01
The challenge
The association had no reliable financial statements for six years. Some owners had paid association costs directly and were owed money while also owing assessments. A large management fee, development costs and ownership changes all needed classification, and the starting owner balances at the end of 2020 were unknown.
02
Our approach
- Information request first. We asked for annotated 2020 bank statements, a list of every bank account and year-end 2020 owner balances, and logged every open question.
- Assessment model. Regular assessments were allocated by each unit's footprint percentage and recognized on an accrual basis.
- Owner sub-ledgers. Each owner's receivable and payable were tracked separately, so offsets were visible and documented.
- Classification decisions. Management fees, development costs and interest were classified with written support, and ownership changes dated.
- Tax filing check. Because the association is non-residential, it does not qualify for the Form 1120-H election and was mapped to Form 1120.
03
Results delivered
- Six years of financial statements the board can present to owners.
- An owner-by-owner balance schedule as of each year end.
- A documented accumulated deficit and a plan to address it through assessments.
- Correct tax return type identified for every open year.
04
Frequently asked questions
Only if it qualifies under §528, which requires mainly residential units. Commercial or non-residential associations generally file Form 1120.
Usually by each unit's percentage interest in the declaration, often based on square footage or footprint.
Statements can be rebuilt from bank statements, assessment schedules and owner records, with open items documented where evidence is missing.
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