In order to perform their duties and fulfill their obligations, community associations must collect assessments from their members. With the exception of a fortunate few, most community associations must deal with members who either refuse to pay their assessments or cannot pay their assessments. There...
Reserve Loans and Interest Deductions
Associations Using CPA’s: Is it Really Necessary?
Although homeowner associations are created as nonprofit corporations, this does not mean the associations do not engage in financial transactions or require the services of a certified public accountant (CPA). For example, it is common for an association’s governing documents to require a financial audit or review on an annual basis, and associations are required to file tax returns every year. Further examples of situations in which it may be beneficial to consult a CPA include:
Association Taxation and Reserves
The Internal Revenue Service (“IRS”) excludes from an association’s taxable income those amounts which are properly kept and used for capital contributions. In several significant Revenue Rulings, the IRS considered special assessments for major repairs and replacements to be capital contributions in addition to capital contributions to reserve funds from annual assessments.