Cohousing-L Mailing List: Re: HOA taxes

[Diana E Carroll (dianaecarroll]

The key there is "operating expenses", which is a pretty broad term.

In our case, we provide childcare only during our general meetings, 
which are meetings whose purpose is to discuss the operation of our 
association.  I don't see how we'd be able to pay a secretary to take 
notes during the meeting, but not a childcare person to watch our 
children during the meeting.  I think it would be quite different if it 
were childcare for other purposes.

Meals I think would be hard to include.  :-\

On 2/8/2010 7:41 AM, Fred H Olson wrote:
> ------------------------------------------------------------------------
>
> 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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