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About John Stancil, CPA
Expertise
I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants. Visit my website at www.johnstancilcpa.com. Also visit my blog, www.thetaxdocspot.com.

Experience
I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper. I have prepared taxes for over 30 years.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill College

You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > Condo Association Common Property

Tax Law (Questions About Taxes) - Condo Association Common Property

Expert: John Stancil, CPA - 11/8/2009

Question
Hi John,

The New Jersey Turnpike Authority (NJTA) recently acquired about an 2 acres of common property from our Condo Association through eminent domain. The proceeds went directly to the condo association and they are retaining all the proceeds. The association said each unit owner will receive a 1099 indicating their tax liability as part of the settlement with the NJTA. Since the association is not disbursing the settlement proceeds to the unit owners, why do the unit owners have a tax liability? Shouldn't this settlement be a tax liability on the corporation and not the individual unit owners since the unit owners will never even see this money? The corporation assumes tax liability on other income it receives such as late fees, club house rentals, working capital, etc., so why should this be any different?

Thank you for any guidance you can provide.

Regards,

JoAnn

Answer
JoAnn,

Thanks for your question.

Normally, unless the association distributed the proceeds to the owners, it should be the liability of the association. The tax would be on the gain, not the sale price, so the association would have to provide each of you a cost basis in the sold property.

However, that would not be the case if the property is titled to the owners and not to the association. In this event, it would be the liability of the owners, but the association would then have at least a moral obligation to distribute the proceeds.

Hope this helps.

John Stancil, CPA

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