§216 — Deduction of taxes, interest, and business depreciation by cooperative housing corporation tenant-stockholder
29 cases·5 followed·4 distinguished·1 questioned·2 criticized·1 overruled·16 cited—17% support
Statute Text — 26 U.S.C. §216
In the case of a tenant-stockholder (as defined in subsection (b)(2)), there shall be allowed as a deduction amounts (not otherwise deductible) paid or accrued to a cooperative housing corporation within the taxable year, but only to the extent that such amounts represent the tenant-stockholder’s proportionate share of—
the real estate taxes allowable as a deduction to the corporation under section 164 which are paid or incurred by the corporation on the houses or apartment building and on the land on which such houses (or building) are situated, or
the interest allowable as a deduction to the corporation under section 163 which is paid or incurred by the corporation on its indebtedness contracted—
in the acquisition, construction, alteration, rehabilitation, or maintenance of the houses or apartment building, or
in the acquisition of the land on which the houses (or apartment building) are situated.
For purposes of this section—
The term “cooperative housing corporation” means a corporation—
having one and only one class of stock outstanding,
each of the stockholders of which is entitled, solely by reason of his ownership of stock in the corporation, to occupy for dwelling purposes a house, or an apartment in a building, owned or leased by such corporation,
no stockholder of which is entitled (either conditionally or unconditionally) to receive any distribution not out of earnings and profits of the corporation except on a complete or partial liquidation of the corporation, and
meeting 1 or more of the following requirements for the taxable year in which the taxes and interest described in subsection (a) are paid or incurred:
80 percent or more of the corporation’s gross income for such taxable year is derived from tenant-stockholders.
At all times during such taxable year, 80 percent or more of the total square footage of the corporation’s property is used or available for use by the tenant-stockholders for residential purposes or purposes ancillary to such residential use.
90 percent or more of the expenditures of the corporation paid or incurred during such taxable year are paid or incurred for the acquisition, construction, management, maintenance, or care of the corporation’s property for the benefit of the tenant-stockholders.
The term “tenant-stockholder” means a person who is a stockholder in a cooperative housing corporation, and whose stock is fully paid-up in an amount not less than an amount shown to the satisfaction of the Secretary as bearing a reasonable relationship to the portion of the value of the corporation’s equity in the houses or apartment building and the land on which situated which is attributable to the house or apartment which such person is entitled to occupy.
Except as provided in subparagraph (B), the term “tenant-stockholder’s proportionate share” means that proportion which the stock of the cooperative housing corporation owned by the tenant-stockholder is of the total outstanding stock of the corporation (including any stock held by the corporation).
If, for any taxable year—
each dwelling unit owned or leased by a cooperative housing corporation is separately allocated a share of such corporation’s real estate taxes described in subsection (a)(1) or a share of such corporation’s interest described in subsection (a)(2), and
such allocations reasonably reflect the cost to such corporation of such taxes, or of such interest, attributable to the tenant-stockholder’s dwelling unit (and such unit’s share of the common areas),
Clause (i) shall apply with respect to any cooperative housing corporation only if such corporation elects its application. Such an election, once made, may be revoked only with the consent of the Secretary.
then the term “tenant-stockholder’s proportionate share” means the shares determined in accordance with the allocations described in subclause (II).
For purposes of this subsection, in determining whether a corporation is a cooperative housing corporation, stock owned and apartments leased by the United States or any of its possessions, a State or any political subdivision thereof, or any agency or instrumentality of the foregoing empowered to acquire shares in a cooperative housing corporation for the purpose of providing housing facilities, shall not be taken into account.
For purposes of this section, in the following cases there shall not be taken into account the fact that (by agreement with the cooperative housing corporation) the person or his nominee may not occupy the house or apartment without the prior approval of such corporation:
In any case where a person acquires stock of a cooperative housing corporation by operation of law.
In any case where a person other than an individual acquires stock of a cooperative housing corporation.
In any case where the original seller acquires any stock of the cooperative housing corporation from the corporation not later than 1 year after the date on which the apartments or houses (or leaseholds therein) are transferred by the original seller to the corporation.
For purposes of paragraph (5), the term “original seller” means the person from whom the corporation has acquired the apartments or houses (or leaseholds therein).
So much of the stock of a tenant-stockholder in a cooperative housing corporation as is allocable, under regulations prescribed by the Secretary, to a proprietary lease or right of tenancy in property subject to the allowance for depreciation under section 167(a) shall, to the extent such proprietary lease or right of tenancy is used by such tenant-stockholder in a trade or business or for the production of income, be treated as property subject to the allowance for depreciation under section 167(a). The preceding sentence shall not be construed to limit or deny a deduction for depreciation under section 167(a) by a cooperative housing corporation with respect to property owned by such a corporation and leased to tenant-stockholders.
The amount of any deduction for depreciation allowable under section 167(a) to a tenant-stockholder with respect to any stock for any taxable year by reason of paragraph (1) shall not exceed the adjusted basis of such stock as of the close of the taxable year of the tenant-stockholder in which such deduction was incurred.
The amount of any deduction which is not allowed by reason of subparagraph (A) shall, subject to the provisions of subparagraph (A), be treated as a deduction allowable under section 167(a) in the succeeding taxable year.
No deduction shall be allowed to a stockholder in a cooperative housing corporation for any amount paid or accrued to such corporation during any taxable year (in excess of the stockholder’s proportionate share of the items described in subsections (a)(1) and (a)(2)) to the extent that, under regulations prescribed by the Secretary, such amount is properly allocable to amounts paid or incurred at any time by the corporation which are chargeable to the corporation’s capital account. The stockholder’s adjusted basis in the stock in the corporation shall be increased by the amount of such disallowance.
Except as provided in regulations no gain or loss shall be recognized on the distribution by a cooperative housing corporation of a dwelling unit to a stockholder in such corporation if such distribution is in exchange for the stockholder’s stock in such corporation and such dwelling unit is used as his principal residence (within the meaning of section 121).
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.216-1 Amounts representing taxes and interest paid to cooperative housing corporation
- Treas. Reg. §Treas. Reg. §1.216-1(a) General rule.
- Treas. Reg. §Treas. Reg. §1.216-1(b) Limitation.
- Treas. Reg. §Treas. Reg. §1.216-1(c) Disallowance of deduction for certain payments to the corporation.
- Treas. Reg. §Treas. Reg. §1.216-1(d) Tenant-stockholder's proportionate share—(1) General rule.
- Treas. Reg. §Treas. Reg. §1.216-1(e) Cooperative housing corporation.
- Treas. Reg. §Treas. Reg. §1.216-1(f) Tenant-stockholder.
- Treas. Reg. §Treas. Reg. §1.216-1(g) Governmental unit.
- Treas. Reg. §Treas. Reg. §1.216-1(h) Examples.
- Treas. Reg. §Treas. Reg. §1.216-1(i) §1.216-1(i)
- Treas. Reg. §Treas. Reg. §1.216-2 Treatment as property subject to depreciation
- Treas. Reg. §Treas. Reg. §1.216-2(a) General rule.
- Treas. Reg. §Treas. Reg. §1.216-2(b) Determination of allowance for depreciation—(1) In general.
- Treas. Reg. §Treas. Reg. §1.216-2(c) Limitation.
- Treas. Reg. §Treas. Reg. §1.216-2(d) Examples.
- Treas. Reg. §Treas. Reg. §1.216-2(i) §1.216-2(i)
29 Citing Cases
This Court must decide whether a deduction allowed under section 216 for real estate taxes paid in connection with a cooperative housing corporation is an adjustment for purposes of the alternative minimum tax (AMT). This case was submitted fully stipulated pursuant to Rule 122. All of the facts stipulated are so found. Petitioner resided in New York, New York, at the time she filed her petition. Section 7491 does not apply because this case involves a legal issue.
Whether or not section 56(b)(1)(A)(ii) has that effect, we do not agree that that reading precludes respondent's claim here; i.e., that a deduction under section 216(a)(1) based on taxes paid by a cooperative housing corporation is a deduction for taxes "described in" section 164(a).
We hold that petitioner is not entitled to a deduction under section 165(a) and' (c) (3) with respect to the claimed 2005 casualty loss.
Deduction Under Section 216 Petitioner has failed to explain how section 216, Deduction of Taxes, Interest, and Business Depreciation by Cooperative Housing Corporation Tenant-Stockholder, has any application here.
Whether petitioner, a housing cooperative under section 216, is subject to subchapter T (sections 1381-1388), aspetitioner contends, or is a membership organization under section 277, as respondent contends.
Petitioners contend that amounts deducted under section 216(a)(1) are deductible in computing AMTI because section 216 deductions are not (1) listed in section 56(b)(l)(A)(ii) as deductions denied in computing AMTI; (2) deductions “for any taxes described in section 164(a)(1)”; or (3) miscellaneous itemized deductions.
it owns. Petitioner asserts that section 216(a) should be interpreted to permit not only the two deductions that that section expressly allows, but also the casualty loss deduction that she claims here. According to petitioner: The stated purpose of I.R.C. § 216 and its predecessor, I.R.C. § 23(z) is to give tenants-stockholders of housing cooperatives the same tax benefits as are allowed to homeowners. Eckstein v. United States, 452 F.2d 1036, 1048 (Ct. Cl. 1971) citing S.Rep.No. 1631, 77th Con
§§ 216.41, 226.16 (2016). 3 [*3] Tier 1 $2529.00 Tier 2 $1509.97 Supplemental Annuity $43.00 Gross RRB Benefit $4081.97 (less Federal income taxes withheld) $0.00 (less other deductions) $0.00 RRB Benefit (before Medicare) $4081.97 Less Medicare premium(s) $0.00 Benefit Amount $4081.97 The RRB also issued Mr. Tuma a Form RRB–1099, Payments by the R
evant evidence to support their position, or the Court believed that the record did not permit it to decide the issue. See Concord Consumers Housing Coop. v. Commissioner, 89 T.C. 105, 106-107 n.3 (1987) (Court did not consider whether taxpayer was sec. 216 cooperative housing corporation because neither party addressed the issue and Court could not tell from the record); Leahy v. Commissioner, 87 T.C. 56, 64-65 (1986) (Commissioner originally contended that partnership was not entitled to inves
section 216 (1994), and attorney’s fees and costs. The complaint was never amended during any time relevant to the class action lawsuit. On January 25, 1995, an Order approving the settlement of the class action lawsuit was signed by Larry M. Boyle, United States Magistrate Judge. The Settlement Agreement and Release (Settlement Agreement) states:
evant evidence to support their position, or the Court believed that the record did not permit it to decide the issue. See Concord Consumers Housing Coop. v. Commissioner, 89 T.C. 105, 106-107 n.3 (1987) (Court did not consider whether taxpayer was sec. 216 cooperative housing corporation because neither party addressed the issue and Court could not tell from the record); Leahy v. Commissioner, 87 T.C. 56, 64-65 (1986) (Commissioner originally contended that partnership was not entitled to inves