[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1778 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                S. 1778

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 22, 1993

 Mr. Moynihan introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 with respect to the tax 
             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. TAX TREATMENT OF COOPERATIVE HOUSING CORPORATIONS.

    (a) 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)).''
    (b) Application of Rules Relating to Tax Treatment of 
Cooperatives.--
            (1) Patronage earnings may be offset only by patronage 
        losses.--Section 1388(a) of such Code is amended by adding at 
        the end the following new sentence: ``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.''
            (2) Patronage earnings and losses of cooperative housing 
        corporations.--Section 1388 of such Code is amended by adding 
        at the end the following new subsection:
    ``(k) Patronage Earnings or Losses Defined.--For purposes of this 
section--
            ``(1) 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.
            ``(2) Special rules for cooperative housing corporation.--
        In the case of a cooperative housing corporation, the following 
        earnings shall be treated as patronage earnings:
                    ``(A) Interest on reasonable reserves established 
                in connection with the corporation, including reserves 
                required by a governmental agency or lender.
                    ``(B) Income from laundry and parking facilities to 
                the extent attributable to use of the facilities by 
                tenant-stockholders and their guests.
                    ``(C) In the case of 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, rental income from other than 
                tenant-stockholders to the extent attributable to any 
                project operated by the corporation.
            ``(3) Definitions.--For purposes of paragraph (2)--
                    ``(A) 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)).
                    ``(B) Tenant-stockholder.--The term `tenant-
                stockholder' has the meaning given such term by section 
                216(b)(2).''
            (3) Conforming amendment.--Section 1388(j) of such Code is 
        amended by striking paragraph (4).
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after the date of the enactment of this Act.
            (2) Election to have amendments apply retroactively.--Any 
        corporation which is a cooperative housing corporation as of 
        the 1st day of the 1st taxable year beginning after the date of 
        the enactment of this Act may elect to have the amendments made 
        by this section apply to all taxable years whether beginning 
        before, on, or after the date of the enactment of this Act.
            (3) No inference.--Nothing in the provisions of this 
        section shall be construed as a change in the treatment of 
        income derived by any cooperative housing corporation, and the 
        treatment of such income for any year to which the amendments 
        made by this section does not apply shall be made as if this 
        section had not been enacted.

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