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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION I. SHORT TITLE.
This Act may be cited as the ‘‘Housing Co-op Tax
Correction Act of 1995’’.
SEC. 2. SECTION 277 NOT TO APPLY TO COOPERATIVE
HOUSING CORPORATIONS.
Section 277(b) of the Internal Revenue Code of 1986
(relating to exceptions) is amended by striking ‘‘or’’ at the
end of paragraph (3), by striking the period at the end
of paragraph (4) and inserting a comma and ‘‘or’’, and
by adding at the end thereof the following new paragraph:
‘‘(5) which for the taxable year is a cooperative
housing corporation described in section 216(b)(1)
(determined 
without 
regard 
to 
section
143(k)(9)(E)).’’
SEC. 3. APPLICATION OF RULES RELATING TO TAX TREAT-
MENT OF COOPERATIVES TO COOPERATIVE
HOUSING CORPORATIONS.
(a) NONPATRONAGE EARNINGS
OF COOPERATIVE
HOUSING CORPORATIONS MAY NOT BE OFFSET BY PA-
TRONAGE LOSSES.—Section 1388(j) of the Internal Reve-
nue Code of 1986 is amended by redesignating paragraph
(4) as paragraph (5) and by inserting after paragraph (3)
the following new paragraph:
‘‘(4) PATRONAGE
LOSSES
MAY
NOT
OFFSET
NONPATRONAGE EARNINGS.—In no event shall any
patronage losses of an organization described in sec-
tion 277(b)(5) be used to offset earnings which are
not patronage earnings.’’
(b) PATRONAGE EARNINGS AND LOSSES OF COOPER-
ATIVE HOUSING CORPORATIONS.—Section 1388(j)(5) of
such Code (as redesignated by subsection (a)) is amended
to read as follows:
‘‘(5) PATRONAGE
EARNINGS
OR
LOSSES
DE-
FINED.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The terms ‘patronage
earnings’ and ‘patronage losses’ mean earnings
and losses, respectively, which are derived from
business done with or for patrons of the organi-
zation.
‘‘(B) SPECIAL
RULES
FOR
COOPERATIVE
HOUSING CORPORATION.—In the case of a co-
operative housing corporation, the following
earnings shall be treated as patronage earnings:
‘‘(i) Interest on reasonable reserves
established in connection with the corpora-
tion, including reserves required by a gov-
ernmental agency or lender.
‘‘(ii) Income from laundry and park-
ing facilities to the extent attributable to
use of the facilities by tenant-stockholders,
their subtenants and their guests.
‘‘(iii) In the case of a limited equity
cooperative housing corporation, rental in-
come from other than tenant-stockholders
to the extent attributable to any housing
project operated by the corporation.
‘‘(C) DEFINITIONS.—For purposes of sub-
paragraph (B)—
‘‘(i) COOPERATIVE
HOUSING
COR-
PORATION.—The term ‘cooperative housing
corporation’ has the meaning given such
term by section 216(b)(1) (without regard
to section 143(k)(9)(E)).
‘‘(ii) LIMITED
EQUITY
COOPERATIVE
HOUSING
CORPORATION.—The term ‘lim-
ited equity cooperative housing corpora-
tion’ means a cooperative housing corpora-
tion with respect to which the require-
ments of clause (i) of section 143(k)(9)(D)
are met at all times during the taxable
year.
‘‘(iii) 
TENANT-STOCKHOLDER.—The
term ‘tenant-stockholder’ has the meaning
given such term by section 216(b)(2).’’
SEC. 4. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b), the amendments made by this Act shall apply to tax-
able years beginning after the date of the enactment of
this Act.
(b) ELECTION
TO
HAVE
AMENDMENTS
APPLY
RETROACTIVELY.—Any corporation may elect to have the
amendments made by this Act apply to any taxable year,
whether beginning before, on, or after the date of the en-
actment of this Act, to which such amendments do not
otherwise apply if the corporation was a cooperative hous-
ing corporation during such taxable year.
(c) NO INFERENCE.—Nothing in the provisions of
this Act shall be construed as a change in the treatment
of income derived by any cooperative housing corporation
or any corporation operating on a cooperative basis under
section 1381 of the Internal Revenue Code of 1986, and
the treatment of such income for any year to which the
amendments made by this Act does not apply shall be
made as if this Act had not been enacted.
Æ