IRS Form 1120-H: Does an Association Pay Taxes on Reserve Interest?
So on what income does an association pay tax? This can get very complicated, but at the very least, the association generally needs to pay tax on its interest earnings. That includes ALL bank and investment interest, including interest earned on reserve accounts.
Can Painting & Tree Trimming be Paid from Reserves?
We continue to find some reluctance to include major, infrequent common area expenses such as painting and tree trimming in the Reserve Study. This stems from IRS rulings and audit filings which state that these are “maintenance” items and not “contributions to capital”.
IRS Ruling 70-604: Can an Association move Surplus Funds to Reserves?
Associations that have excess funds at the end of the year face the decision if and how those funds can be moved to Reserves, or if they must be rolled over to the Operating Fund the following year. Since most associations are underfunded in their reserves, it is usually a good idea to apply those […]
Capital Replacement Fund: When to use it?
Fund accounting segregates money according to different uses (Operating, Capital Replacement,
Capital Improvement, etc.). The concept of fund accounting is based on the nature of the
expense incurred by an association,
Reserve Funds – How best to account?
“How do I reserve? Let me count the ways” is not exactly what Elizabeth Barrett Browning had
in mind when she penned her famous poem about love, but if you have 37 different Reserve
components, how many Reserve contributions do you make and track each month? One or 37?
There is a good answer.
Can An Association Move Surplus Funds to Reserves
Associations that have excess funds at the end of the year face the decision if and how those
funds can be moved to Reserves, or if they must be rolled over to the Operating Fund the
following year.