Thwaites Terrace House Owners Corp. - Page 2

                                          2                                           
                                 MEMORANDUM OPINION                                   

               COLVIN, Judge:  Respondent determined deficiencies in                  
          petitioner's Federal income tax of $8,117 for 1989 and $6,606 for           
          1990.                                                                       
               The issues for decision are:                                           
               1.   Whether petitioner, a housing cooperative under section           
          216, is subject to subchapter T (sections 1381-1388),                       
          aspetitioner contends, or is a membership organization under                
          section 277, as respondent contends.  We hold that petitioner is            
          subject to subchapter T and is not subject to section 277.                  
               2.   Whether interest income earned by petitioner is                   
          patronage sourced income under section 1388(j)(1).  We hold that            
          it is not.                                                                  
               Section references are to the Internal Revenue Code in                 
          effect for the years at issue.  Rule references are to the Tax              
          Court Rules of Practice and Procedure.                                      
               The facts have been fully stipulated and are so found.  The            
          relevant facts are summarized below.                                        
          Background                                                                  
          A.   Petitioner                                                             
               Petitioner's principal place of business was in New York               
          City when it filed the petition in this case.                               








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