AgdaPkt 2025.10.27 Joint SA PFA - Laserfiche WebLink

Browse Search

Redwood City Improvement Association Notes to Financial Statements 8 Income Taxes The Association is a nonprofit public benefit corporation that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code (IRC) and classified by the Internal Revenue Service (IRS) as other than a private organization. Contributions received qualify as tax deductible gifts as provided in Section 170(c)(2). The Association is also exempt from California State franchise and income taxes under Section 23701(d) of the California Revenue and Taxation Code. Accordingly, no provision for income taxes has been reflected in these financial statements. Each entity is annually required to file a Return of Organization Exempt from Income Tax (Form 990) with the IRS. In addition, the Association is subject to income tax on net income that is derived from business activities that are unrelated to their exempt purposes. The Association determined that its entity is not subject to unrelated business income tax and have not filed an Exempt Organization Business Income Tax Return (Form 990‐T) with the IRS. Functional Allocation of Expenses The costs of program and supporting services activities have been summarized on a functional basis in the statements of activities. The statements of functional expenses present the natural classification detail of expenses by function. Accordingly, certain costs have been allocated among the programs and supporting services benefited. The financial statements report certain categories of expenses that are attributed to more than one program or supporting function. Therefore, expenses require allocation on a reasonable basis that is consistently applied. The expenses that are allocated include occupancy, depreciation, and amortization, which are allocated on a square footage basis, as well as salaries and wages, benefits, payroll taxes, professional services, office expenses, information technology, interest, insurance, and other, which are allocated on the basis of estimates of time and effort. Note 2 - Liquidity and Availability Financial assets available for general expenses, that is, without donor or other restrictions limiting their use, within one year of the statement of financial position date, comprise of $622,727 cash and cash equivalents. Note 3 - Market Value of Financial Assets and Liabilities The Association determines the fair market values of certain financial instruments based on the fair value hierarchy established in FASB ASC 820-10-50, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value. The following provides a summary of the hierarchical levels used to measure fair value: •Level 1 - Quoted prices in active markets for identical assets or liabilities. •Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities. •Level 3 - Unobservable inputs that are supported by little or no market activity. 8.A. - Page 30 of 33 42