|Re: HOA taxes||<– Date –> <– Thread –>|
|From: Fred H Olson (fholsoncohousing.org)|
|Date: Mon, 8 Feb 2010 04:41:07 -0800 (PST)|
Rosemary McNaughton <astromezzo [at] gmail.com> is the author of the message below. It was posted by Fred, the Cohousing-L list manager <fholson [at] cohousing.org> after deleting excess quotes. -------------------- FORWARDED MESSAGE FOLLOWS -------------------- >From the instructions for the 1120-H: 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 ------- Item C. 90% expenditure test. At least 90% of the association?s expenditures for the tax year must consist of *expenses to 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. ----------------- These instructions seem pretty oriented towards care of property - but I don't know about any past history of tax rulings that clarify whether something like childcare would count as managing property. In most condo associations there's professional management, but when a lot is managed by volunteers is their childcare expense a management expense? With childcare you'd want to be careful to file the right 1099s for any provider who's received over the threshold amount for the tax year. I don't see how common meals would fit in there at all - or really any social event. Even once we separated common meals, it was hard to believe we would meet the 90% expenditure test every year given that we try to keep our property maintainance costs low (through a lot of volunteer labor) and social interaction high! -Rosemary
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