OUTDOOR RESORTS/PALM SPRINGS OWNERS ASSOCIATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020 AND 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income Taxes
Homeowners' associations may elect to be taxed as regular corporations or as homeowners' associations. The Association elected to be taxed as a regular corporation for the years ended June 30, 2020 and 2019. Under the elections, the Association is taxed on non-membership income, at regular federal and state corporate tax rates. The Association's policy is to record income tax related interest and penalties in operating expenses. For the years ended June 30, 2020 and 2019, there was no interest or penalties expense recorded and no accrued interest or penalties. Management has considered its tax positions and believes that all of the positions taken by the Association on its Federal and State tax returns are more likely than not to be sustained upon examination. The Association's Forms 1120, US Corporation Tax Return are subject to examination by the IRS, generally for three years after they are filed. The Association's Forms 100, Corporation Franchise or Income Tax Return and Forms 199, California Exempt Organization Annual Information Return, are subject to examination by the Franchise Tax Board, generally for four years after they are filed. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Subsequent Events Subsequent events have been evaluated through August 18, 2020, which is the date the financial statements were available to be issued.
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