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employees. Petitioner provides laundry facilities for its
tenant-shareholders.
Petitioner is not required to rebate to its members the
excess of its charges collected from them over its operating
costs, and its members have no right to receive those
distributions.
B. Petitioner's Proprietary Lease
Petitioner's tenant-shareholders, because of their ownership
of stock in the corporation, may have proprietary leases2 which
entitle them to live in an apartment of petitioner.
Each shareholder must sign a proprietary lease with
petitioner. The proprietary lease used by petitioner during the
years in issue referred to tenants as "lessees". It required
each lessee to pay rent (called "maintenance") in equal monthly
installments. A lessee could occupy only the apartment he or she
leased. Monthly rent equaled the lessee's pro rata share of "the
estimated amount in cash which the Directors * * * determine to
be necessary" to operate, maintain and improve the property, and
to create a reserve for contingencies, repairs, and replacements.
The lease provided that petitioner's Board of Directors "from
time to time in its judgment" shall determine the annual
obligation of each lessee. The lease authorizes the Board of
2 A proprietary lease allows a shareholder in a cooperative
to possess an apartment in the cooperative. Black's Law
Dictionary 890 (6th ed. 1990).
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