[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 537 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 537

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 21, 1993

 Mr. Schumer 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 Representatives 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 
1993''.

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 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, their 
                        subtenants 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. 4. 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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