Seacrest Services
Seacrest Services Newsletter
July  2012 
Greetings!

 

When your community looks good, we look good! Seacrest Services wants to ensure that you are receiving the quality services you desire and that all contractual obligations are met each month. One way we do this is by implementing our signature Total Quality Management (TQM) Program. This program is uniquely tailored to the specific needs of your property. Through building a synergistic partnership between your Seacrest Services team and your board, TQM ensures that your property looks its best!

 

Let me walk you through a basic TQM process:

 

A Total Quality Management representative will meet with the Association Board or designated Board members on a predetermined scheduled basis to discuss any issues or concerns. All requests from the Board of Directors will then be documented.

 

The Total Quality Manager will conduct regular inspections of the property. During this review, services will be evaluated for contractual compliance and work that has been completed will be assessed for quality and timeliness.

 

A follow-up meeting will be scheduled to verify that all requests or problems have been addressed and corrected to the Association's satisfaction.

 

Every Seacrest employee is committed to the Total Quality Management culture and is reviewed and graded internally to ensure the highest quality standards are met.

 

If you have any questions about our TQM Program, please feel free to contact us today! 888-828-6464 

      

Sincerely,  

 

Paul Licata

Director of Business Development

Seacrest Services

561-697-4990

 

 

 

 
Ask the Expert:
Goede & Adamczyk, PLLC
Attorneys at Law
  

Q:           There is much confusion in our community regarding the "master" association and which laws govern the master with respect to voting and elections. The master board as attempted to operate under Chapter 718, although some have argued at membership meetings that we should be following Chapter 720 because the master is not a condominium association. Can you point us to the rule or statute that will end the confusion? C.G., Naples

 

A:        Your question is timely because this issue was recently addressed by a Florida court. In that case, a dispute arose over the election of officers in a master condominium association comprised solely of five sub-condominium associations. Two Directors were nominated as President and they disagreed on the voting method for the election of officers. One candidate wanted a weighted voting procedure, while the other candidate insisted that a one-vote-per-director majority voting scheme be used. The court confirmed an important clarification regarding voting and elections in master condominium associations. First, master condominium associations are controlled by Chapter 718 only if the master association meets the definition of "association" found in section 718.103(2), Florida Statutes. Otherwise, the master association is subject to chapter 617, Florida Statutes, the Non-Profit Corporation Act. The Court reiterated that a master condominium association meets the definition of a "condo association" in 718.103(2) if: 1) It is responsible for common areas distinct from any sub-condominium association; 2) condominium unit owners have user rights in the master association's property; 3) voting membership is exclusively condominium unit owners; 4) membership in the master association is a required condition of ownership; and 5) the master association is authorized to assess its members for payment of shared expenses with lien authority to compel payment. The legal distinction in this court decision is critical because Chapter 718 permits weighted voting procedures if supported by the governing documents, and Chapter 617 does not. At the end of the day, it is questionable whether this court decision will have a major impact on the election of officers but this decision may be cited as a basis to invalidate prior elections depending on the specific language of the governing documents. This decision highlights the importance of 1) clarifying whether a master association is governed by Chapter 718 or Chapter 617 with respect to voting and elections; and 2) ensuring that your Declaration, By-Laws, and Articles of Incorporation are uniform and clear regarding voting procedures.

 

 



Goede & Adamczyk, PLLC has a concentrated focus on condo and homeowner association ("Condo & HOA") law, real estate lawbusiness lawwills/trusts/estates and all related litigation. The firm represents hundreds of community associations throughout Florida, including condominiums, HOA's and co-op associations.
 
Visit the website at www.floridacommunitylaw.com to learn more!  

 

 
Association's Tax Consequences for Cable Refunds:

 

 

 

Cable companies often enter into agreements under which the Associations are billed for the total cost of the services at a reduced rate. The Association then has to allocate those pass-through costs to the members since they are generally not billed separately. The three basic approaches for recovering these costs from their members are:

 

a)   Basic monthly assessments may be increased to cover the allocated costs.

 

b) The allocated costs may be billed to the members   separately   from the monthly assessments. Many Associations choose that option so that monthly assessments will not be increased.

 

c) Estimated allocated costs may be billed to the members annually to avoid possible unfavorable tax treatment for those Associations that file Form 1120-H.   All members have

to use the utility, such as cable service, under that scenario.

 

The tax consequences are as follows:

 

a) If the monthly/quarterly assessments are increased so that the cable costs are not passed-through or the cable is billed separately and gross cable revenues and expenses are reported separately in the statement of revenue and expenses it may disqualify an association from filing Form 1120-H.   This is because non-maintenance utilities (cable) related to a unit owners property do not qualify as exempt function expense for the 90% test, as does association community property.

 

b)   Reporting the net difference in the statement of revenues and expenses would not disqualify the Association under the 90% test for Form 1120-H.   However, if the cable revenue and expenses do not offset exactly (especially if there is a net income rather than a net loss) it could introduce a "profit motive" argument.   An activity with a profit motive falls into the nonexempt function area and may result in tax.

 

Now that I have laid this foundation there could be a case to be made that the cable discounts could be taxable income if Form 1120-H is filed. If Form 1120 and F-1120, using IRS section 277 is filed, the cable discount is membership income and is taxable if there is a net income from the Association's operations.

 

Therefore, I suggest we look at your Association's potential net income for 2011 after taking into consideration the cable discount.   If there is no net income projected for 2011, the Association should consider filing Form 1120 and F-1120.   If there is potential net income after taking into consideration the cable discount, I suggest you attempt to structure the transaction to report under Form 1120-H using the following methodology.

 

1)   Do not report a separate income line for cable receipts.

 

2)   If the net cable income (cable discount less cable expenses) is negative, set the budget to reflect the net, for example:

 

Cable discount                                                $100,000

 

Cable expense                                                  110,000

 

 

Cable assessment revenue                             $10,000

  

Also do not reflect the $10,000 on the income statement but only on the budget detail. Effectively you are reducing the cable assessment fee by the discount.

 

3) If the net cable income (cable discount less cable expense) is positive and is reported as discussed, the positive amount ($20,000) may be taxable, for example:

 

Cable discount                                                $120,000

 

Cable expense                                                  100,000

  

 

 Net cable income                                             $ 20.000

 

 

4)   If the Association does not offset and reduce the cable assessment income by the cable discount, showing the entire cable discount as other income, you may have taxable income on the entire cable discount.

 

 

 

5)   If the cable discount agreement is detailed and clearly provides a time line for the period of the discount, you may be able to defer the income to agree to the contract period, for example, if the contact shows a cable discount of $100,000 for five years allocated evenly over the five year period, then $20,000 may be current cable income (the budget should be adjusted accordingly) and $80,000 is recorded deferred income to be recognized at $20,000 per year over the remaining four year. This also can be used to offset cable expense.

 

 

 

 

Answered by:

Charles S Hafer, CPA

Hafer Company, LLC 

www.hafercpas.com

 

Hafer Company, LLC | 249 Royal Palm Way; Suite 300 | Palm Beach, FL 334

 

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Seacrest Services


2400 Centerpark West Drive
West Palm Beach, Florida 33409
561-697-4990
In This Issue
Ask the Expert
Tax Consequences for Cable Refunds
Landscape Tip
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If you're interested in seeing if Seacrest Services is a good fit for your community..

Call  today for an analysis of your property!

 

Contact Paul Licata at

1-888-828-6464

 

 

Seacrest Landscape/ L&O Tip:

 

 

Increased rains during the summer months can contribute to disease development in your yard. Be on the lookout for Fairy rings, especially the mushrooms, and rings of yellow or brown turf with apparently healthy turf in the center. They are most commonly observed during the summer months, when Florida receives the majority of its rainfall.

fairy ring 
Fairy ring with mushrooms present

 

brown patch

Brown Patch

 

Infection is triggered by rainfall, excessive irrigation, or extended periods of high humidity resulting in the leaves being continuously wet for 48 hours or more. Wet areas in the landscape can be managed or improved by installing a water structure such as a french drain. Another way you can help prevent fairy rings or rings of brown turf is by using fungicides to stop the disease from spreading.

 

  

 

Join the WPB Office of Sustainability for a FREE energy-saving workshop for your home and business!

 

FREE Refreshments and Giveaways!

 

Wednesday, August 8, 5:30-7:00

 

Mandel Public Library of West Palm Beach

 

 

Space is limited, RSVP by email: [email protected] or call (561) 804-4994

 

Workshop Topics

  • Reducing energy usage and utility bills
  • FREE home/business energy audits
  • Energy-efficient products
  • Available rebates for energy-efficient retrofits
  • PACE financing -Property Assessed Clean Energy for business
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