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 author. Republication rights limited by the publisher of the book in which this chapter appears also apply.
Certified Public Accountant
2975 E. Hillcrest Drive #403
Thousand Oaks, CA 91362
Contact us through our website at:
It All Adds Up For You
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
© 2013, John Trapani, CPA,