Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 69-76

1969-1 C.B. 56

Sec. 164

Sec. 216

IRS Headnote

A tenant-stockholder in a cooperative housing corporation may not deduct his proportionate share of real estate taxes levied on recreational facility properties owned and maintained by another corporation.

Full Text

Rev. Rul. 69-76

Advice has been requested whether a tenant-stockholder in a cooperative housing corporation may deduct a proportionate share of the real estate taxes levied on certain recreational facility properties owned and maintained by another corporation for the use of the tenant-stockholders of the cooperative housing corporation.

The separate corporation (not a cooperative housing corporation) maintaining the recreational facilities is owned by a group of cooperative housing corporations, including the one in which this taxpayer is a tenant-stockholder. The recreational facility properties consist of swimming pools, club-houses, tennis courts, riding stables, an administrative building, and street areas.

The corporation that owns the recreational facility properties is paid by each cooperative housing corporation which in turn derives the funds necessary for these payments from monthly charges it collects from its tenant-stockholders. The monthly charges paid by the tenant-stockholders are pursuant to occupancy agreements between the tenant-stockholders and the cooperative housing corporation whereby the tenant-stockholders are obligated to remit to the cooperative housing corporation monthly payments equivalent to their proportionate shares of the cooperative housing corporation's annual expenses of operation, maintenance, mortgage payments, insurance, and taxes. Also specifically included in the monthly charge is a proportionate share of the fee paid by the cooperative housing corporation for the right to use the recreational facility properties.

Section 216 of the Internal Revenue Code of 1954 provides, in part, that:

"* * * 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 * * *. [Emphasis supplied.]"

Only a tenant-stockholder's proportionate share of real estate taxes allowable as a deduction to the cooperative housing corporation under section 164 of the Code is deductible by him. In the instant case the cooperative housing corporation is not entitled to a deduction for the real estate taxes in question since they were imposed on, and paid by, another corporation. Accordingly, the tenant-stockholder in the instant case is not entitled to deduct any portion of the real estate taxes levied on the recreational facility properties.