Income Tax - Other Income

Started by AlanM1 • 6 replies • 1852 views

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AlanM1 (Texas)
Posts: 2

Posted:

Our association rents garages every year to association members only. They are billed annually and can make a payment every six months or once a year.

On our income tax return I believe you would called that "other income" on our tax returns? We generate $ 18,000 a year from these rentals. It is my understanding we can write off all expenses related to this income, right ?

We had to termite 17 of these garages.
We pay to insure them.
We replaced 3 garage doors
We had a garage door break and fall onto a car which we had to pay to fix.
Somebody backed into garage wall which we had to repair
Our maintenance department spends time to repair, clean, paint, replace wood on these garages.
Our manager time
Electricity cost

We basically incurred well over $ 18,000 in expenses last year on these garages, so its my understanding we should have no income tax liability.

Am I correct or are expenses not deductible ?

Thanks for any help...

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By AlanM1 on 02/17/2014 7:41 AM
Our association rents garages every year to association members only. They are billed annually and can make a payment every six months or once a year.

On our income tax return I believe you would called that "other income" on our tax returns? We generate $ 18,000 a year from these rentals. It is my understanding we can write off all expenses related to this income, right ?

We had to termite 17 of these garages.
We pay to insure them.
We replaced 3 garage doors
We had a garage door break and fall onto a car which we had to pay to fix.
Somebody backed into garage wall which we had to repair
Our maintenance department spends time to repair, clean, paint, replace wood on these garages.
Our manager time
Electricity cost

We basically incurred well over $ 18,000 in expenses last year on these garages, so its my understanding we should have no income tax liability.

Am I correct or are expenses not deductible ?

Thanks for any help...

Yes, this would be non-exempt (taxable) income. Income from members, such as assessments, which occur solely because of membership is exempt function income and is not taxable. Income that comes from members for special services, such as renting a clubhouse for a party, renting garages, etc., is non-exempt income.

Yes, you may deduct any expenses directly related to producing that income, such as insurance, taxes, utilities, repairs, etc.

Your major concern is whether or not your association qualifies to file form 1120-H. If the $18,000 from the garage rent is more that 40% of your total income, you may not file form 1120-H. Also, if your unqualified expenses exceeds 10% of your total expenses you are not qualified to file form 1120-H. Fortunately, since the garages are association property, those expenses are qualified expenses.

LK1 (Georgia)
Posts: 3

Posted:

What if Reserve Fund in MMA's in 2 different states are not legitimate?
Both change only when partially debited or all monies are withdrawn.
Our Bylaws mandate Yearly Audits by a CPA. Example: 2009 Audit begun by our usual CPA, taken over by new CPA; 2010,2011 - No Audits; 2012 Audit performed by CPA; 2013 - No Audit; 2014, it was noted that "there was no formal designation for Reserve Fund", and same in 2015,2016,2017 & 2018, the same. After my inquires, a 48-month "Review" was performed.From 2013 forward, only "Reviews" were performed:1 in Arizona by a "non-designated "person", & one in GA.
As a result, whom do I communicate with to determine why, though I've asked, won't Prop. Mgr. obtain a Forensic Audit, and other facts? T.Y.

SheliaH (Indiana)
Posts: 6,964

Posted:

These questions may be best put to a CPA or tax attorney - if you don't have one, you need to get one immediately

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

TimB4 (Tennessee)
Posts: 21,059

Posted:

LK,

This is an old thread.
Please start a new one as your topic may be lost being farther in the thread.

LK1 (Georgia)
Posts: 3

Posted:

Thought so....there are sub-contracted roofing jobs, payments of over $8K to a n I n-elected acting Pres., phony elections, and the constant building repairs. 25+ trees were taken down without the City Arborists approval: he is an "on call" independent contractor & did not respond to our calls.I must say, these thugs have nothing on the BinLadins of this world, in my opinion. Our biggest enemy is community apathy and refusal to question "what's going on". Thanks LK

LK1 (Georgia)
Posts: 3

Posted:

What topic do you suggest? Georgia is in the 18th century where holding white collar criminals accountable for their crimes. They don't use a gun, but still ruin legacies and lives. so ineffable are legislators refusal to take on these Lobbyist corporate criminals! LK

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