Hi, AdC,

Thanks for the thoughtful response.

I certainly didn't mean to take your comment about a reliabe source of income out of context. My apologies.

My point was that flip tax income cannot be used in income projections (i.e. the budget). Yes, the accountant records flip tax income, but only after the fact. That's what you're referring to (the income statement). The budget, of course, attempts to foresee the future, and the GAAP prohibit using an income source as capricious as flip taxes in a corporation's planning.

You point out: "The money that you receive through flip tax is accounted by way of your income statement as part of a 'flip tax line item.' The surplus in your income statement is then converted to 'Reserves' for your 'Capital Expenses.' "

That's what I was trying to say. Money from the flip tax comes in, is assigned a category by the accountant (and accountants do love categories), and is placed in the reserves account. I could have been clearer: The amendment to the proprietary lease that approves the flip tax can require that flip tax income be used only for capital improvement (as it is in my building).

"However, should your taxes be higher than expected or your oerating expenses suffer an unexpected increase, your 'reserves' need to be move to 'patch the hole.' Then, it's up to the board to determine if to access for the deficit or just use the reserves without inconveniencing your shareholders."

Yes, exactly! The higher the reserves, of course, the less likely shareholders will have to be bothered by yet another dreaded assessment. Which is why our shareholders are pleased to have a healthy reserves account -- funded by their flip tax.

"And as Lily Tomlin used to say (Watch out!, I'm dating myself), THIS IS THE TRUTH, PRUURRR!"

She's a national treasure!