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HR 4097 IH

To amend the Internal Revenue Code of 1986 with respect to the treatment of cooperative housing corporations.

January 22, 1992

Mr. GREEN (for himself, Mr. RANGEL, and Mr. MCGRATH) introduced the following bill

January 28, 1992

Referred to the Committee on Ways and Means

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 Representatives of the United States of America in Congress assembled,

SECTION 1. 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. 2. APPLICATION OF RULES RELATING TO TAX TREATMENT OF COOPERATIVES TO COOPERATIVE HOUSING CORPORATIONS.

(a) NONPATRONAGE EARNINGS OF COOPERATIVE HOUSING CORPORATIONS MAY NOT BE OFFSET BY PATRONAGE LOSSES- Section 1388(j) of the Internal Revenue 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 section 277(b)(5) be used to offset earnings which are not patronage earnings.'

(b) PATRONAGE EARNINGS AND LOSSES OF COOPERATIVE 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 DEFINED- 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 organization.

`(B) SPECIAL RULES FOR COOPERATIVE HOUSING CORPORATION- In the case of a cooperative housing corporation, the following earnings shall be treated as patronage earnings:

`(i) Interest on reasonable reserves established in connection with the corporation, including reserves required by a governmental agency or lender.

`(ii) Income from laundry and parking facilities to the extent attributable to use of the facilities by tenant-stockholders and their guests.

`(iii) In the case of a limited equity cooperative housing corporation, rental income from other than tenant-stockholders to the extent attributable to any housing project operated by the corporation.

`(C) DEFINITIONS- For purposes of subparagraph (B)--

`(i) COOPERATIVE HOUSING CORPORATION- 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 `limited equity cooperative housing corporation' means a cooperative housing corporation with respect to which the requirements 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. 3. EFFECTIVE DATE.

(a) IN GENERAL- Except as provided in subsection (b), the amendments made by this Act shall apply to taxable 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 enactment of this Act, to which such amendments do not otherwise apply if the corporation was a cooperative housing 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.

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