CAN COOPERATIVE HOUSING CORPORATION STOCKHOLDERS DEDUCT STRUCTURAL DAMAGES DUE TO SANDY?
A HIDDEN PROBLEM FOR MANY PEOPLE WHO EXPERIENCED SANDY
COOPERATIVE HOUSING
CORPORATIONS
A 2011 case, Alphonso, U.S. Tax
Court, 136 T.C. No. 11, (Mar. 16, 2011) explains why owners of units in
cooperative housing corporations are not permitted to deduct casualty losses
related to the corporation’s property. A tenant-stockholder in a cooperative housing
corporation, “coop” could not deduct a casualty loss for damage that resulted
from the collapse of a retaining wall located on the coop property where the
taxpayer’s apartment was located. Initially, the taxpayer deducted the coops
assessment on each stockholder to repair the wall collapsed. No deduction was
allowed under §165, Losses,
because
the taxpayer had no property rights in the damaged property. The taxpayer’s perpetual
lease and other documents did not grant her any fee, leasehold, easement or
other property interest in that property. No deduction was allowed under Code section 216(a). That provision allows a deduction for amounts paid to the
corporation for real estate taxes paid under Code section 164 or for interest under Code section 163
that is paid or incurred by the corporation on debt that it issued in order to,
among other things, acquire or construct the land or buildings that it owns.
Under Code section 216(a) no deduction is allowed for casualty losses.
This blog,
“AccountantForDisasterRecovery.com” has been addressing taxpayer income tax
issues related to catastrophic losses for five years
All rights to reproduce or
quote any part of the chapter in any other publication are reserved by the
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chapter appears also apply.
JOHN TRAPANI
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It All Adds Up For You
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This material
was contributed by John Trapani. A Certified Public Accountant who has assisted
taxpayers since 1976, in analyzing and reporting transactions of the type
covered in this material.
Internal
Revenue Service Circular 230 Disclosure
This
is a general discussion of tax law. The application of the law to specific
facts may involve aspects that are not identical to the situations presented in
this material. Relying on this material does not qualify as tax advice for
purpose of mounting a defense of a tax position with the taxing authorities
The
analysis of the tax consequences of any event is based on tax laws in effect at
the time of the event.
This
material was completed on the date of the posting
© 2013, John Trapani, CPA,
