7
issued no Forms 1099-PATR (Taxable Distributions Received From
Cooperatives) to its tenant-shareholders for the years at issue.
Petitioner serves its members at less than cost and realized
a loss from its activities in 1989 and 1990. It did not pay tax
on its investment income.
Respondent determined that petitioner's interest income of
$52,468 in 1989 and $44,041 in 1990 was taxable as nonmembership
income by reason of section 277.
Discussion
A. Background
The issue for decision is whether petitioner, a section 216
cooperative housing corporation, is a cooperative under
subchapter T (sections 13813-1388), as petitioner contends, or
3 Section 1381 provides in part:
SEC. 1381(a). In General.--This part shall apply to--
(1) any organization exempt from tax under section 521
(relating to exemption of farmers' cooperatives from tax),
and
(2) any corporation operating on a cooperative basis
other than an organization--
(A) which is exempt from tax under this chapter,
(B) which is subject to the provisions of--
(i) part II of subchapter H (relating to
mutual savings banks, etc.), or
(ii) subchapter L (relating to insurance
companies), or
(continued...)
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