HOA dues waived for being a Board member

[jsprous]

If dues for An HOA is waived for being a board member, Is it taxable income and if so, how should it be reported?  

[xmasbaby0]

Money you did not have to spend is not income.

[Mike9241]

I take a different viewpoint. the IRS could argue that he got $X of taxable compensation and paid $X of non-deductible HOA fees,  what is being done may even be in violation of the HOA rules and regulations and maybe even state law,      

[Anonymous_]

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@Mike9241 wrote:

I take a different viewpoint. the IRS could argue that he got $X of taxable compensation and paid $X of non-deductible HOA fees,  what is being done may even be in violation of the HOA rules and regulations and maybe even state law,      

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I agree. In Florida, and probably other states, directors and officers Of HOAs and condo associations cannot be compensated unless otherwise provided in the bylaws (by statute) and it is unusual for bylaws to provide for such compensation.

In the event a board member is compensated, however, it certainly is reasonable to presume that the IRS would consider the compensation to be taxable (most likely as miscellaneous income not subject to self-employment tax).

[in some ways, this could be viewed as COD income since the member of the association is obligated to pay the dues]

[jsprous]

Our by-laws state that Board members cannot be compensated.  Some argue that waiving fees is not compensation.  Is it compensation and taxable income?  It is not enough to trigger a 1099 or 1099c.

Is there a definite answer, I have been unable to find it in the IRS code.  Does it fall under either misc income or cancelled debt.?

Thanks so much for your help.

[Anonymous_]

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@jsprous wrote:

It is not enough to trigger a 1099 or 1099c.

Is there a definite answer, I have been unable to find it in the IRS code. 

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I sincerely doubt there is a definitive answer to this specific question, but the general rule is all income is taxable unless otherwise excluded (in the Code).

If the figure is not sufficient to trigger a tax reporting statement, the board member will most likely never be questioned about the dues waiver. However, it certainly appears that it would (and should) be some form of compensation that would need to be reported as such.

[Hal_Al]

Q. Is there a definite answer?

A. No.

All you're going to get is opinions.  I'm of the opinion that it is not compensation and it is not taxable.  It's a discount or reduced price.  I think is a similar situation is where a college professor gets his (or his spouse and kids) tuition waived at his school.  That's not taxable income to him. 

[jsprous]

Thanks everyone for their replies

[Anonymous_]

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@Hal_Al wrote:

All you're going to get is opinions.  I'm of the opinion that it is not compensation and it is not taxable.  It's a discount or reduced price.  I think is a similar situation is where a college professor gets his (or his spouse and kids) tuition waived at his school.  That's not taxable income to him. 

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Exactly, only opinions. However, it cannot be a discount or reduced price since this is not some sort of product or service that the board member purchased. Rather, it is the relief of an obligation that the board member owes to the association. 

With respect to the college professor, the college professor has no obligation to pay the tuition for his spouse or child as does the board member who specifically agrees to pay association dues when that member purchases a unit governed by the association.