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107TH CONGRESS

1ST SESSION H. R. 1788

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

of cooperative housing corporations.

IN THE HOUSE OF REPRESENTATIVES

MAY 9, 2001

Mr. RANGEL 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 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Cooperative Housing

5 Act of 2001’’.

6 SEC. 2. MODIFICATION OF GROSS INCOME TEST FOR DE7 TERMINING WHETHER CORPORATION IS CO8 OPERATIVE HOUSING CORPORATION.

9 (a) IN GENERAL.—Subparagraph (D) of section

10 216(b)(1) of the Internal Revenue Code of 1986 (defining
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1 cooperative housing corporations) is amended to read as

2 follows:

3 ‘‘(D) 80 percent or more of the total base

4 receipts of which for the taxable year in which

5 the taxes and interest described in subsection

6 (a) are paid or incurred are qualified housing

7 receipts.’’

8 (b) DEFINITIONS.—Subsection (b) of section 216 of

9 such Code is amended by adding at the end the following

10 new paragraphs:

11 ‘‘(7) TOTAL BASE RECEIPTS.—

12 ‘‘(A) IN GENERAL.—The term ‘total base

13 receipts’ means the sum of—

14 ‘‘(i) gross income, and

15 ‘‘(ii) qualified housing receipts to the

16 extent not includible in gross income.

17 ‘‘(B) EXCEPTIONS.—For purposes of sub18 paragraph (A), gross income shall be deter19 mined without regard to amounts received or

20 accrued on account of—

21 ‘‘(i) discharge of indebtedness,

22 ‘‘(ii) fire, theft, or other casualty in23 surance proceeds,

24 ‘‘(iii) refunds and interest thereon,
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1 ‘‘(iv) redemptions of stock of, or pa2 tronage dividends from, a cooperative,

3 ‘‘(v) interest on reserves to the extent

4 that such reserves are—

5 ‘‘(I) maintained in connection

6 with providing housing to the corpora7 tion’s tenant-stockholders, and

8 ‘‘(II) required by a governmental

9 agency, a lender, or as a matter of or10 dinary business prudence, or

11 ‘‘(vi) other items that the Secretary

12 determines should be excluded in order to

13 effectuate the intent of this section.

14 ‘‘(8) QUALIFIED HOUSING RECEIPTS.—The

15 term ‘qualified housing receipts’ includes amounts

16 (whether or not includible in gross income) received

17 or accrued on account of—

18 ‘‘(A) obligations of tenant-stockholders in

19 their capacity as such, including contributions

20 to capital, charges for the tenant-stockholder’s

21 dwelling unit or appurtenant facilities, pay22 ments for utilities or other services rendered in

23 connection with the tenant-stockholder’s dwell24 ing unit, and interest and late charges in con25 nection with any of the foregoing,
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1 ‘‘(B) similar obligations of occupants of de2 fault units, but as to any taxable year only to

3 the extent that the amount does not exceed the

4 amount that would be described in subpara5 graph (A) had the dwelling units not become

6 default units,

7 ‘‘(C) the operation of laundry, parking,

8 recreational or other facilities substantially all

9 the customers of which are occupants of either

10 tenant-stockholders’ dwelling units or default

11 units,

12 ‘‘(D) other items that the Secretary deter13 mines should be included in order to effectuate

14 the intent of this section, and

15 ‘‘(E) insurance proceeds in lieu of any of

16 the foregoing.

17 ‘‘(9) DEFAULT UNIT.—

18 ‘‘(A) IN GENERAL.—The term ‘default

19 unit’ means a dwelling unit to which shares

20 were allocated and issued and were last out21 standing in the hands of a person who, as a

22 consequence of a default in an obligation to the

23 corporation, lost the right to occupy such dwell24 ing unit (whether such shares continue to be
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1 held by such person, were acquired by the cor2 poration, or were canceled).

3 ‘‘(B) APPLICATION OF PROVISIONS TO DE4 FAULT UNITS.—The shares allocated to a de5 fault unit—

6 ‘‘(i) shall not be taken into account

7 for purposes of paragraph (1)(B),

8 ‘‘(ii) shall, if reissued, be treated for

9 purposes of paragraph (2) as if they had

10 remained issued, and

11 ‘‘(iii) shall be treated as outstanding

12 for purposes of paragraph (3)(A).’’

13 SEC. 3. EFFECTIVE DATE.

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

15 (b), the amendments made by this Act shall apply to tax16 able years beginning after the date of the enactment of

17 this Act.

18 (b) ELECTION TO HAVE AMENDMENTS APPLY

19 RETROACTIVELY.—Any corporation may elect to have the

20 amendments made by this Act apply to any taxable year,

21 whether beginning before, on, or after the date of the en22 actment of this Act, to which such amendments do not

23 otherwise apply if the corporation was a cooperative hous24 ing corporation during such taxable year.
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1 (c) NO INFERENCE.—Nothing in this Act shall be

2 construed as a change in the treatment of income derived

3 by any cooperative housing corporation or any corporation

4 operating on a cooperative basis under section 1381 of the

5 Internal Revenue Code of 1986, and the treatment of such

6 income for any year to which the amendments made by

7 this Act does not apply shall be made as if this Act had

8 not been enacted.

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