IRS TAX RAMIFICATIONS TO RESTAURANT SUBSIDIES

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IRS TAX RAMIFICATIONS TO RESTAURANT SUBSIDIES

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  • #3907
    Rana Goodman
    Keymaster

    Respectfully submitted:

    Linda Kaplan, MST, EA

    My Fellow SCA property owners. It has come to my attention that the SCA Board of Directors is attempting to pass a resolution changing Policy and Procedures to enable SCA to provide financial assistance to a proposed restaurant. This is an extremely DANGEROUS proposal for numerous reasons.

    • I believe that SCA files with the Internal Revenue Service as an F1120H entity. Simply stated this means that the IRS considers this entity as a Not for Profit Condo Association.  The IRS Code and Regulations that govern this type of filing which includes but is not limited to IRC 401(c), not for profit rules become applicable. These rules strictly DISALLOW this type of entity to support or finance a for-profit entity like a Restaurant.
    • If this proposed resolution is adopted, SCA will LOSE its not-for-profit status. SCA will then be required to file as a C Corporation, F1120, resulting in a higher tax obligation creating an unnecessary additional cost.

    I have been a tax accountant most of my adult life, earning an MST (Master of Science in Taxation) from Fairleigh Dickenson University. In addition, after many years of running my own practice, I took a position with the IRS as an Internal Revenue Agent. My duties as an agent included, auditing multiple tax entities, classification work (an agent makes a professional judgement call on a specific tax return determining if an entity requires a full audit); IRS certified instructor, teaching revenue agents how to perform audits in compliance with the tax code. In addition, I am a Special Enrolled Agent (federally authorized practitioner) Enrolled agent status is the highest credential awarded by the IRS.

    If the restaurant becomes a reality, and all clubs and residents are mandated to use this restaurant exclusively for catering their events there are a number of serious concerns which need to be addressed.

    • Financially supporting this restaurant will be an unnecessary additional cost to SCA property owners.
    • How would this new restaurant accommodate seating especially during the holiday season. There are over 60 clubs double the amount of days in the month of December. Scheduling would most assuredly become a nightmare when trying to fit all into our facilities, and could a restaurant handle so many clubs at holiday time without turning many away?
    • Once this precedent is established we may be driving more clubs off campus clubs due to our restaurant’s inability to accommodate 60 plus clubs. Will they go running into the arms of other establishments?
    • For the reasons enumerated above I am requesting that we make it abundantly clear that the exclusivity proposal is only creating more of a financial problem for SCA owners and should NOT be passed.

     

    #3912
    Norman McCullough
    Participant

    Linda Kaplan;

     

    Were (or Are) you aware that two members of our past BOD illegally changed the quantity of stucco needing paint in order to lower an IRS Tax fine of 1.3 million dollars? Are you aware of the past IRS tax problems and what occurred in 2008?

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