REQUEST: Clarification on IRS Resolution

[danny ek]

Hi Adriana,

I don't believe I have enough info to make an intelligent choice.

What is the IRS Resolution about?  Can you explain in layman's terms?

NOTE: I didn't find IRS Regulation 1.277-1 and IRS Revenue Ruling 70-604 documents at IRS website.

Thanks,

Danny

[Adriana DaSilva]

The layman’s way to explain the IRS Resolution is that it allows the association to take any income the HOA received that was not used and allocate it to the 2011 year so that the HOA does not pay taxes on the money.  As a non-profit the HOA has the right to do this and than is only liable to pay taxes on interest earned.  With out the resolution the HOA would pay taxes on the unused funds as if they were profit.

Let me know if anyone else has further questions.

 

Community Manager

MB Homeowners Management Inc.

1210 S. Bascom Avenue, Suite 220

San Jose, CA 95128

408-871-9500/650-559-9020

Fax - 408-871-9515

[danny ek]

More questions:

1. Are you referring income as interest from HOA dues?  Not HOA dues, right?

2. So, if we keep rolling the unused funds for the year to next year then we will never have to pay tax, right?

Thanks,

Danny

[Adriana DaSilva]

Income would be HOA dues, interest earned on accounts and late fees.  All of that is off-sets the expenses. 

 

Yes if the unused funds keep rolling than the HOA never pays taxes on that income.

 

The HOA pays $10 filing fee each year and on the interest which based on the low interest rates it is very low. 

[danny ek]

Let's say we don't roll-over how much tax do we have to pay roughly?  And which IRS form(s) do you use?

Thanks,

Danny

[Silvia Del Gusto]

Hi Danny,

thanks for sharing these useful informations.

Regards,
Silvia Del Gusto

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From: danny ek <dann...@gmail.com>
To: Adriana DaSilva <adr...@mbhm.net>
Cc: cordeterr...@googlegroups.com
Sent: Fri, April 15, 2011 10:12:01 AM
Subject: [cordeterravillassj] Re: REQUEST: Clarification on IRS Resolution

[danny ek]

So we have 43 homes in the community and HOA dues $109.00 (roughly) monthly.

Let's say every home is occupied and every homeowner pays the HOA dues. So income for the year: 43 x $109.00 x 12 = $56244.00.

Let's say no interest, no late fees, and no expenses.  So, based on the calculation above and your tax rate, our tax would be 20% x $56244.00 = $11248.80?

Thanks,

Danny

On Fri, Apr 15, 2011 at 11:38 AM, Adriana DaSilva <adr...@mbhm.net> wrote:

I don’t know the exact tax I believe it is 20% the auditor selects the appropriate tax form. 

 

Community Manager

MB Homeowners Management Inc.

1210 S. Bascom Avenue, Suite 220

San Jose, CA 95128

408-871-9500/650-559-9020

Fax - 408-871-9515

 

From: danny ek [mailto:dann...@gmail.com]

Sent: Friday, April 15, 2011 10:12 AM

To: Adriana DaSilva
Cc: cordeterr...@googlegroups.com

[Adriana DaSilva]

Yes I believe that would be correct however that would mean there are no expenses which is unrealistic.  For exact information about the taxes I would need to ask the auditor. 

[Kappu - Mahaatek, Inc.]

Whoever is the moderator

Please remove my mah...@mahaatek.com from the Cordeterravillass group

Becaz I am receiving duplicate emails..

You added my two email IDs

Keep ka...@mahaatek.com and remove Mah...@mahaatek.com

 

Thank you in advance.

 

Kappu
Phone: 408 591-4977
Fax:      408 521-3060
email:    ka...@mahaatek.com

 

 

 

[Adriana DaSilva]

The group was created by a homeowner.  I have not been involved with creating the list or providing any homeowners e-mails.

 

Community Manager

MB Homeowners Management Inc.

1210 S. Bascom Avenue, Suite 220

San Jose, CA 95128

408-871-9500/650-559-9020

Fax - 408-871-9515