I am working on form 1120-H for an HOA. All of our income is from fees but we settled a lien and we received some interest. Is that interest tax exempt?
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1 Best answer
Anonymous_
Level 15
Jun 6, 2019 1:05:02 AM
"Is that interest tax exempt?"
No, that interest would not be tax-exempt unless it were paid on a state or local government debt obligation (e.g., a municipal bond).
It is also not exempt function income. See Treas. Reg. §1.528-9
3 Replies
Anonymous_
Level 15
Jun 6, 2019 1:05:02 AM
"Is that interest tax exempt?"
No, that interest would not be tax-exempt unless it were paid on a state or local government debt obligation (e.g., a municipal bond).
It is also not exempt function income. See Treas. Reg. §1.528-9
user11141950
New Member
Jun 6, 2019 1:05:05 AM
Is the late fees recovered from the lien taxable as well?
Anonymous_
Level 15
Jun 6, 2019 1:05:06 AM
Such fees would likely have to be included in gross income (as "other income"), not exempt function income.