Draft Articles of IncorporationARTICLES OF INCORPORATION
OF
TETON TERRACE HOMEOWNERS ASSOCIATION, INC.
KNOW ALL MEN BY THESE PRESENTS:
The undersigned hereby adopts the following Articles of
Incorporation pursuant to the Montana Nonprofit Corporation Act:
ARTICLE I - NAME AND TYPE
A. The name of the Corporation is:
TETON TERRACE HOMEOWNERS ASSOCIATION, INC.
B. Teton Terrace Homeowners Association, Inc. is deemed a
Mutual Benefit Corporation.
ARTICLE II - DURATION
This Corporation shall have perpetual existence.
ARTICLE III - PURPOSES
The purposes for which this Corporation is organized are:
A. Exercise the powers, through the board of directors, as
given to the homeowners association under the Declaration
of Covenants filed as Document Number, 1997705815060,
Records of Flathead County, Montana, and all amendments
thereto.
B. To engage in any and all other activities authorized by
the Montana Nonprofit Corporation Act and the Internal
Revenue Code and Regulations as from time to time amended
or modified.
C. The foregoing clauses shall be construed both as purposes
and powers and shall not be held to limit or restrict in
any manner the general powers of the corporation and the
enjoyment and exercise thereof, as conferred by the laws
of the State of Montana; and it is the intention that the
purposes and powers specified in each of the paragraphs
V:\attsect\wp\tetonterracecorp.wpd 1
of this Article III shall be regarded as independent
purposes and powers.
ARTICLE IV - MEMBERSHIP
A. The membership of the corporation shall be each owner of
a lot as the term is used in the Declaration of Covenants
above referenced.
B. As to all lot owners, there shall be one vote cast for
each lot irrespective of the number of owners and should
co -owners disagree, they shall cast fractional votes
determined by the percentage of ownership of the lot as
determined by public record. Should the public record
not be specific, than each owner will be presumed to have
equal ownership with his co -owners.
C. No contract seller or mortgagee shall be considered an
owner.
ARTICLE V - INITIAL OFFICER AND AGENT
The address of this Corporation's initial registered office
and the name of its initial registered agent at such address
is.
Agent: Susan Moyer
Office: 15 Iris Court
Kalispell, MT 59901
ARTICLE VI - DIRECTORS
A. The number of directors constituting the initial Board of
Directors of this Corporation shall be five (5). The
Incorporator shall call an organizational meeting to
elect directors and the organization of the corporation.
B. The number of directors may be increased by an amendment
to the By -Laws to not more than seven (7).
ARTICLE VII - INDEMNIFICATION
No officer or Director shall be personally liable for any
obligations of the Corporation or for any duties or
obligations arising out of any acts or conduct of said officer
V:\attsect\wp\tetonterracecorp.wpd 2
or Director performed for or on behalf of the Corporation.
The Corporation shall and does hereby indemnify and hold
harmless each person and his heirs and administrators who
shall serve at any time hereafter as a Director or officer of
the Corporation from and against any and all claims, judgments
and liabilities to which such person shall become subject by
reason of his having been a Director or officer of the
Corporation, or by reason of any action alleged to have been
taken or omitted to have been taken by him as such Director or
officer, and shall reimburse each such person for all legal
and other expenses reasonably incurred by him in connection
with the defense or payment of any such claim or liability;
this shall include the duty or power to defend such person
from all suits or claims as provided for under the provisions
of the Montana Business Corporation Act; provided, however,
that no such person shall be indemnified against, or be
reimbursed for, any expense incurred in connection with any
claim or liability arising out of his own criminal,
intentional or willful misconduct. The rights accruing to any
person under the foregoing provisions of this section shall
not exclude any other right to which he may lawfully be
entitled, nor shall anything herein contained restrict the
right of the Corporation to indemnify or reimburse such person
in any proper case, even though not specifically herein
provided for. The Corporation, its Directors, officers,
employees and agents shall be fully protected in taking any
action or making any payment, or in refusing so to do in
reliance upon the advice of counsel.
The indemnification herein provided shall not be deemed
exclusive of any other rights to which those seeking
indemnification may be entitled under any By -Law, agreement,
vote of stockholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in
another capacity while holding such officer, and shall
continue after such person has ceased to be a director,
officer or employee, and shall inure to the benefit of the
heirs, executors and administrators of such person.
The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer or employee of
the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of
V:\attsect\wp\tetonterracecorp.wpd 3
his status as such, either or not the corporation would have
the power to indemnify him against such liability under these
provisions or of the Montana Business Corporation Act.
The right of any person to be indemnified shall be subject
always to the right of the Corporation by its Board of
Directors, in lieu of such indemnity, to settle any such
claim, action, suit or proceeding at the expense of the
Corporation by the payment of the amount of such settlement
and the costs and expenses incurred in connection therewith.
ARTICLE VIII - INCORPORATOR
The name and address of the incorporator of this Corporation
is.
Susan Moyer
15 Iris Court
Kalispell, MT 59901
DATED this day of , 2001.
Incorporator
STATE OF MONTANA )
.ss.
County of Flathead )
On this day of 1 2001, before me, the
undersigned, Notary Public for the State of Montana, personally
appeared , known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that he
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
Notarial Seal the day and year in this certificate first above
written.
NOTARY PUBLIC for the State of Montana
Residing at Kalispell, Montana
My Commission Expires:
V:\attsect\wp\tetonterracecorp.wpd 4
ACCEPTANCE OF APPOINTMENT AS REGISTERED AGENT
I, Susan Moyer, the initial registered agent for the Teton
Terrace Homeowner's Association, hereby accept said appointment.
Susan Moyer
Initial Registered Agent
STATE OF MONTANA )
.ss.
County of Flathead )
On this day of 1 2001, before me, the
undersigned, Notary Public for the State of Montana, personally
appeared , known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that he
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
Notarial Seal the day and year in this certificate first above
written.
NOTARY PUBLIC for the State of Montana
Residing at Kalispell, Montana
My Commission Expires:
V:\attsect\wp\tetonterracecorp.wpd 5
Prepare, sign and submit an ORIGINAL AND COPY with fee.
STATE OF MONTANA
ARTICLES of INCORPORATION
for DOMESTIC NONPROFIT
�tl
CORPORATION W` -
(35-2-213, MCA) -'
MAIL: BOB BROWN
Secretary of State
P.O. Box 202801
Helena, MT 59620-2801
PHONE: a(406)444-3665
FAX: (406)444-3976
WEB SITE: www.stat&mtus/sos
rms is the muumum intormation r<
(This space for use by the Secretary of State only)
❑ Priority Filing Add $20.00
Form: DN-1
Fee: $20.00
► Executed by the undersigned person for the purpose of forming a Montana nonprofit corporation.
► FIRST: The name of the Nonprofit Corporation is
► SECOND: The name and address of the registered office/agent in Montana:
Name
Street Address
Mailing Address
City
Signature of Agent (Required)
MONTANA Zip Code
► THIRD: The name and address of the incorporator is as follows:
Name
Address
► FOURTH: The Nonprofit Corporation ❑ WILL
► FIFTH: This Nonprofit Corporation is a (check one):
❑ Public Benefit Corporation
❑ Mutual Benefit Corporation
❑ Religious Corporation
Zip Code
❑ WILL NOT have members.
► SIXTH: Upon dissolution, the assets shall be distributed in the following manner:
Signature of Incorporator
Date
sAforms\dn-1
Revised:01/02/2001
F�l Use this form to file Articles of Incorporation for a Montana nonprofit corporation.
K�F You may request priority filing of your document. Simply mark the "priority filing" box and include
an additional $20.00 with your filing fee for a total of $40.00. Priority filing ensures that your
application will be handled within 24 hours of receipt of the document by our office.
UZI Please type or clearly print the requested information.
n�F This form provides the minimal information necessary to file a nonprofit corporation. It is advised that
you contact an attorney for assistance and guidance in consideration of additional provisions that may
be necessary for your organization.
tw The Internal Revenue Service (IRS) requires specific language to be included in Articles of
Incorporation in order to qualify for nonprofit tax status. It is advised that you contact the IRS for
their language requirements.
Unless otherwise specified, the existence date for the corporation will be the date the Articles of
Incorporation were filed with the Secretary of State. (35-2-214, MCA)
a Article Fourth:
Members are those individuals who can vote to elect the board of directors or elect delegates who in
turn elect the board of directors.
WWI Article Fifth:
a.) Public Benefit Corporations are those corporations operating for public or charitable purposes.
As such, members may not sell their interest or receive distributions from the organizations.
Written notice of intent to dissolve must be given to the Attorney General.
b.) Mutual Benefit Corporations are organizations such as trade associations, social clubs, and
fraternal organizations designed to benefit their members. Members, as such, are given broader
voting rights. Members, while not entitled to receive distributions while the organization is
operating, will be entitled to sell their memberships and receive distributions when the
organization dissolves.
c.) Religious Corporations are treated in a way similar to public benefit corporations. Written
notice of intent to dissolve must be given to the Attorney General.
W Upon completion, mail the original, one copy, and the correct filing fee to the Secretary of State, PO
Box 202801, Helena, MT 59620-2801. Make checks payable to the Secretary of State.
W The Secretary of State will send a letter of acknowledgment to you once your document has been filed
with our office.
WRP Annual reports must be filed with the Secretary of State prior to April 15 each year. The Secretary of
State will mail the report to the corporation's registered agent during the month of January, beginning
the year following incorporation. (35-2-904, MCA)
oW If you have any questions regarding this form, please contact the Secretary of State, Business Services
Bureau at (406) 444-3665.
Please be advised that the Business Services Bureau of the Montana Secretary of State will process your
business documents within 10 working days of initial receipt. During this period if it is determined that your
document does not meet statutory requirements, a letter outlining the deficiencies will be returned to the
original submitter. If the document is complete and correct, the document will be filed and an acknowledgment
copy showing completion returned to the original submitter.
Form
Request for Taxpayer
Give form to the
(Rev. December 2000)
identification Number and Certification
requester. Do not
Department of the Treasury
send to the IRS.
Internal Revenue Service
Name (See Specific Instructions on page 2.)
am
T
Business name, if different from above. (See Specific Instructions on page 2.)
`o
Check appropriate box: El Individual/Sole proprietor 0 Corporation Partnership
Other 0-
--------------------------------------.
a
o,
Address (number, street, and apt. or suite no.)
Requester's
name and address (optional)
M
m
a
City, state, and ZIP code
TeX a er Identification Number (TIN)
List account
number(s) here (optional)
Enter your TIN in the appropriate box. For
individuals, this is your social security number Social security number
(SSN). However, for a resident alien, sole
proprietor, or disregarded entity, see the Part 1
For U.S. Payees Exempt From
instructions on page 2. For other entities, it is your
employer identification number (EIN). If you do not or
Backup Withholding (See the
have a number, see How to get a TIN on page 2. Employer identification number
instructions on page 2.)
Note: If the account is in more than one name, see
the chart on page 2 for guidelines on whose number
to enter.
Certification
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and
2. 1 am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding, and
3. 1 am a U.S. person (including a U.S. resident alien).
Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup
withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply.
For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement
arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the Certification, but you must
provide your correct TIN. (See the instructions on page 2.)
Sign ( Signature of
Here I U.S. person Is Date Ill
Purpose of Form
A person who is required to file an information
return with the IRS must get your correct
taxpayer identification number (TIN) to report, for
example, income paid to you, real estate
transactions, mortgage interest you paid,
acquisition or abandonment of secured property,
cancellation of debt, or contributions you made
to an IRA.
Use Form W-9 only if you are a U.S. person
(including a resident alien), to give your correct
TIN to the person requesting it (the requester)
and, when applicable, to:
1. Certify the TIN you are giving is correct (or
you are waiting for a number to be issued),
2. Certify you are not subject to backup
withholding, or
3. Claim exemption from backup withholding if
you are a U.S. exempt payee.
If you are a foreign person, use the
appropriate Form W-8. See Pub. 515,
Withholding of Tax on Nonresident Aliens and
Foreign Corporations,
Note: If a requester gives you a form other than
Form W-9 to request your TIN, you must use the
requester's form if it is substantially similar to this
Form W-9.
What is backup withholding? Persons making
certain payments to you must withhold and pay
to the IRS 31% of such payments under certain
conditions. This is called "backup withholding."
Payments that may be subject to backup
withholding include interest, dividends, broker
and barter exchange transactions, rents,
royalties, nonemployee pay, and certain
payments from fishing boat operators. Real
estate transactions are not subject to backup
withholding.
If you give the requester your correct TIN,
make the proper certifications, and report all
your taxable interest and dividends on your tax
return, payments you receive will not be subject
to backup withholding. Payments you receive
will be subject to backup withholding if:
1. You do not furnish your TIN to the
requester, or
2. You do not certify your TIN when required
(see the Part III instructions on page 2 for
details), or
3. The IRS tells the requester that you
furnished an incorrect TIN, or
4. The IRS tells you that you are subject to
backup withholding because you did not report
all your interest and dividends on your tax return
(for reportable interest and dividends only), or
5. You do not certify to the requester that you
are not subject to backup withholding under 4
above (for reportable interest and dividend
accounts opened after 1983 only).
Certain payees and payments are exempt
from backup withholding. See the Part II
instructions and the separate Instructions for
the Requester of Form W-9.
Penalties
Failure to furnish TIN. If you fail to furnish your
correct TIN to a requester, you are subject to a
penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to
willful neglect.
Civil penalty for false information with respect
to withholding. If you make a false statement
with no reasonable basis that results in no
backup withholding, you are subject to a $500
penalty.
Criminal penalty for falsifying information.
Willfully falsifying certifications or affirmations
may subject you to criminal penalties including
fines and/or imprisonment.
Misuse of TINs. If the requester discloses or
uses TINS in violation of Federal law, the
requester may be subject to civil and criminal
penalties.
Cat. No. 10231X Form W-9 (Rev. 12-2000)
Form W-9 (Rev. 12-2000)
Page 2
Name. If you are an individual, you must
generally enter the name shown on your social
security card. However, if you have changed
your last name, for instance, due to marriage
without informing the Social Security
Administration of the name change, enter your
first name, the last name shown on your social
security card, and your new last name.
If the account is in joint names, list first and
then circle the name of the person or entity
whose number you enter in Part I of the form.
Sole proprietor. Enter your individual name
as shown on your social security card on the
"Name" line. You may enter your business,
trade, or "doing business as (DBA)" name on the
"Business name" line.
Limited liability company (LLC). If you are a
single -member LLC (including a foreign LLC with
a domestic owner) that is disregarded as an
entity separate from its owner under Treasury
regulations section 301.7701-3, enter the
owner's name on the "Name" line. Enter the
LLC's name on the "Business name" line.
Caution: A disregarded domestic entity that has
a foreign owner must use the appropriate
Form W-8.
Other entities. Enter your business name as
shown on required Federal tax documents on
the "Name" line. This name should match the
name shown on the charter or other legal
document creating the entity. You may enter any
business, trade, or DBA name on the "Business
name" line.
Part I —Taxpayer Identification Number (TIN)
Enter your TIN in the appropriate box.
If you are a resident alien and you do not
have and are not eligible to get an SSN, your
TIN is your IRS individual taxpayer identification
number (ITIN). Enter it in the social security
number box. If you do not have an ITIN, see
How to get a TIN below.
If you are a sole proprietor and you have an
EIN, you may enter either your SSN or EIN.
However, the IRS prefers that you use your SSN.
If you are an LLC that is disregarded as an
entity separate from its owner (see Limited
liability company (LLC) above), and are owned
by an individual, enter your SSN (or "pre-LLC"
EIN, if desired). If the owner of a disregarded
LLC is a corporation, partnership, etc., enter the
owner's EIN.
Note: See the chart on this page for further
clarification of name and TIN combinations.
How to get a TIN. If you do not have a TIN,
apply for one immediately. To apply for an SSN,
get Form SS-5, Application for a Social Security
Card, from your local Social Security
Administration office. Get Form W-7, Application
for IRS Individual Taxpayer Identification
Number, to apply for an ITIN or Form SS-4,
Application for Employer Identification Number,
to apply for an EIN. You can get Forms W-7 and
SS-4 from the IRS by calling 1-800-TAX-FORM
(1-800-829-3676) or from the IRS's Internet Web
Site at www.irs.gov.
If you do not have a TIN, write "Applied For"
in the space for the TIN, sign and date the form,
and give it to the requester. For interest and
dividend payments, and certain payments made
with respect to readily tradable instruments,
generally you will have 60 days to get a TIN and
give it to the requester before you are subject to
backup withholding on payments. The 60-day
rule does not apply to other types of payments.
You will be subject to backup withholding on all
such payments until you provide your TIN to the
requester.
Note: Writing 'Applied For" means that you have
already applied for a TIN or that you intend to
apply for one soon.
Part II —For U.S. Payees Exempt From Backup
Withholding
Individuals (including sole proprietors) are not
exempt from backup withholding. Corporations
are exempt from backup withholding for certain
payments, such as interest and dividends. For
more information on exempt payees, see the
separate Instructions for the Requester of
Form W-9.
If you are exempt from backup withholding,
you should still complete this form to avoid
possible erroneous backup withholding. Enter
your correct TIN in Part I, write "Exempt" in
Part Il, and sign and date the form.
If you are a nonresident alien or a foreign
entity not subject to backup withholding, give
the requester the appropriate completed Form
W-8.
Part III —Certification
To establish to the withholding agent that you
are a U.S. person, or resident alien, sign Form
W-9. You may be requested to sign by the
withholding agent even if items 1, 3, and 5
below indicate otherwise.
For a joint account, only the person whose
TIN is shown in Part I should sign (when
required).
1. Interest, dividend, and barter exchange
accounts opened before 1984 and broker
accounts considered active during 1983. You
must give your correct TIN, but you do not have
to sign the certification.
2. Interest, dividend, broker, and barter
exchange accounts opened after 1983 and
broker accounts considered inactive during
1983. You must sign the certification or backup
withholding will apply. If you are subject to
backup withholding and you are merely providing
your correct TIN to the requester, you must
cross out item 2 in the certification before
signing the form.
3. Real estate transactions. You must sign
the certification. You may cross out item 2 of the
certification.
4. Other payments. You must give your
correct TIN, but you do not have to sign the
certification unless you have been notified that
you have previously given an incorrect TIN.
"Other payments" include payments made in the
course of the requester's trade or business for
rents, royalties, goods (other than bills for
merchandise), medical and health care services
(including payments to corporations), payments
to a nonemployee for services, payments to
certain fishing boat crew members and
fishermen, and gross proceeds paid to attorneys
(including payments to corporations).
5. Mortgage interest paid by you,
acquisition or abandonment of secured
property, cancellation of debt, qualified state
tuition program payments, IRA or MSA
contributions or distributions, and pension
distributions. You must give your correct TIN,
but you do not have to sign the certification.
Privacy Act Notice
Section 6109 of the Internal Revenue Code
requires you to give your correct TIN to persons
who must file information returns with the IRS to
GJ'
report interest, dividends, and certain other
income paid to you, mortgage interest you paid,
the acquisition or abandonment of secured
property, cancellation of debt, or contributions
you made to an IRA or MSA. The IRS uses the
numbers for identification purposes and to help
verify the accuracy of your tax return. The IRS
may also provide this information to the
Department of Justice for civil and criminal
litigation, and to cities, states, and the District of
Columbia to carry out their tax laws.
You must provide your TIN whether or not yoL
are required to file a tax return. Payers must
generally withhold 31 % of taxable interest,
dividend, and certain other payments to a payee
who does not give a TIN to a payer. Certain
penalties may also apply.
What Name • Number a
Give the Requester I
For this type of account:
Give name and SSN of:
1. Individual
The individual
2. Two or more
The actual owner of the
individuals {joint
account or, if combined
account)
funds, the first individual
on the account'
3. Custodian account of
The minor z
a minor (Uniform Gift
to Minors Act)
4. a. The usual
The grantor -trustee'
revocable savings
trust (grantor is
also trustee)
b. So-called trust
The actual owner '
account that is not
a legal or valid trust
under state law
5. Sole proprietorship
The owner 3
For this type of account:
Give name and EIN of:
6. Sole proprietorship
The owner 3
7. A valid trust, estate, or
Legal entity 4
pension trust
8. Corporate
The corporation
9. Association, club,
The organization
religious, charitable,
educational, or other
tax-exempt
organization
10. Partnership
The partnership
11. A broker or registered
The broker or nominee
nominee
12. Account with the
The public entity
Department of
Agriculture in the name
of a public entity (such
as a state or local
government, school
district, or prison) that
receives agricultural
program payments
' List first and circle the name of the person whose
number you furnish. If only one person on a joint
account has an SSN, that person's number must be
furnished.
2 Circle the minor's name and furnish the minor's SSN.
You must show your individual name, but you may also
enter your business or "DBA" name. You may use either
your SSN or EIN (if you have one).
' List first and circle the name of the legal trust, estate,
or pension trust. (Do not furnish the TIN of the personal
representative or trustee unless the legal entity itself is
not designated in the account title.)
Note: if no name is circled when more than one
name is listed, the number will be considered to
be that of the first name listed.
OMB No. 1545-0127
FormU.S. income Tax Return
for Homeowners Associations gO
Department of the Treasury
oo
Internal Revenue Service
For calendar year 2000 or tax year beginning 2000, and ending 20
Use Name Employer identification number (see page 4)
IRS
label.
Other- Number, street, and room or suite no. (If a P.O. box, see page 4.) Date association formed
wise,
please Cityor town, state, and ZIP code
print or
Check if: (1) ❑ Final return (2) ❑ Change of address (3) ❑ Amended return
A Check type of homeowners association: ❑ Condominium management association ❑ Residential real estate 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 (excludinq exempt function income)
1
2
3
4
5
6
7
8
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxable interest . . . . . . . . . . . . . . . . . . . . . . . .
Gross rents . . . . . . . . . . . . . . . . . . . . . . . . .
Gross royalties . . . . . . . . . . . . . . . . . . . . . . . .
Capital gain net income (attach Schedule D (Form 1120)) . . . . . . . . . .
Net gain (or loss) from Form 4797, Part II, line 18 (attach Form 4797) . . . . . .
Other income (excluding exempt function income) (attach schedule) . . . . . .
Gross income (excludin exem t function income). Add lines 1 through 7
. . .
. .
. .
.
.
. . .
.
1
2
3
4
5
6
7
8
Deductions (directly connected to the production of gross income, excluding
exempt function income)
9
10
11
12
13
14
15
16
17
18
Salaries and wages . . . . . . . . . . . . . . . . . . . . . . .
Repairs and maintenance . . . . . . . . . . . . . . . . . . . . .
Rents . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation (attach Form 4562) . . . . . . . . . . . . . . . . . .
Other deductions (attach schedule) . . . . . . . . . . . . . . . . .
Total deductions. Add lines 9 through 15 . . . . . . . . . . . . . . .
Taxable income before specific deduction of $100. Subtract line 16 from line 8 . . .
Specific deduction of $100
. . .
.
. .
. .
. .
.
.
.
.
9
10
11
12
13
14
15
16
17
18
$100
00
Tax and Pavments
19 Taxable income. Subtract line 18 from line 17 . . . . . . . . . . . . . . .
19
20
20 Enter 30% of line 19. (Timeshare associations, enter 32% of line 19.) . . . . . . .
21
21 Tax credits (see instructions) . . . . . . . . . . . . . . . . . . . . . . .
22
22 Total tax. Subtract line 21 from line 20. See instructions for recapture of certain credits
23 Payments: a 1999 overpayment
credited to 000 . 23a 2FM
b 2000 estimated tax payments 23b c Total ®
d Tax deposited with Form 7004 . . . . . . 23d
e Credit for tax paid on undistributed capital gains (attach Form 2439) 23e
If Credit for Federal tax on fuels (attach Form 4136) . . ., 23f
g Add lines 23c through 23f . . . . . . . . . . . . . . . . .
23
24
24 Tax due. Subtract line 23g from line 22. See instructions for depository method of tax payment
25
25 Overpayment. Subtract line 22 from line 23g . . . . . . . . . . . . . . .
26
26 Enter amount of line 25 you want: Credited to 2001 estimated tax ® I Refunded ®
Sign
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.
Here
Signature of officer Date Title
Paid
Preparer's
Signature 9
Date
Check if
self-employed ❑
Preparer's SSN or PTIN
Preparer's
Use Only
Firm's name (or
yours if self-employed)
address, and ZIP code
EIN
I Phone no. ( )
For Paperwork Reduction Act Notice, see instructions on page 4. Cat. No. 11477H Form 1120-H (2000)
Form 1120-H (2000)
Page 2
A Change To Note
Mailing the return. The association may need to
mail its return to a different service center this
year because the IRS has changed the filing
location for several areas. See Where To File on
page 3.
How To Get Forms and
Publications
Personal computer. You can access the IRS
Web Site 24 hours a day, 7 days a week at
www.irs.gov to:
e Download forms, instructions, and
publications.
e See answers to frequently asked tax
questions.
e Search publications on-line by topic or
keyword.
e Send us comments or request help by e-mail.
e Sign up to receive local and national tax news
by e-mail.
You can also reach us using file transfer
protocol at ftp.irs.gov.
CD-ROM. Order Pub. 1796, Federal Tax
Products on CD-ROM, and get:
e Current year forms, instructions, and
publications.
e Prior year forms, instructions, and
publications.
e Popular tax forms that may be filled in
electronically, printed out for submission, and
saved for recordkeeping.
e The Internal Revenue Bulletin.
Buy the CD-ROM on the Internet at
www.irs.gov/cdorders from the National
Technical Information Service (NTIS) for $21 (no
handling fee), or call 1-877-CDFORMS
(1-877-233-6767) toll -free to buy the CD-ROM
for $21 (plus a $5 handling fee).
By phone and in person. You can order forms
and publications 24 hours a day, 7 days a week,
by calling 1-800-TAX-FORM (1-800-829-3676).
You can also get most forms and publications at
your local IRS office.
General Instructions
Section references are to the Internal Revenue
Code unless otherwise noted.
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.
Note: 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.
Purpose of Form
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 below) from its gross income.
Definitions
Homeowners association. There are three
kinds of homeowners associations:
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.
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.
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 asociation cannot be a condominium
mangagment association.
Regulations section 1.528-4 explains the
"substantially all" test. In addition:
e At least 60% of the association's gross
income for the tax year must consist of exempt
function income (see below).
e 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 provided to, or on
behalf of, members of the timeshare association.
e 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.
e 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.
The timeshare association or its members
have rights arising out of recorded easements,
covenants, or other recorded instruments to use
property related to the timeshare project.
For more information, see Regulations section
1.528-3.
Taxable income. Taxable income is the excess,
if any, of:
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:
e Net operating loss deduction (section 172).
e 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.
Exempt function income. Exempt function
income consists of membership dues, fees, or
assessments from (1) owners of condominium
housing units, (2) owners of real property in the
case of a residential real estate management
association, or (3) 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.
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.
Income that is not exempt function income
includes:
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.
For more information, see Regulations section
1.528-9.
Electing To File Form 1120-H
By filing a properly completed Form 1120-H, the
association elects to take advantage of the tax
benefits provided by section 528. 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. However,
see Regulations section 301.9100-2 for
information on a 12-month extension of time to
make the election. This extension does not
extend the time to pay the tax. Once Form
1120-H is filed, the association cannot revoke its
election for that year unless the Commissioner
consents. The association may request the
Commissioner's consent by filing a ruling request
with the IRS. A user fee must be paid with all
ruling requests. For more information on ruling
requests, see Rev. Proc. 2000-1, 2000-1 I.R.B. 4.
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, do not file Form 1120-H. See section 6033
and related sections. If the association loses its
exempt status, see Regulations section
1.528-8(e).
When To File
Generally, an association must file Form 1120-H
by the 15th day of the 3rd month after the end
of the tax year.
If the due date falls on a Saturday, Sunday, or
legal holiday, the association may file on the
next business day.
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.
Extension. File Form 7004, Application for
Automatic Extension of Time To File Corporation
Income Tax Return, to request a 6-month
extension of time to file.
Form 1120-H (2000)
Who Must Sign
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 a tax officer)
authorized to sign. Receivers, trustees, or
assignees must sign and date any return filed on
behalf of an association.
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 sign the return. 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, by hand, in the space
provided for the preparer's signature (signature
stamps and labels are not acceptable).
e Give a copy of the return to the taxpayer.
Where To File
File your return at the applicable IRS address
listed below:
If the association's
Use the following
principal office is
Internal Revenue
located in
Service Center address
Florida, Georgia Atlanta, GA 39901
Kansas, New Mexico, Austin, TX 73301
Oklahoma
Delaware, District of
Columbia, Indiana,
Kentucky, Maryland,
Michigan, New Jersey, Cincinnati, OH 45999
North Carolina, Ohio,
Pennsylvania, South
Carolina, West Virginia,
Wisconsin
New York (New York City
and counties of Nassau, Holtsville, NY 00501
Rockland, Suffolk, and
Westchester)
New York (all other
counties), Connecticut,
Maine, Massachusetts, Andover, MA 05501
New Hampshire, Rhode
Island, Vermont
Illinois Kansas City, MO 64999
Alabama, Tennessee Memphis, TN 37501
Alaska, Arizona, Arkansas,
California (counties o(Alpt.ne,
Amador, Butte, Calaveras,
Colusa, Contra Costa, Del
Norte, El Dorado, Glenn,
Humboldt, Lake, Lassen, Marin,
Mendocino, Modoc, Napa,
Nevada, Placer, Plumas, Ogden, UT 84201
Sacramento,
San Joaquin, Shasta, Sierra,
Siskiyou, Solano, Sonoma,
Sutter, Tehama, Trinity, Yolo,
and Yuba), Colorado, Hawaii,
Idaho, Iowa, Louisiana,
Minnesota, Mississippi,
Missouri, Montana, Nebraska,
Nevada, North Dakota, Oregon,
South Dakota, Texas, Utah,
Washington, Wyoming
California (all other Fresno, CA 93888
counties)
Virginia Philadelphia, PA 19255
Associations having their principal place of
business outside the United States must file with
the Internal Revenue Service Center,
Philadelphia, PA 19255.
Other Forms and Statements That
May Be Required
The association may have to file any of the
following:
Form W-2, Wage and Tax Statement.
Form W-3, Transmittal of Wage and Tax
Statements.
Form 940 or Form 940-EZ, Employer's Annual
Federal Unemployment (FUTA) Tax Return.
Report annual Federal unemployment (FUTA) tax.
The tax applies if either of the following
requirements are met:
e You paid wages of $1,500 or more in any
calendar quarter in 1999 or 2000, or
e You had at least one employee who worked
for the association for some part of a day in any
20 or more different weeks in 1999 or 20 or
more different weeks in 2000.
Form 941, Employer's Quarterly Federal Tax
Return. File this form quarterly to report payroll
income tax withheld and employer and employee
social security and Medicare taxes.
Form 945, Annual Return of Withheld Federal
Income Tax. File to report income tax withheld
from nonpayroll distributions or payments.
Form 1098, Mortgage Interest Statement. Use
this form to report the receipt of $600 or more of
mortgage interest (including points) in the course
of the association's trade or business.
Forms 1099-A, B, DIV, INT, MISC, and S. Use
these information returns to report
abandonments, acquisitions through foreclosure,
proceeds from broker and barter exchange
transactions, certain dividends and distributions,
interest income, miscellaneous income (e.g.,
payments to providers of health and medical
services; proceeds paid to attorneys;
miscellaneous income payments and
nonemployee compensation), and proceeds from
real estate transactions. Also use these returns
to report amounts that were received as a
nominee on behalf of another person.
For more information, see the instructions for
Forms 1099, 1098, 5498, and W-2G.
Form 8300, Report of Cash Payments Over
$10,000 Received in a Trade or Business. Use
this form to report the receipt of more than
$10,000 in cash or foreign currency in one
transaction or in a series of related transactions.
Assembling the return. Attach Form 4136,
Credit for Federal Tax Paid on Fuels, to Form
1120-H. Attach schedules in alphabetical order
and other forms in numerical order after Form
4136.
Complete every applicable entry space on
Form 1120-H. Do not write "See attached"
instead of completing the entry spaces. If you
need more space on the forms or schedules,
attach separate sheets. Use the same size and
format as on the printed forms. But show the
totals on the printed forms. Attach these
separate sheets after all the schedules and
forms. Be sure to put the association's name
and EIN on each sheet.
Accounting Methods
Taxable income must be computed using the
method of accounting regularly used in keeping
the association's books and records. Generally,
permissible methods include the cash, accrual,
or any other method authorized by the Internal
Revenue Code. In all cases, the method used
must clearly reflect taxable income.
Generally, an accrual basis taxpayer can
deduct accrued expenses in the tax year in
which (1) all events that determine the liability
have occurred, (2) the amount of the liability can
be figured with reasonable accuracy, and
Page 3
(3) economic performance takes place with
respect to the expense. There are exceptions for
recurring items. See section 461(h) and the
related regulations for the rules for determining
when economic performance takes place.
Generally, the association must get IRS
consent to change the method of accounting
used to report taxable income (for income as a
whole or any material item). To do so, it must file
Form 3115, Application for Change in
Accounting Method. For more information, get
Pub. 538, Accounting Periods and Methods.
Change in 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 may change its tax
year without getting the consent. See
Regulations section 1.442-1 and Pub. 538,
Rounding Off to Whole Dollars
The association may show amounts on the
return and accompanying schedules as whole
dollars. To do so, drop amounts less than 50
cents and increase amounts from 50 cents
through 99 cents to the next higher dollar.
Depository Method of Tax Payment
The association must pay the 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 association income taxes are
discussed below.
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 2001 if:
e The total deposits of such taxes in 1999 were
more than $200,000 or
e The association was required to use EFTPS in
2000.
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 or 1-800-945-8400.
Depositing on time. For deposits made by
EFTPS to be on time, 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 association income
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
only by calling 1-800-829-1040. Be sure to have
your employer identification number (EIN) ready
when you call.
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,
i.e., 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, write
the association EIN, the tax period to which the
deposit applies, and "Form 1120-H" on the
check or money order. Be sure to darken the
"1120" box on the coupon. Records of these
deposits will be sent to the IRS.
Form 1120-H (2000)
For more information on deposits, see the
instructions in the coupon booklet (Form 8109)
and Pub. 583, Starting a Business and Keeping
Records.
Caution: If the association owes tax when it files
Form 1720-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.
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 below 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.
Interest and Penalties
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
failure to file, negligence, fraud, gross valuation
overstatements, and substantial understatement
of tax from the due date (including extensions) to
the date of payment. The interest charge is
figured at a rate determined under section 6621.
Penalty for 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 must attach a statement explaining
the reasonable cause.
Penalty for late payment of tax. An association
that does not pay the tax when due generally
may be penalized 1h 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.
Other penalties. Other penalties can be
imposed for negligence, substantial
understatement of tax, and fraud. See sections
6662 and 6663.
Specific Instructions
Period covered. File the 2000 return for
calendar year 2000 and fiscal years that begin in
2000 and end in 2001. For a fiscal year, fill in the
tax year space at the top of the form.
Note: The 2000 Form 1720-H may also be used
if (1) the association has a tax year of less than
12 months that begins and ends in 2007 and
(2) the 2001 Form 1120-H is not available at the
time the association is required to file its return.
However, the association must show its 2001 tax
year on the 2000 Form 1120-H and must
incorporate any tax law changes that are
effective for tax years beginning after 2000.
Address. Include the suite, room, or other unit
number after the street address. If a
pre -addressed 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 of the street
address.
Note: If a change in address occurs after the
return is filed, the association can use Form
8822, Change of Address, to notify the IRS of
the new address.
Employer identification number (EIN). Show
the correct EIN in the space provided. If the
association does not have an EIN, it should
apply for one on Form SS-4, Application for
Employer Identification Number. If the
association has not received its EIN by the time
the return is due, write "Applied for" in the space
for the EIN. See Pub. 583 for details.
Final return, change of address, or amended
return. If the association ceases to exist, file
Form 1120-H and check the "Final return" box at
the top of the form. If the association has
changed its address since it last filed a return,
check the box for "Change of address."
To amend a previously filed Form 1120-H, file
a corrected Form 1120-H and check the
"Amended return" box at the top of the form.
Item B-60% exempt function 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.
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.
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 21—Tax credits. The association may
qualify for the following tax credits:
Page 4
Foreign tax credit. See Form 1118, Foreign
Tax Credit —Corporations.
Credit for fuel produced from a
nonconventional source. See section 29 for a
definition of qualified fuels, provisions for figuring
the credit, and other special rules.
Qualified electric vehicle credit. See Form
8834, Qualified Electric Vehicle Credit, and
section 30.
The general business credit (but not the
investment credit, the Indian employment credit,
the work opportunity credit, the welfare -to -work
credit, or the empowerment zone employment
credit). See Form 3800, General Business
Credit.
Note: The association may not claim the
qualified zone academy bond credit.
Enter the total amount of credits on line 21
and attach the appropriate form(s).
Line 22. If the association must recapture any of
the low-income housing credit (or the qualified
electric vehicle credit), include the amount of the
recapture in the total for line 22. To the right of
the entry space, write "LIH recapture" (or "QEV
recapture") and the amount. See Form 8611,
Recapture of Low -Income Housing Credit, and
section 420) for more details. See Regulations
section 1.30-1 for details on how to figure the
recapture for the qualified electric vehicle credit.
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 this amount in
the total for line 23g. 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 23g, and write
"backup withholding."
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.
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.
The time needed to complete and file this
form will vary depending on individual
circumstances. The estimated average time is:
Recordkeeping . . . . . .11 hr., 29 min.
Learning about the
law or the form . . . . . . 5 hr., 20 min.
Preparing the form . . . . 33 hr., 12 min.
Copying, assembling,
and sending the form
to the IRS . . . . . . .. 2 hr., 9 min.
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 Tax
Forms Committee, Western Area Distribution
Center, Rancho Cordova, CA 95743-0001. DO
NOT send the tax form to this office. Instead,
see Where To File on page 3.
SCHEDULE H
(Form 1120)
Department of the Treasury
Internal Revenue Service
Name
Section 28Limitations fora Personal Service
Corporation (PSC)
® Attach to PSC's income tax return if Part II is completed.
OMB No. 1545-0123
Employer identification number
Note: A newly organized PSC is considered to have met the section 280H distribution requirements for the first year of its existence
and does not have to complete Schedule H. If, during the tax year, an existing corporation becomes a PSC and makes a
section 444 election, the corporation is treated as if it were a PSC for the 3 preceding tax years. See Temporary Regulations
section 1.280H-1 T(e) for details.
Minimum Distribution Requirement (See instructions.)
1 Enter applicable amounts from preceding tax year . . . . . . . . . . . . . . .
2 Divide number of months in deferral period of preceding tax year by number of months in
preceding tax year. Enter the result as a percentage . . . . . . . . . . . . . . _
3 Amount figured under preceding year test. Multiply line 1 by the percentage on line 2. _
4 Enter applicable amounts from the deferral period of the applicable election year
If line 4 is less than line 3, go to line 5. Otherwise, stop here. The PSC has met the minimum
distribution requirement. Do not attach Schedule H to the PSC's income tax return. Keep
Schedule H with the PSC's tax records.
5 Enter applicable amounts from the:
a 1st tax year before applicable election year . . . . . . . . . . . . . . . .
b 2nd tax year before applicable election year . . . . . . . . . . . . . . . .
c 3rd tax year before applicable election year . . . . . . . . . . . . . . . . . _
6 Total. Add lines 5a through 5c . . . . . . . . . . . . . . . . . . . . . _
7 Enter adjusted taxable income for the:
a 1st tax year before applicable election year . . . . . . . . . . . . . . . . . ..
b 2nd tax year before applicable election year . . . . . . . . . . . . . . . . ..
c 3rd tax year before applicable election year . . . . . . . . . . . . . . . . . ..
8 Total. Add lines 7a through 7c . . . . . . . . . . . . . . . . . . . . . ..
9 Divide line 6 by line 8 . . . . . . . . . . . . . . . . . . . . . . . . ..
10 Enter the percentage from line 9 or 95%, whichever is smaller . . . . . . . . . . ..
11 Enter adjusted taxable income for the deferral period of the applicable election year . . . .
12 Amount figured under 3-year average test. Multiply line 11 by line 10 . . . . . . . _
5a
5b
L
7a
13 Minimum distribution requirement. Enter the smaller of line 3 or line 12 . . 13 _
If line 13 is equal to or less than line 4, stop here. The PSC has met the minimum distribution
requirement. Do not complete Part 11 and do not attach Schedule H to the PSC's income
tax return. Keep Schedule H with the PSC's tax records.
If line 13 is more than line 4, the PSC's deduction for applicable amounts is limited under section
280H. Complete Part II to figure the maximum amount the PSC can deduct.
Maximum Deductible Amount (See instructions.)
14 Enter amount from line 4 . . . . . . . . . . . . . . . . . . . . . . . .. L 14
15 Enter number of months in deferral period of applicable election year . . . . . . . . .. 15
16 Divide line 14 by line 15 . . . . . . . . . . . . . . . . . . . . . . 16
17 Nondeferral period. Subtract the number of months in the deferral period from the number of
months in the applicable tax year. Enter the result . . . . . . . . . . . . . . . .. 17
18 Multiply line 16 by line 17 . . . . . . . . . . . . . . . . . . . . . . . .. 18
19 Maximum deductible amount. Add lines 14 and 18. The PSC's deduction for applicable amounts
paid or incurred to employee -owners is limited to this amount. Attach Schedule H to the PSC's
income tax return. Any amount not allowed because of the section 280H(d) limitation is treated
as paid or incurred in the PSC's succeeding tax year 19
For Paperwork Reduction Act Notice, see the Instructions for Forms 1120 and 1120-A. Cat. No. 14491P Schedule H (Form 1120) (2000)
Schedule H (Form 1120) (2000)
Section references are to the
Internal Revenue Code unless
otherwise noted.
Purpose of Schedule
A personal service corporation (PSC)
(as defined in section 441(i)(2)) may
elect under section 444 to have a
tax year other than a calendar year.
A PSC that makes the election is
subject to the minimum distribution
requirement of section 280H for the
year the election is made and for
each tax year the election remains in
effect. If the PSC does not meet the
requirement, its deduction for
amounts paid or incurred to
employee -owners (see Applicable
amount below) is limited.
Use Part I of Schedule H to
determine if the PSC meets the
minimum distribution requirement of
section 280H(c) for the tax year. Use
Part II to figure the limits on
deductions under section 280H(d) if
the requirement is not met.
Who Must File
A PSC that has elected under
section 444 to have a tax year other
than a calendar year must complete
Schedule H. If the PSC does not
meet the minimum distribution
requirement of section 280H for the
tax year, it must file Schedule H with
its Form 1120. If it does meet the
requirement, it does not need to
attach the completed Schedule H to
its tax return, but it should keep it
with its tax records.
Definitions
Applicable election year. An
applicable election year is any tax
year in which a section 444 election
is in effect.
Applicable amount. An applicable
amount is any amount otherwise
deductible by a PSC in a tax year
that is includible (directly or
indirectly) in the gross income of a
taxpayer who is an employee -owner
during that year. Temporary
Regulations section
1.280H-1T(b)(4)(iii) contains
examples of how to figure a PSC's
applicable amounts.
Exception. Dividends paid by the
corporation and gain on the sale or
exchange of property between the
owner -employee and the corporation
are not applicable amounts.
An amount is indirectly includible
in the gross income of an
employee -owner if the amount is
includible in the gross income of
certain related parties. For details,
see Temporary Regulations section
1.280H-1 T(b)(4)(ii).
Employee -owner. An employee -
owner is a person who:
• On any day of the PSC's tax year,
is an employee of the PSC or who
performs services for or on behalf of
the PSC (including an independent
contractor) and
• On any day of the PSC's tax year,
owns any outstanding stock of the
PSC.
Deferral period. The deferral period
is the number of months between
the last day of the elected tax year
and the last day of the required tax
year.
Example. The PSC elects a tax
year that ends on September 30.
Since the required tax year for a
PSC is the calendar year, the
deferral period is 3 months (the
number of months between
September 30 and December 31).
Nondeferral period. The nondeferral
period is the part of the tax year
that occurs after the part of the year
that constitutes the deferral period.
Adjusted taxable income. Adjusted
taxable income is taxable income
determined without regard to:
• Applicable amounts and
• Any NOL carryover to the extent
the carryover is attributable to
applicable amounts.
Adjusted taxable income for the
deferral period of an applicable
election year is the adjusted taxable
income that would result if the PSC
filed an income tax return for the
deferral period under its normal
method of accounting. Reasonable
estimates are acceptable.
For more information, see
Temporary Regulations section
1.28011-1 T(c)(3)(iii).
Part I
Complete Part I to see if the PSC
meets the minimum distribution
Page 2
requirement of section 280H(c), The
PSC meets the requirement if,
during the deferral period of the tax
year, the applicable amounts paid or
incurred for all employee -owners are
equal to or greater than the smaller
of:
• The amount determined under the
preceding year test or
• The amount determined under the
3-year average test.
Use lines 1 through 4 to see if the
preceding year test applies to the
PSC. If it doesn't, complete the rest
of Part I to see if the 3-year average
test applies.
Line 1. Enter the applicable amount
that was paid or incurred in the
preceding tax year to any
employee -owner of the PSC and
that was otherwise deductible by
the PSC on its preceding income tax
return.
Example. PEK, an accrual basis
personal service corporation with a
tax year ending September 30,
made a section 444 election for its
tax year beginning October 1, 1999.
On October 1, 1999, S, an employee
of PEK, owned no stock of PEK;
however, on March 31, 2000, S
acquired 10 of the 200 outstanding
shares of PEK stock. During the
period October 1, 1999, to
March 31, 2000, S earned $40,000
of compensation as an employee of
PEK. During the period April 1,
2000, to September 30, 2000, S
earned $60,000 of compensation as
an employee -owner of PEK. The
entire $100,000 compensation paid
to S during PEK's tax year ending
September 30, 2000, was otherwise
deductible by PEK and includible in
S's gross income. In 2000, it is an
applicable amount for PEK from the
preceding tax year.
See Temporary Regulations
section 1.280H-lT(c) for more
information, including examples of
the computation of the
preceding -year test and the 3-year
average test.
Use Part II to figure the maximum
deduction under section 280H(d) for
applicable amounts if the PSC did
not meet the minimum distribution
requirement figured in Part I.
go
Form ®
Application for Employer Identification Number
(For use by employers, corporations, Partnerships, trusts, estates, churches,
EIN
(Rev. April 2000)
government agencies, certain individuals, and others. See instructions.)
Department of the Treasury
Internal Revenue Service
► Keep a copy for your records.
OMB No. 1545-0003
1 Name of applicant (legal name) (see instructions)
T
2 Trade name of business (if different from name on line 1)
3 Executor, trustee, "care of name
m
U
c
4a Mailing address (street address) (room, apt., or suite no.)
5a Business address (if different from address on lines 4a and 4b)
C
a
°
4b City, state, and ZIP code
5b City, state, and ZIP code
m
a
N
6 County and state where principal business is located
m
°
°
7 Name of principal officer, general partner, grantor, owner, or trustor- SSN or TIN may be required (see instructions) ►
8a Type of entity (Check only one box.) (see instructions)
Caution: if applicant is a limited liability company, see the instructions for line Sa.
❑ Sole proprietor (SSN) ❑ Estate (SSN of decedent)
❑ Partnership ❑ Personal service Corp. ❑ Plan administrator (SSN)
❑ REMIC ❑ National Guard ❑ Other corporation (specify) ►
❑ State/local government ❑ Farmers' cooperative ❑ Trust
❑ Church or church -controlled organization ❑ Federal government/military
❑ Other nonprofit organization (specify) ► (enter GEN if applicable)
❑ Other (specify) ►
8b If a corporation, name the state or foreign country State Foreign country
(if applicable) where incorporated
9
10
Reason for applying (Check only one box.) (see instructions) ❑ Banking purpose (specify purpose) ►
❑ Started new business (specify type) ► ❑ Changed type of organization (specify new type) 0-
El Purchased going business
❑ Hired employees (Check the box and see line 12.) ❑ Created a trust (specify type) 0-
El Created a pension plan (specify type) ►
Date business started or acquired (month, day, year) (see instructions)
❑ Other (specify) ►
11 Closing month of accounting year (see instructions)
12 First date wages or annuities were paid or will be paid (month, day, year). Note: if applicant is a withholding agent, enter date income will
first be paid to nonresident alien. (month, day, year) . . . . . . . . . . . .. ►
13 Highest number of employees expected in the next 12 months. Note: If the applicant does not Nonagricultural Agricultural Household
expect to have any employees during the period, enter -0-. (see instructions) . . . . , ►
14 Principal activity (see instructions) ►
15 Is the principal business activity manufacturing? . . . . . . . . . . . . . . . . . . . . .❑ Yes El No
If "Yes," principal product and raw material used ►
16 To whom are most of the products or services sold? Please check one box. ❑ Business (wholesale)
❑ Public (retail) ❑ Other (specify) ► ❑ N/A
17a Has the applicant ever applied for an employer identification number for this or any other business? .❑ Yes ❑ No
Note: If "Yes," please complete lines 77b and 17c.
17b If you checked "Yes" on line 17a, give applicant's legal name and trade name shown on prior application, if different from line 1 or 2 above.
Legal name ► Trade name ►
17c Approximate date when and city and state where the application was filed. Enter previous employer identification number if known.
Approximate date when filed (mo., day, year) City and state where filed Previous EIN
Under penalties of perjury, I declare that I have examined this application, and to the best of my knowledge and belief, it is true, correct, and complete. Business telephone number (include area code)
( )
Fax telephone number (include area code)
Name and title (Please type or print clearly.) ►
Signature ► Date Do -
Note: Do not write below this line. For official use only.
Please leave I Geo. Ind. Class Size Reason for applying
blank ►
For Privacy Act and Paperwork Reduction Act Notice, see page 4. Cat. No. 16055N Form SS-4 (Rev. 4-2000)
Form SS-4 (Rev. 4-2000)
General Instructions
Section references are to the Internal Revenue Code unless otherwise
noted.
Purpose of Form
Use Form SS-4 to apply for an employer identification number (EIN). An
EIN is a nine -digit number (for example, 12-3456789) assigned to sole
proprietors, corporations, partnerships, estates, trusts, and other entities
for tax filing and reporting purposes. The information you provide on this
form will establish your business tax account.
Caution: An EIN is for use in connection with your business activities
only. Do not use your EIN in place of your social security number (SSN).
Who Must File
You must file this form if you have not been assigned an EIN before and:
® You pay wages to one or more employees including household
employees.
® You are required to have an EIN to use on any return, statement, or
other document, even if you are not an employer.
e You are a withholding agent required to withhold taxes on income,
other than wages, paid to a nonresident alien (individual, corporation,
partnership, etc.). A withholding agent may be an agent, broker, fiduciary,
manager, tenant, or spouse, and is required to file Form 1042, Annual
Withholding Tax Return for U.S. Source Income of Foreign Persons.
e You file Schedule C, Profit or Loss From Business, Schedule C-EZ,
Net Profit From Business, or Schedule F, Profit or Loss From Farming, of
Form 1040, U.S. Individual Income Tax Return, and have a Keogh plan
or are required to file excise, employment, or alcohol, tobacco, or
firearms returns.
The following must use EINs even if they do not have any employees:
® State and local agencies who serve as tax reporting agents for public
assistance recipients, under Rev. Proc. 80-4, 1980-1 C.B. 581, should
obtain a separate EIN for this reporting. See Household employer on
page 3.
® Trusts, except the following:
1. Certain grantor -owned trusts. (See the Instructions for Form 1041,
U.S. Income Tax Return for Estates and Trusts.)
2. Individual retirement arrangement (IRA) trusts, unless the trust has to
file Form 990-T, Exempt Organization Business Income Tax Return. (See
the Instructions for Form 990-T.)
® Estates
® Partnerships
® REMICs (real estate mortgage investment conduits) (See the
Instructions for Form 1066, U.S. Real Estate Mortgage Investment
Conduit (REMIC) Income Tax Return.)
® Corporations
® Nonprofit organizations (churches, clubs, etc.)
® Farmers' cooperatives
® Plan administrators (A plan administrator is the person or group of
persons specified as the administrator by the instrument under which the
plan is operated.)
When To Apply for a New EIN
New Business. If you become the new owner of an existing business, do
not use the EIN of the former owner. If you already have an EIN, use
that number. If you do not have an EIN, apply for one on this form. If
you become the "owner" of a corporation by acquiring its stock, use the
corporation's EIN.
Changes in Organization or Ownership. If you already have an EIN, you
may need to get a new one if either the organization or ownership of your
business changes. If you incorporate a sole proprietorship or form a
partnership, you must get a new EIN. However, do not apply for a new
EIN if:
® You change only the name of your business,
® You elected on Form 8832, Entity Classification Election, to change
the way the entity is taxed, or
e A partnership terminates because at least 50% of the total interests in
partnership capital and profits were sold or exchanged within a 12-month
period. (See Regulations section 301.6109-1(d)(2)(iii).) The EIN for the
terminated partnership should continue to be used.
Note: If you are electing to be an "S corporation," be sure you file Form
2553, Election by a Small Business Corporation.
Page 2
File Only One Form SS-4. File only one Form SS-4, regardless of the
number of businesses operated or trade names under which a business
operates. However, each corporation in an affiliated group must file a
separate application.
EIN Applied for, But Not Received. If you do not have an EIN by the
time a return is due, write "Applied for" and the date you applied in the
space shown for the number. Do not show your social security number
(SSN) as an EIN on returns.
If you do not have an EIN by the time a tax deposit is due, send your
payment to the Internal Revenue Service Center for your filing area. (See
Where To Apply below.) Make your check or money order payable to
"United States Treasury" and show your name (as shown on Form SS-4),
address, type of tax, period covered, and date you applied for an EIN.
Send an explanation with the deposit.
For more information about EINs, see Pub. 583, Starting a Business
and Keeping Records, and Pub. 1635, Understanding Your EIN.
How TO Apply
You can apply for an EIN either by mail or by telephone. You can get an
EIN immediately by calling the Tele-TIN number for the service center for
your state, or you can send the completed Form SS-4 directly to the
service center to receive your EIN by mail.
Application by Tele-TIN. Under the Tele-TIN program, you can receive
your EIN by telephone and use it immediately to file a return or make a
payment. To receive an EIN by telephone, complete Form SS-4, then call
the Tele-TIN number listed for your state under Where To Apply. The
person making the call must be authorized to sign the form. (See
Signature on page 4.)
An IRS representative will use the information from the Form SS-4 to
establish your account and assign you an EIN. Write the number you are
given on the upper right corner of the form and sign and date it.
Mail or fax (facsimile) the signed Form SS-4 within 24 hours to the
Tele- TIN Unit at the service center address for your state. The IRS
representative will give you the fax number. The fax numbers are also
listed in Pub. 1635.
Taxpayer representatives can receive their client's EIN by telephone if
they first send a fax of a completed Form 2848, Power of Attorney and
Declaration of Representative, or Form 8821, Tax Information
Authorization, to the Tele-TIN unit. The Form 2848 or Form 8821 will be
used solely to release the EIN to the representative authorized on the
form.
Application by Mail. Complete Form SS-4 at least 4 to 5 weeks before
you will need an EIN. Sign and date the application and mail it to the
service center address for your state. You will receive your EIN in the
mail in approximately 4 weeks.
Where To Apply
The Tele-TIN numbers listed below will involve a long-distance charge to
callers outside of the local calling area and can be used only to apply for
an EIN. The numbers may change without notice. Call 1-800-829-1040
to verify a number or to ask about the status of an application by mail.
Call the Tele-TIN
If your principal business,
number shown or
office or agency, or legal
file with the Internal
residence in the case of an
Revenue Service
individual, is located in:
Center at:
Attn: Entity Control
Florida, Georgia, South Carolina Atlanta, GA 39901
770-455-2360
New Jersey, New York (New York City and
Nassau, Rockland, Suffolk,
Attn: Entity Control
Holtsville, NY 00501
counties of and
Westchester)
516-447-4955
New York (all other counties), Connecticut,
Attn: Entity Control
Maine, Massachusetts, New Hampshire,
Andover, MA 05501
Rhode Island, Vermont
978-474-9717
Attn: Entity Control
Stop 6800
Illinois, Iowa, Minnesota, Missouri, Wisconsin
2306 E. Bannister Rd.
Kansas City, MO 64999
816-926-5999
Delaware, District of Columbia, Maryland,
Attn: Entity ControlPhiladelphia, PA 19255
Pennsylvania, Virginia
215-516-6999
Indiana, Kentucky, Michigan, Ohio, West Attn: Entity ControlCincinnati, OH 45999
Virginia 859-292-5467
Form SS-4 (Rev. 4-2000)
Kansas, New Mexico, Oklahoma, Texas
Attn: Entity Control
Austin, TX 73301
512-460-7843
Alaska, Arizona, California (counties of
Alpine, Amador, Butte, Calaveras, Colusa,
Contra Costa, Del Norte, El Dorado, Glenn,
Humboldt, Lake, Lassen, Marin, Mendocino,
Attn: Entity Control
Modoc, Napa, Nevada, Placer, Plumas,
Mail Stop 6271
Sacramento, San Joaquin, Shasta, Sierra,
P.O. Box 9941
Siskiyou, Solano, Sonoma, Sutter, Tehama,
Ogden, UT 84201
Trinity, Yolo, and Yuba), Colorado, Idaho,
801-620-7645
Montana, Nebraska, Nevada, North Dakota,
Oregon, South Dakota, Utah, Washington,
Wyoming
Attn: Entity Control
California (all other counties), Hawaii
Fresno, CA 93888
559-452-4010
Alabama, Arkansas, Louisiana, Mississippi,
Attn: Entity Control
Memphis, TN 37501
North Carolina, Tennessee
901-546-3920
If you have no legal residence, principal
Attn: Entity Control
place of business, or principal office or
Philadelphia, PA 19255
agency in any state
215-516-6999
Specific Instructions
The instructions that follow are for those items that are not
self-explanatory. Enter N/A (nonapplicable) on the lines that do not apply.
Line 1. Enter the legal name of the entity applying for the EIN exactly as
it appears on the social security card, charter, or other applicable legal
document.
Individuals. Enter your first name, middle initial, and last name. If you
are a sole proprietor, enter your individual name, not your business name.
Enter your business name on line 2. Do not use abbreviations or
nicknames on line 1.
Trusts. Enter the name of the trust.
Estate of a decedent. Enter the name of the estate.
Partnerships. Enter the legal name of the partnership as it appears in
the partnership agreement. Do not list the names of the partners on
line 1. See the specific instructions for line 7.
Corporations. Enter the corporate name as it appears in the
corporation charter or other legal document creating it.
Plan administrators. Enter the name of the plan administrator. A plan
administrator who already has an EIN should use that number.
Line 2. Enter the trade name of the business if different from the legal
name. The trade name is the "doing business as" name.
Note: Use the full legal name on line I on all tax returns filed for the
entity. However, if you enter a trade name on line 2 and choose to use
the trade name instead of the legal name, enter the trade name on all
returns you file. To prevent processing delays and errors, always use
either the legal name only or the trade name only on all tax returns.
Line 3. Trusts enter the name of the trustee. Estates enter the name of
the executor, administrator, or other fiduciary. If the entity applying has a
designated person to receive tax information, enter that person's name
as the "care of" person. Print or type the first name, middle initial, and
last name.
Line 7. Enter the first name, middle initial, last name, and SSN of a
principal officer if the business is a corporation; of a general partner if a
partnership; of the owner of a single member entity that is disregarded as
an entity separate from its owner; or of a grantor, owner, or trustor if a
trust. If the person in question is an alien individual with a previously
assigned individual taxpayer identification number (ITIN), enter the ITIN in
the space provided, instead of an SSN. You are not required to enter an
SSN or ITIN if the reason you are applying for an EIN is to make an entity
classification election (see Regulations section 301.7701-1 through
301.7701-3), and you are a nonresident alien with no effectively
connected income from sources within the United States.
Line 8a. Check the box that best describes the type of entity applying for
the EIN. If you are an alien individual with an ITIN previously assigned to
you, enter the ITIN in place of a requested SSN.
Caution: This is not an election for a tax classification of an entity. See
"Limited liability company (LLC)" below.
If not specifically mentioned, check the "Other" box, enter the type of
entity and the type of return that will be filed (for example, common trust
fund, Form 1065). Do not enter N/A. If you are an alien individual applying
for an EIN, see the Line 7 instructions above.
Sole proprietor. Check this box if you file Schedule C, C-EZ, or F (Form
1040) and have a qualified plan, or are required to file excise,
employment, or alcohol, tobacco, or firearms returns, or are a payer of
gambling winnings. Enter your SSN (or ITIN) in the space provided. If you
are a nonresident alien with are a nonresident alien with no effectively
Page 3
connected income from sources within the United States, you do not
need to enter an SSN or ITIN.
REMIC. Check this box if the entity has elected to be treated as a real
estate mortgage investment conduit (REMIC). See the Instructions for
Form 1066 for more information.
Other nonprofit organization. Check this box if the nonprofit
organization is other than a church or church -controlled organization and
specify the type of nonprofit organization (for example, an educational
organization).
If the organization also seeks tax-exempt status, you must file either
Package 1023, Application for Recognition of Exemption, or Package
1024, Application for Recognition of Exemption Under Section 501(a). Get
Pub. 557, Tax Exempt Status for Your Organization, for more information.
Group exemption number (GEN). If the organization is covered by a
group exemption letter, enter the four -digit GEN. (Do not confuse the
GEN with the nine -digit EIN.) If you do not know the GEN, contact the
parent organization. Get Pub. 557 for more information about group
exemption numbers.
Withholding agent. If you are a withholding agent required to file Form
1042, check the "Other" box and enter "Withholding agent."
Personal service corporation. Check this box if the entity is a personal
service corporation. An entity is a personal service corporation for a tax
year only if:
a The principal activity of the entity during the testing period (prior tax
year) for the tax year is the performance of personal services
substantially by employee -owners, and
® The employee -owners own at least 10% of the fair market value of the
outstanding stock in the entity on the last day of the testing period.
Personal services include performance of services in such fields as
health, law, accounting, or consulting. For more information about
personal service corporations, see the Instructions for Forms 1120 and
1120-A, and Pub. 542, Corporations.
Limited liability company (LLC). See the definition of limited liability
company in the Instructions for Form 1065, U.S. Partnership Return of
Income. An LLC with two or more members can be a partnership or an
association taxable as a corporation. An LLC with a single owner can be
an association taxable as a corporation or an entity disregarded as an
entity separate from its owner. See Form 8832 for more details.
Note: A domestic LLC with at least two members that does not file Form
8832 is classified as a partnership for Federal income tax purposes.
® If the entity is classified as a partnership for Federal income tax
purposes, check the "partnership" box.
® If the entity is classified as a corporation for Federal income tax
purposes, check the "Other corporation" box and write "limited liability
co." in the space provided.
e If the entity is disregarded as an entity separate from its owner, check
the "Other" box and write in "disregarded entity" in the space provided.
Plan administrator. If the plan administrator is an individual, enter the
plan administrator's SSN in the space provided.
Other corporation. This box is for any corporation other than a personal
service corporation. If you check this box, enter the type of corporation
(such as insurance company) in the space provided.
Household employer. If you are an individual, check the "Other" box
and enter "Household employer" and your SSN. If you are a state or local
agency serving as a tax reporting agent for public assistance recipients
who become household employers, check the "Other" box and enter
"Household employer agent." If you are a trust that qualifies as a
household employer, you do not need a separate EIN for reporting tax
information relating to household employees; use the EIN of the trust.
QSub. For a qualified subchapter S subsidiary (QSub) check the
"Other" box and specify "QSub."
Line 9. Check only one box. Do not enter NIA.
Started new business. Check this box if you are starting a new
business that requires an EIN. If you check this box, enter the type of
business being started. Do not apply if you already have an EIN and are
only adding another place of business.
Hired employees. Check this box if the existing business is requesting
an EIN because it has hired or is hiring employees and is therefore
required to file employment tax returns. Do not apply if you already have
an EIN and are only hiring employees. For information on the applicable
employment taxes for family members, see Circular E, Employer's Tax
Guide (Publication 15).
Created a pension plan. Check this box if you have created a pension
plan and need an EIN for reporting purposes. Also, enter the type of plan.
Note: Check this box if you are applying for a trust EIN when a new
pension plan is established.
Form SS-4 (Rev. 4-2000)
Page 4
Banking purpose. Check this box if you are requesting an EIN for
banking purposes only, and enter the banking purpose (for example, a
bowling league for depositing dues or an investment club for dividend
and interest reporting).
Changed type of organization. Check this box if the business is
changing its type of organization, for example, if the business was a sole
proprietorship and has been incorporated or has become a partnership. If
you check this box, specify in the space provided the type of change
made, for example, "from sole proprietorship to partnership."
Purchased going business. Check this box if you purchased an existing
business. Do not use the former owner's EIN. Do not apply for a new
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Note: Do not check this box if you are applying for a trust EIN when a
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Exception. Do not file this form for certain grantor -type trusts. The
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® The tax year that results in the least aggregate deferral of income, or
® In certain cases, some other tax year.
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REMIC. REMICs must have a calendar year as their tax year.
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® It can establish a business purpose for having a different tax year, or
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® Tax-exempt trusts,
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® Grantor -owned trusts.
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iAJ
PAGE
26 CFR 1.528-1 printed in FULL format.
LEXIS PUBLISHING'S CODE OF FEDERAL REGULATIONS
Copyright (c) 2001, LEXIS Publishing
*** THIS SECTION IS CURRENT THROUGH THE JANUARY 19, 2001 ISSUE OF ***
*** THE FEDERAL REGISTER ***
TITLE 26 -- INTERNAL REVENUE
CHAPTER I -- INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
SUBCHAPTER A -- INCOME TAX
PART 1 -- INCOME TAXES
NORMAL TAXES AND SURTAXES
EXEMPT ORGANIZATIONS
HOMEOWNERS ASSOCIATIONS
26 CFR 1.528-1
@ 1.528-1 Homeowners associations.
(a) In general. Section 528 only applies to taxable years of homeowners
ssociations beginning after December 31, 1973. To qualify as a homeowners
ssociation an organization must either be a condominium management association
r a residential real estate management association. For the purposes of Section
28 and the regulations under that section, the term homeowners association
hall refer only to an organization described in section 528. Cooperative
ousing corporations and organizations based on a similar form of ownership are
of eligible to be taxed as homeowners associations. As a general rule,
iembership in either a condominium management association or a residential real
,state management association is confined to the developers and the owners of
.he units, residences, or lots. Furthermore, membership in either type of
Lssociation is normally required as a condition of such ownership. However, if
:he membership of an organization consists of other homeowners associations, the
>wners of units, residences, or lots who are members of such other homeowners
associations will be treated as the members of the organization for the purposes
>f the regulations under section 528.
(b) Condominium. The term condominium means an interest in real property
-onsisting of an undivided interest in common in a portion of a parcel of real
?roperty (which may be a fee simple estate or an estate for years, such as a
Leasehold or subleasehold) together with a separate interest in space in a
building located on such property. An interest in property is not a condominium
znless the undivided interest in the common elements are vested in the unit
holders. In addition, a condominium must meet the requirements of applicable
state or local law relating to condominiums or horizontal property regimes.
(c) Residential real estate management association. Residential real estate
management associations are normally composed of owners of single-family
residential units located in a subdivision, development, or similar area.
However, they may also include as members, owners of multiple -family dwelling
units located in such areas. They are commonly formed to administer and enforce
covenants relating to the architecture and appearance of the real estate
development as well as to perform certain maintenance duties relating to common
areas.
(d) Tenants. Tenants will not be considered members for purposes of meeting
the source of income test under section 528(c)(1)(B) and @ 1.528-5. However,
PAGE
26 CFR 1.528-1
e fact that tenants of members of a homeowners association are permitted to be
mbers of the association will not disqualify an association under section
8(c)(1) if it otherwise meets the requirements of section 528(c) and these
gulations.
STORY:
'.D. 7692, 45 FR 26321, Apr. 18, 1980]
fTHORITY:
TTHORITY NOTE APPLICABLE TO ENTIRE PART:
i U.S.C. 7805.
)TES:
)TES APPLICABLE TO ENTIRE CHAPTER:
)ITORIAL NOTE: IRS published a document at 45 FR 6088, Jan. 25, 1980, deleting
-atutory sections from their regulations. In Chapter I, cross references to the
:leted material have been changed to the corresponding sections of the IRS Code
E 1954 or to the appropriate regulations sections. When either such change
coduced a redundancy, the cross reference has been deleted. For further
xplanation, see 45 FR 20795, March 31, 1980.
The OMB control numbers for title 26 appear in @@ 601.9000 and 602.101 of this
hapter.]
OTES APPLICABLE TO ENTIRE SUBCHAPTER:
upplementary Publications: Internal Revenue Service Looseleaf Regulations
ystem, Alcohol and Tobacco Tax Regulations, and Regulations Under Tax
onventions.
DITORIAL NOTE: Treasury Decision 6091, 19 FR 5167, Aug. 17, 1954, provides in
,art as follows:
'ARAGRAPH 1. All regulations (including all Treasury decisions) prescribed by,
�r under authority duly delegated by, the Secretary of the Treasury, or jointly
)y the Secretary and the Commissioner of Internal Revenue, or by the
:ommissioner of Internal Revenue with the approval of the Secretary of the
.reasury, or jointly by the Commissioner of Internal Revenue and the
)ommissioner of Customs or the Commissioner of Narcotics with the approval of
;he Secretary of the Treasury, applicable under any provision of law in effect
Dn the date of enactment of the Code, to the extent such provision of law is
repealed by the Code, are hereby prescribed under and made applicable to the
.Drovisions of the Code corresponding to the provision of law so repealed insofar
as any such regulation is not inconsistent with the Code. Such regulations shall
oecome effective as regulations under the various provisions of the Code as of
the dates the corresponding provisions of law are repealed by the Code, until
superseded by regulations issued under the Code.
PAR. 2. With respect to any provision of the Code which depends for its
application upon the promulgation of regulations or which is to be applied in
such manner as may be prescribed by regulations, all instructions or rules in
effect immediately prior to the enactment of the Code, to the extent such
instructions or rules could be prescribed as regulations under authority of such
provision of the Code, shall be applied as regulations under such provision
insofar as such instructions or rules are not inconsistent with the Code. Such
instructions or rules shall be applied as regulations under the applicable
provision of the Code as of the date such provision takes effect.
PAR. 3. If any election made or other act done pursuant to any provision of the
Internal Revenue Code of 1939 or prior internal revenue laws would (except for
PAGE
26 CFR 1.526-1
enactment of the Code ) be effective for any period subsequent to such
actment, and if corresponding provisions are contained in the Code, such
ection or other act shall be given the same effect under the corresponding
ovisions of the Code to the extent not inconsistent therewith. The term "act"
cludes, but is not limited to, an allocation, identification, declaration,
reemtent, option, waiver, relinquishment, or renunciation.
R. 4. The limits of the various internal revenue districts have not been
anged by the enactment of the Code. Furthermore, delegations of authority made
.rsuant to the provisions of Reorganization Plan No. 26 of 1950 and
organization Plan No. 1 of 1952 (as well as redelegation thereunder),
icluding those governing the authority of the Commissioner of Internal Revenue,
ie Regional Commissioners of Internal Revenue, or the District Directors of
eternal Revenue, are applicable to the provisions of the Code to the extent
)nsistent therewith.
52 words
(or in opposition to) any candidate for public office.
(4) (A) Civic leagues or organizations not organized for profit but operated
lusively for the promotion of social welfare, or local associations of
ployees, the membership of which is limited to the employees of a designated
rson or persons in a particular municipality, and the net earnings of which
e devoted exclusively to charitable, educational, or recreational purposes.
(B) Subparagraph (A) shall not apply to an entity unless no part of the
t earnings of such entity inures to the benefit of any private shareholder or
dividual.
(5) Labor, agricultural, or horticultural organizations.
(6) Business leagues, chambers of commerce, real-estate boards, boards of
ade, or professional football leagues (whether or not administering a pension
nd for football players), not organized for profit and no part of the net
rnings of which inures to the benefit of any private shareholder or
dividual.
(7) Clubs organized for pleasure, recreation, and other nonprofitable
.rposes, substantially all of the activities of which are for such purposes and
part of the net earnings of which inures to the benefit of any private
Lareholder.
(8) Fraternal beneficiary societies, orders, or associations --
(A) operating under the lodge system or for the exclusive benefit of the
ambers of a fraternity itself operating under the lodge system, and
(B) providing for the payment of life, sick, accident, or other benefits
> the members of such society, order, or association or their dependents.
(9) Voluntary employees' beneficiary associations providing for the payment
life, sick, accident, or other benefits to the members of such association or
ieir dependents or designated beneficiaries, if no part of the net earnings of
zch association inures (other than through such payments) to the benefit of any
v
PAGE 2
26 USCS @ 528 printed in FULL format.
UNITED STATES CODE SERVICE
Copyright 2000, LEXIS Law Publishing, a division of Reed Elsevier Inc.
All rights reserved.
*** CURRENT THROUGH P.L. 106-504, APPROVED 11/13/00 ***
*** WITH GAPS OF 106-398 and 501 ***
TITLE 26. INTERNAL REVENUE CODE
SUBTITLE A. INCOME TAXES
CHAPTER 1. NORMAL TAXES AND SURTAXES
SUBCHAPTER F. EXEMPT ORGANIZATIONS
PART VII. CERTAIN HOMEOWNERS ASSOCIATIONS
26 USCS @ 528 (2000)
528. Certain homeowners associations.
a) General rule. A homeowners association (as defined in subsection (c)) shall
e subject to taxation under this subtitle only to the extent provided in this
ection. A homeowners association shall be considered an organization exempt
rom income taxes for the purpose of any law which refers to organizations
xempt from income taxes.
b) Tax imposed. A tax is hereby imposed for each taxable year on the
.omeowners association taxable income of every homeowners association. Such tax
hall be equal to 30 percent of the homeowners association taxable income (32
)ercent of such income in the case of a timeshare association).
;c) Homeowners association defined.
?or purposes of this section—
(1) Homeowners association. The term "homeowners association" means an
>rganization which is a condominium management association, a residential real
estate management association, or a timeshare association if --
(A) such organization is organized and operated to provide for the
acquisition, construction, management, maintenance, and care of association
property,
(B) 60 percent or more of the gross income of such organization for the
taxable year consists solely of amounts received as membership dues, fees, or
assessments from--
(i) owners of residential units in the case of a condominium management
association,
(ii) owners of residences or residential lots in the case of a
residential real estate management association, or
(iii) owners of timeshare rights to use, or timeshare ownership
interests in, association property in the case of a timeshare association,
(C) 90 percent or more of the expenditures of the organization for the
taxable year are expenditures for the acquisition, construction, management,
maintenance, and care of association property and, in the case of a timeshare
association, for activities provided to or on behalf of members of the
association,
(D) no part of the net earnings of such organization inures (other than by
acquiring, constructing, or providing management, maintenance, and care of
association property, and other than by a rebate of excess membership dues,
fees, or assessments) to the benefit of any private shareholder or individual,
26 USCS @ 528
PAGE
M
(E) such organization elects (at such time and in such manner as the
:cretary by regulations prescribes) to have this section apply for the taxable
:ar .
(2) Condominium management association. The term "condominium management
ssociation" means any organization meeting the requirement of subparagraph (A)
paragraph (1) with respect to a condominium project substantially all of the
sits of which are used by individuals for residences.
(3) Residential real estate management association. The term "residential
eal estate management association" means any organization meeting the
equirements of subparagraph (A) of paragraph (1) with respect to a subdivision,
evelopment, or similar area substantially all the lots or buildings of which
ay only be used by individuals for residences.
(4) Timeshare association. The term "timeshare association" means any
rganization (other than a condominium management association) meeting the
equirement of subparagraph (A) of paragraph (1) if any member thereof holds a
imeshare right to use, or a timeshare ownership interest in, real property
onstituting association property.
(5) Association property. The term "association property" means --
(A) property held by the organization,
(B) property commonly held by the members of the organization,
(C) property within the organization privately held by the members of the
irganization, and
(D) property owned by a governmental unit and used for the benefit of
residents of such unit.
In the case of a timeshare association, such term includes property in which
:he timeshare association, or members of the association, have rights arising
>ut of recorded easements, covenants, or other recorded instruments to use
>roperty related to the timeshare project.
(d) Homeowners association taxable income defined.
(1) Taxable income defined. For purposes of this section, the homeowners
association taxable income of any organization for any taxable year is an amount
equal to the excess (if any) of --
(A) the gross income for the taxable year (excluding any exempt function
income), over
(B) the deductions allowed by this chapter which are directly connected
with the production of the gross income (excluding exempt function income),
computed with the modifications provided in paragraph (2).
(2) Modifications. For purposes of this subsection --
(A) there shall be allowed a specific deduction of $ 100,
(B) no net operating loss deduction shall be allowed under section 172,
and
(C) no deduction shall be allowed under part VIII of subchapter B
(relating to special deductions for corporations).
(3) Exempt function income. For purposes of this subsection, the term
"exempt function income" means any amount received as membership dues, fees, or
assessments from --
(A) owners of condominium housing units in the case of a condominium
management association,
(B) owners of real property in the case of 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.
PAGE
26 USCS @ 528
HISTORY; ANCILLARY LAWS AND DIRECTIVES
Lendments:
In 1997, P.L. 105-34, Sec. 966(a)-(d) (applicable to taxable years beginning
ter 12/31/96, as provided by Sec. 966(e), which appears as a note to this
action), amended subsec. (b) by inserting "(32 percent of such income in the
ise of a timeshare association)". amended subsec. (c) by substituting ", a
;sidential real estate management association, or a timeshare association" for
)r a residential real estate management association" in the introductory matter
para. (1), deleted "or" following the concluding comma in cl. (i) of subpara.
3) of such paragraph, substituted ", or" for a concluding period in cl. (ii) of
zch subparagraph, and added cl. (iii) of such subparagraph, and inserted "and,
z the case of a timeshare association, for activities provided to or on behalf
E members of the association" in subpara. (C) of such paragraph, redesignated
ara. (4) as para. (5), added a new para. (4), and inserted the concluding
atter of para. (5); and amended subsec. (d)(3) by deleting "or" following the
oncluding comma in subpara. (A), substituting ", or" for a concluding period in
ubpara. (B), and adding subpara. (C).
In 1980, P.L. 96-605, Sec. 105(a), amended subsec. (b), effective for tax.
rs. begin. after 12/31/80.
Prior to amendment, subsec. (b) read as follows:
"(b) Tax imposed.
"(1) In general. A tax is hereby imposed for each taxable year on the
.omeowners association taxable income of.every homeowners association. Such tax
hall be computed by multiplying the homeowners association taxable income by
.he highest rate of tax specified in section 11(b).
"(2) Alternative tax in case of capital gains. If for any taxable year any
iomeowners association has a net capital gain, then in lieu of the tax imposed
)y paragraph (1), there is hereby imposed a tax (if such tax is less than the
:ax imposed by paragraph (1)) which shall consist of the sum of --
"(A) a partial tax, computed as provided by paragraph (1), on the
iomeowners association taxable income determined by reducing such income by the
amount of such gain, and
"(B) an amount determined as provided in section 1201(a) on such
lain.".
In 1978, P.L. 95-600, Sec. 301(b)(7), amended para. (b)(1), effective for
tax. yrs. begin. after 12/31/78.
Prior to amendment, para. (b)(1) read as follows:
"(1) In general. A tax is hereby imposed for each taxable year on the
homeowners association taxable income of every homeowners association. Such tax
shall consist of a normal tax and surtax computed as provided in section 11 as
though the homeowners association were a corporation and as though the
homeowners association taxable income were the taxable income referred to in
section 11. For purposes of this subsection, the surtax exemption provided by
section 11(d) shall not be allowed."
--P.L. 95-600, Sec. 403(c)(2), amended subpara. (b)(2)(B), effective 11/6/78.
Prior to amendment, subpara. (b)(2)(B) read as follows:
"(B) a tax of 30 percent of such gain."
--P.L. 95-600, Sec. 701(n)(1), substituted "by individuals for residences"
for "as residences" in para. (c)(2), effective for tax. yrs. begin. after
12/31/73.
In 1976, P.L. 94-455, Sec. 2101(a), added Code Sec. 528, effective for tax.
yrs. begin. after 12/31/73.
Other provisions:
PAGE
26 USCS @ 528
Application of Aug. 5, 1997 amendments. Act Aug. 5, 1997, P.L. 105-34, Title
X, Subtitle G, @ 966(e), 111 Stat. 895, provides: "The amendments made by this
ection [amending this section] shall apply to taxable years beginning after
ecember 31, 1996.".
OTES:
CODE OF FEDERAL REGULATIONS
Exempt organizations --homeowners associations, 26 CFR @@ 1.528-1 et seq.
RESEARCH GUIDE
an Jur:
34 Am Jur 2d, Federal Taxation (1999) PP 20785, 20787.
34 Am Jur 2d, Federal Taxation (1998) PP 20785, 20787.
34 Am Jur 2d, Federal Taxation (1997) PP 20785, 20787.
34 Am Jur 2d, Federal Taxation (1996) PP 20785-20787, 20789.
34 Am Jur 2d, Federal Taxation (1995) P P 20784, 20786.
34 Am Jur 2d, Federal Taxation (2000) PP 20784, 20786.
INTERPRETIVE NOTES AND DECISIONS
Homeowners' association that fails to make timely @ 528 election and does not
refund excess assessments to members or apply excesses to following year
assessments recognizes gross income to extent of excess assessments. Mission
ieights Homeowners Ass'n v United States (1996, SD Cal) 96-2 USTC P 50489, 78
kFTR 2d 96-6399.
Amounts paid by developer to homeowner's association in settlement of lawsuit
for underassessments are exempt function income to homeowner's association under
26 USCS @ 528(d)(3). Rev Rul 88-56, IRB 1988-27, p 6.
Benefit of net operating loss incurred in any subsequent tax year may not be
obtained by homeowners association's revocation of elections made under 26 USCS
@ 528 in previous tax year. Rev Rul 82-203, 1982-2 CB 109.
Homeowners association is allowed to revoke election made under 26 USCS @ 528
where it receives inadequate tax advice from its professional tax adviser. Rev
Rule 83-74, 1983-1 CB 112.
section. Rules similar to the rules of subparagraph (G) of paragraph (25) shall
.pply for purposes of this paragraph.
(3) Corporations, and any community chest, fund, or foundation, organized and
)perated exclusively for religious, charitable, scientific, testing for public
;afety, literary, or educational purposes, or to foster national or
.nternational amateur sports competition (but only if no part of its activities
.nvolve the provision of athletic facilities or equipment), or for the
)revention of cruelty to children or animals, no part of the net earnings of
7hich inures to the benefit of any private shareholder or individual, no
;ubstantial part of the activities of which is carrying on propaganda, or
>therwise attempting, to influence legislation (except as otherwise provided in
;ubsection (h)), and which does not participate in, or intervene in (including
:he publishing or distributing of statements), any political campaign on behalf
)f (or in opposition to) any candidate for public office.
(4) (A) Civic leagues or organizations not organized for profit but operated
exclusively for the promotion of social welfare, or local associations of
employees, the membership of which is limited to the employees of a designated
Jerson or persons in a particular municipality, and the net earnings of which
ire devoted exclusively to charitable, educational, or recreational purposes.
(B) Subparagraph (A) shall not apply to an entity unless no part of the
iet earnings of such entity inures to the benefit of any private shareholder or
.ndividual.
(5) Labor, agricultural, or horticultural organizations.
(6) Business leagues, chambers of commerce, real-estate boards, boards of
trade, or professional football leagues (whether or not administering a pension
.und for football players), not organized for profit and no part of the net
earnings of which inures to the benefit of any private shareholder or
_ndividual.