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Tri Park consultant warns grants can trigger taxable status for limited‑equity cooperatives
Summary
A Tri Park development consultant told the House committee that receiving substantial grants can push limited‑equity cooperatives out of IRS income/expense tests that allow homeowner‑association tax treatment, potentially generating large corporate tax liabilities unless grant programs are structured as beneficiary payments.
A development consultant for Tri Park told the House General & Housing Committee on Jan. 28 that limited‑equity cooperatives face federal tax rules that can turn grant income into taxable corporate revenue and create large tax liabilities.
Dan Riddle Hoover said the IRS treats many limited‑equity cooperatives as for‑profit entities for tax purposes and described two critical tests cooperatives use to qualify for homeowner‑association tax filing: an income test (greater than 60% of gross income must come directly from members) and…
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