This is a reminder for State Parkway’s Board of Directors and State Parkway’s tax preparer, Picker & Associates (“Picker”).
To evade the payment of federal and state income taxes per State Parkway’s 2016 Financial Review as prepared by Picker, one must do any of the following:
- Underreport non-exempt income by failing to include parking income and/or laundry income and/or gross rents;
- Claim falsely inflated deductions by deducting 100% of garage expenses.
A review of State Parkway past tax returns (2004 through 2015)* shows the following:
- On the 2004 through 2013 federal and state tax returns prepared by CondoCPA, State Parkway claimed hundreds of thousands of dollars of falsely inflated deductions by improperly deducting 100% of State Parkway’s garage expenses.**
- On the 2014 and 2015 federal and state tax returns, Picker failed to report parking income, laundry income and gross rents (from the Engineer’s Unit).
*Does not include tax returns for years 2008 and 2009 because State Parkway secretly elected to file Form 1120 (corporation tax return) for these years instead of Form 1120-H (Homeowners Association tax return).
**Between 2004 and 2015, including 2008 and 2009, State Parkway claimed over $257K of rental unit (#906) expenses, exclusive of depreciation, which appears to be blatantly excessive.
Consequently, State Parkway and its tax preparers, CondoCPA and Picker, evaded taxes by filing false federal and state tax returns.
I will update the spreadsheet in this blog post once my wife and I inspect State Parkway’s 2016 federal and state tax returns. Meanwhile, each State Parkway board should remember that he/she has a duty to:
- ensure State Parkway qualifies for 1120-H election by meeting both the exempt function income test (at least 60%), and 90% of the HOA’s expenditures are for management, maintenance, acquisition and construction of Association property;
- ensure all gross income is reported on the tax returns;
- review all deductions taken on the tax returns;
- after board approval is obtained (and noted in the minutes), appoint an officer to sign the tax returns on behalf of the Association; and
- make both federal and state tax returns and tax worksheets available for unit owner inspection.