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DEATH OF A
RESIDENT
QUESTION: I'm president of our
association. We have a secure building and our staff has keys for all
units in case of an emergency. An elderly resident recently died in her unit. It
was quickly discovered and once the authorities removed her body, the unit was
locked. Her son contacted us the following day and wanted into the unit. I think
we should let him in but the manager said it's not a good idea. Don't we have a
duty to let him in?
 ANSWER:
Your manager is correct. Do not let him in. The deceased may have cut her son
out of her will. She may have valuable jewelry, antiques and artwork that she
willed to other family members or to charity. If you let her son into
the unit and he loots it, the association could be sued. You should wait for the
executor of the estate to authorize entry into the unit. It is the executor's
job to wind up the affairs of the deceased and distribute the estate to entitled
beneficiaries.
CORPORATE
TAXES
QUESTION: Is there is any tax benefit to
an unincorporated association if it incorporates as a nonprofit mutual benefit
corporation?
 ANSWER:
Both incorporated and unincorporated associations are required to file tax
returns. There are no differences when it comes to federal taxes. An unincorporated association is
treated the same as a corporation for tax purposes. There is a difference when
it comes to
state taxes. An
unincorporated association is not subject to the $800 minimum corporate tax.
However, if an incorporated association is
exempt under Revenue & Taxation Code Section 23701t, then it is taxed the same as an unincorporated
association.
*Thanks to CPAs Gary Porter and Steven
Schonwit for their input. Their firms specialize in tax filings and year-end financials
for community associations. You can find them in
our Service
Directory.
TAX ON
RESERVES
QUESTION: Our association's
budget keeps interest on the reserves in our reserves.
Out of fairness, shouldn't taxes on the interest be paid with reserve
funds? Otherwise, it's an extra expense in operations that we can't
afford.
ANSWER: Taxes are operational
expenses, not long-term reserve items. Unlike reserve components that
require periodic repair or replacement, taxes are paid annually.
Accordingly, they belong on the operational side of the budget.
Very truly yours,
Adrian Adams, Esq.
Adams Kessler PLC |
