10
2. Whether a Section 216 Cooperative Housing Corporation Is
a Cooperative Under Subchapter T
In Park Place, Inc. v. Commissioner, 57 T.C. 767 (1972), we
held that the taxpayer was a cooperative under subchapter T
because it was a section 216 cooperative housing corporation. We
concluded that:
We disagree with the Commissioner's assertion that
subchapter T, section 1381, * * * does not apply. Part
I of that subchapter applies to the taxable year of any
corporation operating on a cooperative basis after
December 31, 1962, and that necessarily includes a
section 216 cooperative housing corporation. [Citation
omitted.]
Id. at 779.
The parties have stipulated that petitioner is a section 216
cooperative housing corporation. Thus, as we discuss further
below in par. B-3-a, we conclude that petitioner is subject to
the provisions of subchapter T. Id.
3. Subordination of Capital, Control by Members, and
Allocation of Profit to Members
In Puget Sound Plywood, Inc. v. Commissioner, 44 T.C. 305,
308 (1965), we identified three factors that we said form the
core of economic cooperative theory:
(1) Subordination of capital, both as regards control
over the cooperative undertaking, and as regards the
ownership of the pecuniary benefits arising therefrom; (2)
democratic control by the worker-members themselves; and (3)
the vesting in and the allocation among the worker-members
of all fruits and increases arising from their cooperative
endeavor (i.e., the excess of the operating revenues over
the costs incurred in generating those revenues), in
proportion to the worker-members' active participation in
the cooperative endeavor.
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