12
S. Rept. 1361, 77th Cong., 2d Sess. (1942), 1942-2 C.B. 504, 577.
We interpret this to mean that Congress expected that a
cooperative apartment corporation (the predecessor to a
cooperative housing corporation) would be operated as a
cooperative.
b. Respondent’s Contention That Petitioner Does Not Operate
as a Cooperative
Respondent argues that petitioner does not meet the Puget
Sound factors and thus does not operate on a cooperative basis.
We disagree. First, petitioner meets the subordination of
capital factor because its tenant-shareholders and patrons are
identical and petitioner operated for the benefit of its patrons.
Second, petitioner is democratically controlled by its tenant-
stockholders. The fact that petitioner's shareholders may vote
by proxy is akin to voting by absentee ballot. See Rev. Rul. 75-
97, 1975-1 C.B. 167 (a farmer's cooperative is not denied exempt
status by allowing proxy voting by shareholders). Also, the fact
that petitioner's shareholders have one vote for each share they
own (instead of one vote per shareholder) and that they own
shares based on the relative sizes of their various dwelling
units is not contrary to democratic principles. The ownership
percentage of shareholders of a housing cooperative is not only a
measure of their investment; it is also a measure of their
relative “patronage” of the housing cooperative. Third,
petitioner did not fail to allocate profits to its members; in
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