualify as a homeowners association, the following       association property;
must apply.
                                                                2. Maintain association property; and
• At least 60% of the association's gross income for the 
tax year must consist of exempt function income (defined        3. Clear snow from public areas and remove trash.
later).                                                         Income that is not exempt function income includes:
• At least 90% of the association's expenses for the tax 
                                                                1. Amounts that are not includible in the organization's 
year must consist of expenses to acquire, build, manage, 
                                                              gross income other than under section 528 (for example, 
maintain, and care for its property, and, in the case of a 
                                                              tax-exempt interest);
timeshare association, for activities provided to, or on 
behalf of, members of the timeshare association.                2. Payments from nonmembers;
• No private shareholder or individual can profit from the      3. Payments from members for special use of the 
association's net earnings except by acquiring, building,     organization's facilities, apart from the use generally 
managing, maintaining, or caring for association property     available to all members;
or by a rebate of excess membership dues, fees, or              4. Interest on amounts in a sinking fund;
assessments.

2                                                                                  Instructions for Form 1120-H (2023)

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5. Payments for work done on nonassociation                              Who Must Sign
property; and
                                                                         The return must be signed and dated by the president, 
6. Members' payments for transportation.                                 vice president, treasurer, assistant treasurer, chief 
For more information, see Regulations section 1.528-9.                   accounting officer, or any other association officer (such 
                                                                         as tax officer) authorized to sign.
When To File                                                               If a return is filed on behalf of an association by a 
Generally, an association must file Form 1120-H by the                   receiver, trustee, or assignee, the fiduciary must sign the 
15th day of the 4th month after the end of its tax year.                 return, instead of the association officer. Returns and 
                                                                         forms signed by a receiver or trustee in bankruptcy on 
However, an association with a fiscal year ending June                   behalf of an association must be accompanied by a copy 
30 must file by the 15th day of the 3rd month after the end              of the order or instructions of the court authorizing signing 
of its tax year. An association with a short tax year ending             of the return or form.
any time in June will be treated as if the short year ended 
on June 30, and must file by the 15th day of the 3rd month                 If an association officer completes Form 1120-H, the 
after the end of its tax year.                                           paid preparer space should remain blank. Anyone who 
                                                                         prepares Form 1120-H but doesn’t charge the association 
If the due date falls on a Saturday, Sunday, or legal                    should not complete that section. Generally, anyone who 
holiday, the association may file on the next business day.              is paid to prepare the return must sign it and fill in the 
                                                                         “Paid Preparer Use Only” area.
Private delivery services (PDSs).      Associations can 
use certain PDSs designated by the IRS to meet the                         The paid preparer must complete the required preparer 
“timely mailing as timely filing/paying” rule for tax returns.           information and:
Go to IRS.gov/PDS for the current list of designated                     • Sign the return in the space provided for the preparer's 
services.                                                                signature, and
The PDS can tell you how to get written proof of the                     • Give a copy of the return to the taxpayer.

mailing date.                                                            Note. A paid preparer may sign the original or amended 
For the IRS mailing address to use if you are using a                    returns by rubber stamp, mechanical device, or computer 
PDS, go to IRS.gov/PDSStreetAddresses.                                   software program.

        PDSs can't deliver items to P.O. boxes. You must                 Paid Preparer Authorization
!       use the U.S. Postal Service to mail any item to an               If the association wants to allow the IRS to discuss its 
CAUTION IRS P.O. box address.
                                                                         2023 tax return with the paid preparer who signed it, 
Extension. File Form 7004, Application for Automatic                     check the “Yes” box in the signature area of the return. 
Extension of Time To File Certain Business Income Tax,                   This authorization applies only to the individual whose 
Information, and Other Returns, to request an extension of               signature appears in the “Paid Preparer Use Only” section 
time to file. Generally, the association must file Form 7004             of the return. It doesn’t apply to the firm, if any, shown in 
by the regular due date of the return. See the Instructions              that section.
for Form 7004.                                                             If the “Yes” box is checked, the association is 
        If the association elects to file Form 1120-H, it                authorizing the IRS to call the paid preparer to answer any 
                                                                         questions that may arise during the processing of its 
!       should file for extension on Form 7004 using the                 return. The association is also authorizing the paid 
CAUTION original form type assigned to the entity.
                                                                         preparer to:

Where To File
File the association's return at the address listed below.

If the association’s principal business, office, or agency is located                    Use the following address:
                                    in:
Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana, 
                                                                         Department of the Treasury
Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, 
                                                                         Internal Revenue Service Center
New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode 
                                                                         Kansas City, MO
Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, 
                                                                         64999-0012
Wisconsin
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, 
                                                                         Department of the Treasury
Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, 
                                                                         Internal Revenue Service Center 
Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, 
                                                                         Ogden, UT 84201-0012
Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming
A foreign country or U.S. territory                                      Internal Revenue Service Center
                                                                         P.O. Box 409101
                                                                         Ogden, UT 84409

Instructions for Form 1120-H (2023)                                                                                                    3

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• Give the IRS any information that is missing from the    accrual, or any other method authorized by the Internal 
return;                                                    Revenue Code.
• Call the IRS for information about the processing of the 
                                                           Change in accounting method.     Generally, the 
return or the status of any related refund or payment(s); 
                                                           association must get IRS consent to change either an 
and
                                                           overall method of accounting or the accounting treatment 
• Respond to certain IRS notices about math errors, 
                                                           of any material item. To do so, the association must 
offsets, and return preparation.
                                                           generally file Form 3115, Application for Change in 
  The association isn’t authorizing the paid preparer to   Accounting Method. See the Instructions for Form 3115 
receive any refund check, bind the association to anything and Pub. 538, Accounting Periods and Methods, for more 
(including any additional tax liability), or otherwise     information and exceptions.
represent the association before the IRS.
  The authorization will automatically end no later than   Change of Tax Year
the due date (excluding extensions) for filing the         Generally, an association must get the consent of the IRS 
association's 2024 tax return. If the association wants to before changing its tax year by filing Form 1128, 
expand the paid preparer's authorization, see Pub. 947,    Application To Adopt, Change, or Retain a Tax Year. 
Practice Before the IRS and Power of Attorney.             However, under certain conditions, an association can 
                                                           change its tax year without getting the consent.
Other Forms and Statements That 
                                                           For more information on change of tax year, see the 
May Be Required                                            Instructions for Form 1128 and Pub. 538.
See the Instructions for Form 1120 and Pub. 542, 
Corporations, for a list of other forms and statements the Rounding Off to Whole Dollars
association may be required to file.                       You may enter decimal points and cents when completing 
                                                           your return. However, you should round off cents to whole 
Qualified opportunity investment.    If you deferred a     dollars on your return, forms, and schedules to make 
capital gain in a qualified opportunity fund (QOF), you    completing your return easier. You must either round off all 
must file your return with Schedule D (Form 1120), Capital amounts on your return to whole dollars, or use cents for 
Gains and Losses; Form 8949, Sales and Other               all amounts. To round, drop amounts under 50 cents and 
Dispositions of Capital Assets; and Form 8997, Initial and increase amounts from 50 to 99 cents to the next dollar. 
Annual Statement of Qualified Opportunity Fund (QOF)       For example, $8.40 rounds to $8 and $8.50 rounds to $9.
Investments, attached. You will need to file Form 8997 
annually until you dispose of the investment. See the Form If you have to add two or more amounts to figure the 
8997 instructions.                                         amount to enter on a line, include cents when adding the 
                                                           amounts and round off only the total.
Assembling the Return
To ensure that the association’s tax return is correctly   Payment of Tax (Line 24)
processed, attach all forms and schedules after Form       The association must pay any tax due in full no later than 
1120-H in the following order.                             the due date for filing its tax return (not including 
  1. Form 4136.                                            extensions). Do not include the payment with the tax 
                                                           return. However, see Line 24. Amount owed, later.
  2. Form 8978.
  3. Form 8941.                                            Electronic deposit requirement.  Associations must use 
                                                           electronic funds transfers (EFTs) to make all federal tax 
  4. Form 3800.                                            deposits (such as deposits of employment, excise, and 
  5. Schedules in alphabetical order.                      income tax). Generally, EFTs are made using the 
  6. Additional forms in numerical order.                  Electronic Federal Tax Payment System (EFTPS). 
                                                           However, if the association doesn’t want to use EFTPS, it 
  7. Supporting statements and attachments.
                                                           can arrange for its tax professional, financial institution, 
  Complete every applicable entry space on Form            payroll service, or other trusted third party to make 
1120-H. Do not enter “See Attached” or “Available Upon     deposits on its behalf. Also, it may arrange for its financial 
Request” instead of completing the entry spaces. If more   institution to initiate a same-day wire payment (discussed 
space is needed on the forms or schedules, attach          below) on its behalf. EFTPS is a free service provided by 
separate sheets using the same size and format as the      the Department of the Treasury. Services provided by a 
printed forms. If there are supporting statements and      tax professional, financial institution, payroll service, or 
attachments, arrange them in the same order as the         other third party may have a fee.
schedules or forms they support and attach them last.      To get more information about EFTPS or to enroll in 
Show the totals on the printed forms. Enter the            EFTPS, go to EFTPS.gov, or call 800-555-4477. To 
association's name and employer identification number      contact EFTPS using Telecommunications Relay Services 
(EIN) on each supporting statement or attachment.          (TRS) for people who are deaf, hard of hearing, or have a 
                                                           speech disability, dial 711 and then provide the TRS 
Accounting Methods
                                                           assistant the 800-555-4477 number above or 
Figure taxable income using the method of accounting       800-733-4829. Additional information about EFTPS is also 
regularly used in keeping the association's books and      available in Pub. 966.
records. In all cases, the method used must clearly show 
taxable income. Permissible methods include cash, 

4                                                                                Instructions for Form 1120-H (2023)

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Depositing on time.    For deposits made by EFTPS to be        attach an explanation when the association's return is 
on time, the association must submit the deposit by 8 p.m.     filed.
Eastern time the day before the date the deposit is due. If    Other penalties. Other penalties can be imposed for 
the association uses a third party to make deposits on its     negligence, substantial understatement of tax, reportable 
behalf, they may have different cutoff times.                  transaction understatements, and fraud. See sections 
Same-day wire payment option.   If the association fails       6662, 6662A, and 6663.
to submit a deposit transaction on EFTPS by 8 p.m. 
Eastern time the day before the date a deposit is due, it      Specific Instructions
can still make its deposit on time by using the Federal Tax 
Collection Service (FTCS). To use the same-day wire            Period covered.  File the 2023 return for calendar year 
payment method, the association will need to make              2023, and fiscal years that begin in 2023 and end in 2024. 
arrangements with its financial institution ahead of time.     For a fiscal or short tax year return, fill in the tax year 
Check with the financial institution regarding availability,   space at the top of the form.
deadlines, and costs. Financial institutions may charge a        The 2023 Form 1120-H can also be used if (a) the 
fee for payments made this way. To learn more about the        association has a tax year of less than 12 months that 
information you will need to provide your financial            begins and ends in 2024, and (b) the 2024 Form 1120-H 
institution to make a same-day wire payment, go to             isn’t available at the time the association is required to file 
IRS.gov/SameDayWire.                                           its return.
                                                                 The association must show its 2024 tax year on the 
Estimated Tax
                                                               2023 Form 1120-H and take into account any tax law 
The estimated tax and alternative minimum tax                  changes that are effective for tax years beginning after 
requirements do not apply to homeowners associations           December 31, 2023.
electing to file Form 1120-H. However, a homeowners 
association that does not elect to file Form 1120-H may be     Name and address.    Enter the association's true name 
required to make payments of estimated tax. Because the        (as set forth in the charter or other legal document 
election is not made until the return is filed, Form 1120-H    creating it), address, and EIN on the appropriate lines. 
provides lines for estimated tax payments and the              Include the suite, room, or other unit number after the 
crediting of overpayments against tax if estimated tax         street address. If the post office doesn’t deliver mail to the 
payments or overpayments apply.                                street address and the association has a P.O. box, show 
                                                               the box number instead.
Interest and Penalties                                           If the association receives its mail in care of a third 
Interest. Interest is charged on taxes paid late even if an    party (such as an accountant or an attorney), enter on the 
extension of time to file is granted. Interest is also charged street address line “C/O” followed by the third party's 
on penalties imposed for failure to file, negligence, fraud,   name and street address or P.O. box.
substantial valuation misstatements, substantial                 If the association has a foreign address, include the city 
understatements of tax, and reportable transaction             or town, state or province, country, and foreign postal 
understatements from the due date (including extensions)       code. Do not abbreviate the country name. Follow the 
to the date of payment. The interest charge is figured at a    country's practice for entering the name of the state or 
rate determined under section 6621.                            province and postal code.
Late filing of return. In addition to losing the right to      Employer identification number (EIN).       Enter the 
elect to file Form 1120-H, a homeowners association that       association's EIN. If the association doesn’t have an EIN, 
doesn’t file its tax return by the due date, including         it must apply for one. An EIN may be applied for:
extensions, may be penalized 5% of the unpaid tax for          • Online by visiting IRS.gov/EIN (the EIN is issued 
each month or part of a month the return is late, up to a      immediately once the application information is validated); 
maximum of 25% of the unpaid tax. The minimum penalty          or
for a return that is over 60 days late is the smaller of the   • By mailing or faxing Form SS-4, Application for 
tax due or $485. The penalty will not be imposed if the        Employer Identification Number.
association can show that the failure to file on time was        If the association has not received its EIN by the time 
due to reasonable cause.                                       the return is due, enter “Applied for” and the date you 
Late payment of tax.   An association that doesn’t pay         applied in the space for the EIN. For more details, see the 
the tax when due may generally be penalized  /  of 1% of 1 2   Instructions for Form SS-4.
the unpaid tax for each month or part of a month the tax 
isn’t paid, up to a maximum of 25% of the unpaid tax. The      Note. Only associations located in the United States or 
penalty will not be imposed if the association can show        U.S. territories can use the online process.
that the failure to pay on time was due to reasonable          Final return, name change, address change, amen-
cause.                                                         ded return. 
Reasonable-cause determinations.    If the association         • If the association ceases to exist, file Form 1120-H and 
receives a notice about a penalty after it files its return,   check the “Final return” box.
send the IRS an explanation and we will determine if the       • If the association changed its name since it last filed a 
association meets the reasonable-cause criteria. Do not        return, check the box for “Name change.”

Instructions for Form 1120-H (2023)                                                                                        5

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• If the association has changed its address since it last production of gross income to be deductible in computing
filed a return (including a change to an “in care of” the unrelated taxable income.
address), check the box for “Address change.”
Line 20. Multiply the amount on line 19 (taxable income)
• To amend a previously filed Form 1120-H, file a
by 30% (0.30) (timeshare associations multiply line 19 by
corrected Form 1120-H and check the “Amended return”
32% (0.32)). If the amount on line 19 is zero or less than
box.
zero, enter -0- on line 20.
Note. If a change in address occurs after the return is Line 21. Tax credits. The association may qualify for the
filed, use Form 8822-B, Change of Address or following tax credits.
Responsible Party—Business, to notify the IRS of the new • Foreign tax credit (Form 1118).
address. See the instructions for Form 8822-B for details. • General business credit (Form 3800).
Item A. Type of homeowners association. See
Note. Homeowners associations can’t claim the
Definitions, earlier.
investment credit.
Item B. 60% gross income test. At least 60% of the Enter the total applicable credits on line 21 and attach
association's gross income for the tax year must consist of the appropriate form(s).
exempt function income. See Exempt function income,
earlier. Line 22. Total tax. If the association must recapture any
low-income housing credit, qualified electric vehicle credit,
Item C. 90% expenditure test. At least 90% of the or new markets credit, include the amount of the recapture
association's expenditures for the tax year must consist of in the total for line 22. To the right of the entry space, enter
expenses to acquire, build, manage, maintain, and care “LIHTC,” “QEV,” or “NMTC”; “recapture”; and the amount.
for property, and, in the case of a timeshare association, For details, see Form 8611, Recapture of Low-Income
for activities provided to, or on behalf of, members of the Housing Credit; Regulations section 1.30-1 (regarding the
timeshare association. Include current and capital qualified electric vehicle credit); Form 8874, New Markets
expenditures. Use the association's accounting method to Credit; or Form 8874-B, Notice of Recapture Event for
figure the total. New Markets Credit.
Include:
Line 23b. Estimated tax payments. Enter any
1. Salary for an association manager or secretary; estimated tax payments the association made for the
2. Expenses for gardening, paving, street signs, current tax year.
security guards, and property taxes assessed on Line 23d. Credit from Form 2439. Enter any credit from
association property; Form 2439, Notice to Shareholder of Undistributed
3. Current operating and capital expenditures for Long-Term Capital Gains, for the corporation’s share of
tennis courts, swimming pools, recreation halls, etc.; and the tax paid by a RIC or a real estate investment trust
4. Replacement costs for common buildings, heating, (REIT) on undistributed long-term capital gains included in
air conditioning, elevators, etc. the corporation’s income. Attach Form 2439.
Don’t include expenditures for property that is not Line 23e. Credit for federal tax on fuels. Enter the total
association property. Also, don’t include investments or income tax credit claimed on Form 4136, Credit for
transfers of funds held to meet future costs. An example Federal Tax Paid on Fuels. Attach Form 4136.
would be transfers to a sinking fund to replace a roof, even Line 23f. Elective payment election amount from
if the roof is association property. Form 3800. Enter on line 23f the total net elective
Item D. Enter the association's total expenditures for the payment amount from Form 3800, Part III, line 6, column
tax year including those expenditures directly related to (i). See the Instructions for Form 3800.
exempt function income. Use the association's accounting Line 23g. Total payments and credits. Add the
method to figure the entry for item D. amounts on lines 23a through 23f and enter the total on
Item E. Show any tax-exempt interest received or line 23g.
accrued. Include any exempt-interest dividend received as Backup withholding. If the association had income tax
a shareholder in a mutual fund or other regulated withheld from any payments it received because, for
investment company (RIC). example, it failed to give the payer its correct EIN, include
Line 13. Interest. The business interest expense the amount withheld in the total for line 23g. This type of
deduction may be limited for certain associations. The withholding is called backup withholding. Show the
Instructions for Form 8990, Limitation on Business Interest amount withheld in the blank space in the right-hand
Expense Under Section 163(j), explain when a business column between lines 22 and 23g, and enter “Backup
interest expense deduction is limited, who is required to Withholding.”
file Form 8990, and how certain businesses may elect out Line 24. Amount owed. If you can’t pay the full amount
of the business interest expense limitation. See Form of tax you owe, you can apply for an installment
8990 and its instructions for details. agreement online.
Line 15. Other deductions. Expenses, depreciation, You can apply for an installment agreement online if:
and similar items must not only qualify as items of • You can’t pay the full amount shown on line 24,
deduction, but must also be directly connected with the • The total amount you owe is $25,000 or less, and
• You can pay the liability in full in 24 months.

6 Instructions for Form 1120-H (2023)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

To apply using the Online Payment Agreement control number. Books or records relating to a form or its
Application, go to IRS.gov/OPA. Under an installment instructions must be retained as long as their contents
agreement, you can pay what you owe in monthly may become material in the administration of any Internal
installments. There are certain conditions you must meet Revenue law. Generally, tax returns and return information
to enter into and maintain an installment agreement, such are confidential, as required by section 6103.
as paying the liability within 24 months and making all
required deposits and timely filing tax returns during the The time needed to complete and file this form will vary
length of the agreement. If your installment agreement is depending on individual circumstances. The estimated
accepted, you will be charged a fee and you will be burden for business taxpayers filing this form is approved
subject to penalties and interest on the amount of tax not under OMB control number 1545-0123 and is included in
paid by the due date of the return. the estimates shown in the instructions for their business
income tax return.
Paperwork Reduction Act Notice. We ask for the If you have comments concerning the accuracy of the
information on this form to carry out the Internal Revenue time estimates or suggestions for making this form
laws of the United States. You are required to give us the simpler, we would be happy to hear from you. You can
information. We need it to ensure that you are complying send us comments from IRS.gov/FormComments. Or, you
with these laws and to allow us to figure and collect the can write to the Internal Revenue Service, Tax Forms and
right amount of tax. Publications Division, 1111 Constitution Ave. NW,
You are not required to provide the information IR-6526, Washington, DC 20224. Do not send the tax
requested on a form that is subject to the Paperwork form to this office. Instead, see Where To File, earlier.
Reduction Act unless the form displays a valid OMB

Instructions for Form 1120-H (2023) 7

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