I

104TH CONGRESS

1ST SESSION H. R. 1546

To amend the Internal Revenue Code of 1986 with respect to the treatment

of cooperative housing corporations.

IN THE HOUSE OF REPRESENTATIVES

MAY 2, 1995

Mr. SCHUMER (for himself, Mr. RANGEL, Mrs. MALONEY, Mr. NADLER, Ms.

VELA ́ZQUEZ, Mr. MANTON, Mr. ENGEL, Mrs. LOWEY, and Mr.

TORRICELLI) introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 with respect

to the treatment of cooperative housing corporations.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION I. SHORT TITLE.

4 This Act may be cited as the ‘‘Housing Co-op Tax

5 Correction Act of 1995’’.

6 SEC. 2. SECTION 277 NOT TO APPLY TO COOPERATIVE

7 HOUSING CORPORATIONS.

8 Section 277(b) of the Internal Revenue Code of 1986

9 (relating to exceptions) is amended by striking ‘‘or’’ at the
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1 end of paragraph (3), by striking the period at the end

2 of paragraph (4) and inserting a comma and ‘‘or’’, and

3 by adding at the end thereof the following new paragraph:

4 ‘‘(5) which for the taxable year is a cooperative

5 housing corporation described in section 216(b)(1)

6 (determined without regard to section

7 143(k)(9)(E)).’’

8 SEC. 3. APPLICATION OF RULES RELATING TO TAX TREAT9 MENT OF COOPERATIVES TO COOPERATIVE

10 HOUSING CORPORATIONS.

11 (a) NONPATRONAGE EARNINGS OF COOPERATIVE

12 HOUSING CORPORATIONS MAY NOT BE OFFSET BY PA13 TRONAGE LOSSES.—Section 1388(j) of the Internal Reve14 nue Code of 1986 is amended by redesignating paragraph

15 (4) as paragraph (5) and by inserting after paragraph (3)

16 the following new paragraph:

17 ‘‘(4) PATRONAGE LOSSES MAY NOT OFFSET

18 NONPATRONAGE EARNINGS.—In no event shall any

19 patronage losses of an organization described in sec20 tion 277(b)(5) be used to offset earnings which are

21 not patronage earnings.’’

22 (b) PATRONAGE EARNINGS AND LOSSES OF COOPER23 ATIVE HOUSING CORPORATIONS.—Section 1388(j)(5) of

24 such Code (as redesignated by subsection (a)) is amended

25 to read as follows:
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1 ‘‘(5) PATRONAGE EARNINGS OR LOSSES DE2 FINED.—For purposes of this subsection—

3 ‘‘(A) IN GENERAL.—The terms ‘patronage

4 earnings’ and ‘patronage losses’ mean earnings

5 and losses, respectively, which are derived from

6 business done with or for patrons of the organi7 zation.

8 ‘‘(B) SPECIAL RULES FOR COOPERATIVE

9 HOUSING CORPORATION.—In the case of a co10 operative housing corporation, the following

11 earnings shall be treated as patronage earnings:

12 ‘‘(i) Interest on reasonable reserves

13 established in connection with the corpora14 tion, including reserves required by a gov15 ernmental agency or lender.

16 ‘‘(ii) Income from laundry and park17 ing facilities to the extent attributable to

18 use of the facilities by tenant-stockholders,

19 their subtenants and their guests.

20 ‘‘(iii) In the case of a limited equity

21 cooperative housing corporation, rental in22 come from other than tenant-stockholders

23 to the extent attributable to any housing

24 project operated by the corporation.
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1 ‘‘(C) DEFINITIONS.—For purposes of sub2 paragraph (B)—

3 ‘‘(i) COOPERATIVE HOUSING COR4 PORATION.—The term ‘cooperative housing

5 corporation’ has the meaning given such

6 term by section 216(b)(1) (without regard

7 to section 143(k)(9)(E)).

8 ‘‘(ii) LIMITED EQUITY COOPERATIVE

9 HOUSING CORPORATION.—The term ‘lim10 ited equity cooperative housing corpora11 tion’ means a cooperative housing corpora12 tion with respect to which the require13 ments of clause (i) of section 143(k)(9)(D)

14 are met at all times during the taxable

15 year.

16 ‘‘(iii) TENANT-STOCKHOLDER.—The

17 term ‘tenant-stockholder’ has the meaning

18 given such term by section 216(b)(2).’’

19 SEC. 4. EFFECTIVE DATE.

20 (a) IN GENERAL.—Except as provided in subsection

21 (b), the amendments made by this Act shall apply to tax22 able years beginning after the date of the enactment of

23 this Act.

24 (b) ELECTION TO HAVE AMENDMENTS APPLY

25 RETROACTIVELY.—Any corporation may elect to have the
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1 amendments made by this Act apply to any taxable year,

2 whether beginning before, on, or after the date of the en3 actment of this Act, to which such amendments do not

4 otherwise apply if the corporation was a cooperative hous5 ing corporation during such taxable year.

6 (c) NO INFERENCE.—Nothing in the provisions of

7 this Act shall be construed as a change in the treatment

8 of income derived by any cooperative housing corporation

9 or any corporation operating on a cooperative basis under

10 section 1381 of the Internal Revenue Code of 1986, and

11 the treatment of such income for any year to which the

12 amendments made by this Act does not apply shall be

13 made as if this Act had not been enacted.

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