§ 216.
Deduction of taxes, interest, and business depreciation by cooperative housing corporation tenant-stockholder
(a)
Allowance of deduction
In the case of a tenant-stockholder (as defined in subsection (b)(2)), there shall be allowed as a deduction amounts (not otherwise deductible) paid or accrued to a cooperative housing corporation within the taxable year, but only to the extent that such amounts represent the tenant-stockholder’s proportionate share of—
(1)
the real estate taxes allowable as a deduction to the corporation under section 164 which are paid or incurred by the corporation on the houses or apartment building and on the land on which such houses (or building) are situated, or
(2)
the interest allowable as a deduction to the corporation under section 163 which is paid or incurred by the corporation on its indebtedness contracted—
(A)
in the acquisition, construction, alteration, rehabilitation, or maintenance of the houses or apartment building, or
(B)
in the acquisition of the land on which the houses (or apartment building) are situated.
(b)
Definitions
For purposes of this section—
(1)
Cooperative housing corporation
The term “cooperative housing corporation” means a corporation—
(A)
having one and only one class of stock outstanding,
(B)
each of the stockholders of which is entitled, solely by reason of his ownership of stock in the corporation, to occupy for dwelling purposes a house, or an apartment in a building, owned or leased by such corporation,
(C)
no stockholder of which is entitled (either conditionally or unconditionally) to receive any distribution not out of earnings and profits of the corporation except on a complete or partial liquidation of the corporation, and
(D)
meeting 1 or more of the following requirements for the taxable year in which the taxes and interest described in subsection (a) are paid or incurred:
(i)
80 percent or more of the corporation’s gross income for such taxable year is derived from tenant-stockholders.
(ii)
At all times during such taxable year, 80 percent or more of the total square footage of the corporation’s property is used or available for use by the tenant-stockholders for residential purposes or purposes ancillary to such residential use.
(iii)
90 percent or more of the expenditures of the corporation paid or incurred during such taxable year are paid or incurred for the acquisition, construction, management, maintenance, or care of the corporation’s property for the benefit of the tenant-stockholders.
(3)
Tenant-stockholder’s proportionate share
(B)
Special rule where allocation of taxes or interest reflect cost to corporation of stockholder’s unit
(i)
In general
If, for any taxable year—
(I)
each dwelling unit owned or leased by a cooperative housing corporation is separately allocated a share of such corporation’s real estate taxes described in subsection (a)(1) or a share of such corporation’s interest described in subsection (a)(2), and
(II)
such allocations reasonably reflect the cost to such corporation of such taxes, or of such interest, attributable to the tenant-stockholder’s dwelling unit (and such unit’s share of the common areas),
then the term “tenant-stockholder’s proportionate share” means the shares determined in accordance with the allocations described in subclause (II).
(ii)
Election by corporation required
(4)
Stock owned by governmental units
(5)
Prior approval of occupancy
For purposes of this section, in the following cases there shall not be taken into account the fact that (by agreement with the cooperative housing corporation) the person or his nominee may not occupy the house or apartment without the prior approval of such corporation:
(A)
In any case where a person acquires stock of a cooperative housing corporation by operation of law.
(B)
In any case where a person other than an individual acquires stock of a cooperative housing corporation.
(C)
In any case where the original seller acquires any stock of the cooperative housing corporation from the corporation not later than 1 year after the date on which the apartments or houses (or leaseholds therein) are transferred by the original seller to the corporation.
(6)
Original seller defined
([Aug. 16, 1954, ch. 736], [68A Stat. 71]; [Pub. L. 87–834, § 28(a)], Oct. 16, 1962, [76 Stat. 1068]; [Pub. L. 91–172, title IX, § 913(a)], Dec. 30, 1969, [83 Stat. 723]; [Pub. L. 94–455, title XIX, § 1906(b)(13)(A)], title XXI, § 2101(b), (f)(1), Oct. 4, 1976, [90 Stat. 1834], 1899; [Pub. L. 95–600, title V, § 531(a)], Nov. 6, 1978, [92 Stat. 2886]; [Pub. L. 96–222, title I, § 105(a)(6)], Apr. 1, 1980, [94 Stat. 219]; [Pub. L. 99–514, title VI, § 644(a)]–(d), Oct. 22, 1986, [100 Stat. 2285], 2286; [Pub. L. 100–647, title VI, § 6282(a)], Nov. 10, 1988, [102 Stat. 3755]; [Pub. L. 101–508, title XI, § 11702(i)], Nov. 5, 1990, [104 Stat. 1388–516]; [Pub. L. 105–34, title III, § 312(d)(4)], Aug. 5, 1997, [111 Stat. 840]; [Pub. L. 110–142, § 4(a)], Dec. 20, 2007, [121 Stat. 1804].)