Section 2

Citation: Section 2
Parent Document: United Housing Foundation, Inc. v. Forman, 421 U.S. 837 (1975)
Jurisdiction: United States (federal)
Effective Date: 1975-10-06
Original Source: https://www.courtlistener.com/opinion/109272/united-housing-foundation-inc-v-forman/ ↗

Full Text

1,612 chars

The Court of Appeals also relied on the tax deductibility accorded to portions of the monthly carrying charges paid by Co-op City residents as a source of profit to them. 500 F. 2d, at 1254. The Court rejects this argument with the statement that "[t]hese tax benefits are nothing more than that which is available to any homeowner . . . ." Ante, at 855. This is true but irrelevant to the question whether they constitute profits that "come solely from the efforts of others." The special federal tax provision for cooperative owners, 26 U. S. C. § 216. was intended "to place the tenant stockholders of a cooperative apartment in the same position as the owner of a dwelling house so far as deductions for interest and taxes are concerned." S. Rep. No. 1631, 77th Cong., 2d Sess., 51 (1942). This tax benefit constitutes a profit both for the individual homeowners and for the "tenant stockholders of a cooperative apartment." The difference is that the profit of the individual homeowner does not "come solely from the efforts of others," whereas the profit from this source realized by a resident of Co-op City does. Setting up and operating a corporation so as to take advantage of special tax provisions is a project requiring specialized skills. If the arrangements go awry the residents can find themselves without the hoped-for tax advantages. *863 See, e. g., Eckstein v. United States, 196 Ct. Cl. 644, 452 F. 2d 1036 (1971). Thus, the investors must depend upon the "efforts of others," here Co-op City's management, properly to organize and operate the project to realize the tax advantage for them.

Other Sections in This Document (195)

Full Text