What is section 528 & how does it compare to section 277 of the IRS code?

Why would a homeowner's association (a non-profit) choose to file their federal returns under section 528 as opposed to section 277? What are the advantages? What are the disadvantages? Would the IRS website give me access to the tax code?

What is section 528 %26amp; how does it compare to section 277 of the IRS code?
A Good Question!





1. Section 277(a) applies to taxable social clubs or other taxable membership organizations operated primarily to provide goods or services to members. For more info:





http://www.irs.gov/irb/2003-28_IRB/ar06....





2. Membership organization formed by a real estate developer to own and maintain common green areas, streets, and sidewalks and to enforce covenants to preserve the appearance of the development may be exempt as a social welfare organization if it is operated for the benefit of all the residents of the community. The term community generally refers to a geographical unit recognizable as a governmental subdivi­sion, unit, or district thereof. Whether a particu­lar association meets the requirement of benefiting a community depends on the facts and circumstances of each case. Even if an area represented by an association is not a commu­nity, the association can still qualify for exemp­tion if its activities benefit a community.





The association should include with its exemption application evidence that areas such as roadways and park land that it owns and maintains are open to the general public and not just its own members. It also must show that it does not engage in exterior mainte­nance of private homes.





A homeowners’ association that is not ex­empt under section 501(c)(4) and that is a con­dominium management association, a residential real estate management association, or a timeshare association generally may elect under the provisions of Code section 528 to receive certain tax benefits that, in effect, permit it to exclude its exempt function income from its gross income.





http://www.irs.gov/pub/irs-pdf/f1120h.pd...

sepal