10 Tips to Avoid Findings and Questioned Costs for Multifamily HUD Projects
February 21, 2011 | 
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HUD’s Multifamily programs provide mortgage insurance to HUD-approved lenders to facilitate the construction, substantial rehabilitation, purchase and refinancing of multifamily housing projects and healthcare facilities. If your project receives a HUD loan, here are a few suggestions to help you avoid Findings and Questioned Costs:
- Determine all expenses paid are “reasonable and necessary” to the Project.
- Obtain HUD approval before assuming any new debt.
- Submit audited financial statements with 90 days after the end of the fiscal year through electronic submission to the Real Estate Assessment Center (REAC).
- Determine that your HUD project bank account is in the name of the Project and that it is federally insured.
- Avoid commingling of Project cash with other projects or other entities.
- Perform your surplus cash calculation at a semiannual or annual fiscal period depending on your regulatory agreement. Any owner distributions should be paid as of or subsequent to the surplus cash calculation date. Do not pay owner distributions if you do not have surplus cash!
- Use amounts withdrawn from the replacement reserve only for the purpose authorized by HUD.
- Without HUD approval do not change the amount of management fees or lease payments (leased nursing homes).
- If you do not have surplus cash do not make any payments to related parties– its just easier. Remember these amounts are disclosed to HUD in the electronic filing and there’s a good chance HUD will ask you to explain what the payments are for.
- Remember, taking cash or any other assets from the Project can be construed as a Distribution by HUD. If you did make an unauthorized distribution or paid a questioned cost, it may be in your best interest to return the funds to the HUD Project asap.
For more information, visit the U.S. Department of Housing and Urban Development’s Multifamily Housing site. You can also contact our resident HUD project expert, auditor Jennifer Verch at jennifer.verch@glassjacobson.com.
Proposed Increase in R&D Credits
February 15, 2011 | Subscribe to our RSS Feed
Yesterday, President Obama visited Parkville Middle School to discuss the federal budget and investments in math and science. His proposed spending on R&D across the federal government is pegged at $148 billion.
This includes funding for basic research at the National Science Foundation, the Department of Energy’s Office of Science and the National Institute of Standards and Technology labs. Those agencies conduct research into clean energy technologies, advanced manufacturing processes and cyber security, among other things.
Also part of the proposal is $32 billion in funding for biomedical research at the National Institutes of Health, an increase of over $700 million. The focus will be on moving drugs and other therapies from the research to deployment stage.
The budget also calls for making the research and experimentation tax credit for companies permanent, and increasing it by 20%.
We will follow this budget proposal and keep the blog updated. Make sure you understand if your company qualifies for R&D credits!!
Questions?
New Mothers- A New Tax Deduction
February 14, 2011 | Subscribe to our RSS Feed
The IRS has reversed a previous rule, making lactation supplies and breast pumps a tax deductible expense. These means families can use Flexible Spending Accounts and Health Saving Accounts for these supplies.
8 Facts About First Time Homebuyer Credit for 2010
February 10, 2011 | Subscribe to our RSS Feed
If you purchased a home in 2010, you may be eligible to claim the First-Time Homebuyer Credit, whether you are a first-time homebuyer or a long-time resident purchasing a new home. The purchaser must have been at least 18 years old on the date of purchase; for a married couple, only one spouse must meet this age requirement. A dependent is not eligible to claim the credit.
Here are eight things the IRS wants you to know about claiming the credit:
1. You must have bought – or entered into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed on the home on or before September 30, 2010.
2. To be considered a first-time homebuyer, you and your spouse – if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
3. To be considered a long-time resident homebuyer you and your spouse – if you are married – must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the new home is purchased.
4. The maximum credit for a first-time homebuyer is $8,000, half that amount for married individuals filing separately. The maximum credit for a long-time resident homebuyer is $6,500. Married individuals filing separately are limited to $3,250.
5. You must file a paper return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit with additional documents to verify the purchase. Therefore, if you claim the credit you will not be able to file electronically.
6. New homebuyers must attach a copy of a properly executed settlement statement used to complete such purchase. Buyers of a newly constructed home, where a settlement statement is not available, must attach a copy of the dated certificate of occupancy. Mobile home purchasers who are unable to get a settlement statement must attach a copy of the retail sales contract.
7. If you are a long-time resident claiming the credit, the IRS recommends that you also attach any documentation covering the five-consecutive-year period, including Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, property tax records or homeowner’s insurance records.
8. Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit.
Questions?