Non-exempt income question

Our association owns a road to the development, and the road is utilized by non-HOA members. We have an agreement with them to pay a certain amount in fees in each year as subsidy for the cost of the repair/maintenance of this road. From my understanding of the income tax rules, this income is considered non-exempt. However, can we offset the income with expenses (such as expenses to maintain the road, even if we can't specifically show that x amount of the expenses pertain specifically to the Non-HOA fees received)? Any further clarity on how to handle this matter to reduce any taxable income would be very helpful.

Thank you!

Thanks, TimB4. The 1120-H instructions state that payments from nonmembers is not exempt function income. Where it speaks to assessments, the information notes “membership” and dues from members.

Am I misinterpreting the instructions then? I just want to make sure we abide by the IRS rules. This is my first time on an HOA committee and truly appreciate the expertise on this site. Very valuable!

From what I imagine is your setup.

I would say that any income received from those who are required to contribute to the road would be considered an assessment and treated as such.