1970-2 C.B. 9, Sec. 61
IRS Headnote.
Excess assessments by a condominium management corporation, over
and above the amounts used for the operation of condominium
property, that are returned to the stockholder-owners or applied
to the following year's assessments are not taxable income to
the corporation.
Full Text.
A condominium management corporation assesses its
stockholder-owners for the purposes of managing, operating,
maintaining, and replacing the common elements of the
condominium property. This is the sole activity of the
corporation and its by-laws do not authorize it to engage in any
other activity.
A meeting is held
each year by the stockholder-owners of the corporation, at which
they decide what is to be done with any excess assessments not
actually used for the purposes described above, i.e., they
decide either to return the excess to themselves or to have the
excess applied against the following year's assessments.
Held, the excess
assessments for the taxable year over and above the actual
expenses paid or incurred for the purposes described above are
not taxable income to the corporation, since such excess, in
effect, has been returned to the stockholder-owners.
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