Page:United States Statutes at Large Volume 90 Part 2.djvu/430

 90 STAT. 1898 26 USC 11. Ante, p. 1606.

PUBLIC LAW 94-455—OCT. 4, 1976 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. "(2)

ALTERNATIVE TAX IN CASE OF CAPITAL GAINS.—If for

any

taxable year any homeowners association has a net capital gain, then in lieu of the tax imposed by paragraph (1), there is hereby imposed a tax (if such tax is less that the tax imposed by paragraph (1)) which shall consist of the sum of.— "(A) a partial tax, computed as provided by paragraph (1), on the homeowners association taxable income determined by reducing such income by the amount of such gain, and " (B) a tax of 30 percent of such gain. "(c) HOMEOWNERS ASSOCIATION DEFINED.—For purposes of this section— "(1) HOMEOWNERS ASSOCIATION.—The term 'homeowners association means an organization which is a condominium management association or a residential real estate management 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, or " (ii) owners of residences or residential lots in the case of a residential real estate management 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, "(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, and " (E) such organization elects (at such time and in such manner as the Secretary by regulations prescribes) to have this section apply for the taxable year. "(2) CONDOMINIUM MANAGEMENT ASSOCIATION.'—The term 'condominium management association' means any organization meeting the requirement of subparagraph (A) of paragraph (1) with respect to a condominium project substantially all of the units of which are used as residences. "(3)

R E S I D E N T I A L REAL ESTATE MANAGEMENT ASSOCIATION.—The

term 'residential real estate management association' means any organization meeting the requirements of subparagraph (A) of paragraph (1) with respect to a subdivision, development, or similar area substantially all the lots or buildings of which may only be used by individuals for residences. "(4) ASSOCIATION PROPERTY.—The term 'association property' means— " (A) property held by the organization.

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