‘Yes’ vote gives tax advantage

GRF & MUTUAL BALLOT ITEM

The Golden Rain Foundation’s annual ballot that was recently mailed to all shareholders includes an item called the IRS Revenue Ruling 70-604.

Common Interest Developments have two different options when filing their respective Federal Income Tax returns. Although there are many different factors that can affect the final determination of which return shall be filed, IRS Revenue Ruling 70-604 is one factor that allows for Common Interest Developments to exclude net membership operating profits from taxation (as defined as excess membership operating revenues over membership operating expenses). Under this ruling, owners may vote to apply any excess membership income for the year to the following (or subsequent) year’s budget requirements for tax purposes. Failure to approve the revenue ruling limits the tax filing options available to the association and can mean increased tax liability for the current fiscal year.