26 U.S.C. § 216 — Deduction of taxes, interest, and business

Page 941 TITLE 26—INTERNAL REVENUE CODE § 216 EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103–66 applicable to taxable years beginning after Dec. 31, 1993, see section 13131(e) of Pub. L. 103–66, set out as a note under section 32 of this title. EFFECTIVE DATE OF 1990 AMENDMENT Amendment by section 11111(d)(1) of Pub. L. 101–508 applicable to taxable years beginning after Dec. 31, 1990, see section 11111(f) of Pub. L. 101–508, set out as a note under section 32 of this title. Pub. L. 101–508, title XI, § 11342(b), Nov. 5, 1990, 104 Stat. 1388–472, provided that: ‘‘The amendment made by this section [amending this section] shall apply to tax- able years beginning after December 31, 1990.’’ EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub. L. 99–514, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by section 423(b) of Pub. L. 98–369 appli- cable to taxable years beginning after Dec. 31, 1984, see section 423(d) of Pub. L. 98–369, set out as a note under section 2 of this title. Amendment by section 474(r)(9) of Pub. L. 98–369 ap- plicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from such years, see section 475(a) of Pub. L. 98–369, set out as a note under section 21 of this title. Pub. L. 98–369, div. A, title IV, § 482(c), July 18, 1984, 98 Stat. 848, provided that: ‘‘The amendments made by this section [amending this section and section 152 of this title] shall apply to taxable years beginning after December 31, 1983.’’ Amendment by section 711(b) of Pub. L. 98–369 effec- tive as if included in the provision of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97–248, to which such amendment relates, see section 715 of Pub. L. 98–369, set out as a note under section 31 of this title. EFFECTIVE DATE OF 1982 AMENDMENT Pub. L. 97–248, title II, § 202(c), Sept. 3, 1982, 96 Stat. 421, provided that: ‘‘(1) SUBSECTION (a).—The amendment made by sub- section (a) [amending this section] shall apply to tax- able years beginning after December 31, 1982. ‘‘(2) SUBSECTION (b).—The amendments made by sub- section (b) [amending this section and section 105 of this title] shall apply to taxable years beginning after December 31, 1983.’’ EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 504(c)(1) of Pub. L. 94–455 ap- plicable to taxable years beginning after Dec. 31, 1975, see section 508 of Pub. L. 94–455, set out as a note under section 3 of this title. EFFECTIVE DATE OF 1965 AMENDMENT Pub. L. 89–97, title I, § 106(e), July 30, 1965, 79 Stat. 337, provided that: ‘‘The amendments made by this section [amending this section and sections 72, 79, 401, and 405 of this title] shall apply to taxable years beginning after December 31, 1966.’’ EFFECTIVE DATE OF 1964 AMENDMENT Pub. L. 88–272, title II, § 211(b), Feb. 26, 1964, 78 Stat. 49, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1963.’’ EFFECTIVE DATE OF 1962 AMENDMENT Pub. L. 87–863, § 1(c), Oct. 23, 1962, 76 Stat. 1141, pro- vided that: ‘‘The amendments made by subsections (a) and (b) [amending this section] shall apply only with respect to taxable years beginning after December 31, 1961.’’ EFFECTIVE DATE OF 1960 AMENDMENT Pub. L. 86–470, § 3(b), May 14, 1960, 74 Stat. 133, pro- vided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to taxable years be- ginning after December 31, 1959.’’ EFFECTIVE DATE OF 1958 AMENDMENT Amendment by section 16 of Pub. L. 85–866 applicable to taxable years beginning after Dec. 31, 1953, and end- ing after Aug. 16, 1954, see section 1(c)(1) of Pub. L. 85–866, set out as a note under section 165 of this title. Pub. L. 85–866, § 17(c), Sept. 2, 1958, 72 Stat. 1614, pro- vided that: ‘‘The amendments made by subsections (a) and (b) [amending this section] shall apply only with respect to taxable years beginning after December 31, 1957.’’ [§ 214. Repealed. Pub. L. 94–455, title V, § 504(b)(1), Oct. 4, 1976, 90 Stat. 1565] Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 70; Apr. 2, 1963, Pub. L. 88–4, § 1, 77 Stat. 4; Feb. 26, 1964, Pub. L. 88–272, title II, § 212(a), 78 Stat. 49; Dec. 10, 1971, Pub. L. 92–178, title II, § 210(a), 85 Stat. 518; Mar. 29, 1975, Pub. L. 94–12, title II, § 206, 89 Stat. 32, provided for allowance of deduction for household and dependent care services necessary for gainful employment; defined ‘‘qualifying individual’’, ‘‘employment-related expenses’’, ‘‘main- taining a household’’; limitation on deductible amount; income limitation; and special rules and regulations applicable in the determination and allowance of de- duction. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to taxable years beginning after Dec. 31, 1975, see section 508 of Pub. L. 94–455, set out as an Effective Date of 1976 Amendment note under sec- tion 3 of this title. [§ 215. Repealed. Pub. L. 115–97, title I, § 11051(a), Dec. 22, 2017, 131 Stat. 2089] Section, act Aug. 16, 1954, ch. 736, 68A Stat. 71; Pub. L. 98–369, div. A, title IV, § 422(b), July 18, 1984, 98 Stat. 797, related to a deduction for alimony or separate maintenance payments paid during an individual’s tax- able year. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to any divorce or separation instru- ment (as defined in former section 71(b)(2) of this title as in effect before Dec. 22, 2017) executed after Dec. 31, 2018, and to such instruments executed on or before Dec. 31, 2018, and modified after Dec. 31, 2018, if the modification expressly provides that the amendment made by section 11051 of Pub. L. 115–97 applies to such modification, see section 11051(c) of Pub. L. 115–97, set out as an Effective Date of 2017 Amendment note under section 61 of this title. § 216. Deduction of taxes, interest, and business depreciation by cooperative housing cor- poration tenant-stockholder (a) Allowance of deduction In the case of a tenant-stockholder (as defined in subsection (b)(2)), there shall be allowed as a deduction amounts (not otherwise deductible) paid or accrued to a cooperative housing cor- poration within the taxable year, but only to the extent that such amounts represent the ten- ant-stockholder’s proportionate share of— Page 942 TITLE 26—INTERNAL REVENUE CODE § 216 (1) the real estate taxes allowable as a de- duction to the corporation under section 164 which are paid or incurred by the corporation on the houses or apartment building and on the land on which such houses (or building) are situated, or (2) the interest allowable as a deduction to the corporation under section 163 which is paid or incurred by the corporation on its indebted- ness contracted— (A) in the acquisition, construction, alter- ation, rehabilitation, or maintenance of the houses or apartment building, or (B) in the acquisition of the land on which the houses (or apartment building) are situ- ated. (b) Definitions For purposes of this section— (1) Cooperative housing corporation The term ‘‘cooperative housing corporation’’ means a corporation— (A) having one and only one class of stock outstanding, (B) each of the stockholders of which is en- titled, solely by reason of his ownership of stock in the corporation, to occupy for dwelling purposes a house, or an apartment in a building, owned or leased by such cor- poration, (C) no stockholder of which is entitled (ei- ther conditionally or unconditionally) to re- ceive any distribution not out of earnings and profits of the corporation except on a complete or partial liquidation of the cor- poration, and (D) meeting 1 or more of the following re- quirements for the taxable year in which the taxes and interest described in subsection (a) are paid or incurred: (i) 80 percent or more of the corpora- tion’s gross income for such taxable year is derived from tenant-stockholders. (ii) At all times during such taxable year, 80 percent or more of the total square footage of the corporation’s prop- erty is used or available for use by the ten- ant-stockholders for residential purposes or purposes ancillary to such residential use. (iii) 90 percent or more of the expendi- tures of the corporation paid or incurred during such taxable year are paid or in- curred for the acquisition, construction, management, maintenance, or care of the corporation’s property for the benefit of the tenant-stockholders. (2) Tenant-stockholder The term ‘‘tenant-stockholder’’ means a per- son who is a stockholder in a cooperative housing corporation, and whose stock is fully paid-up in an amount not less than an amount shown to the satisfaction of the Secretary as bearing a reasonable relationship to the por- tion of the value of the corporation’s equity in the houses or apartment building and the land on which situated which is attributable to the house or apartment which such person is enti- tled to occupy. (3) Tenant-stockholder’s proportionate share (A) In general Except as provided in subparagraph (B), the term ‘‘tenant-stockholder’s propor- tionate share’’ means that proportion which the stock of the cooperative housing cor- poration owned by the tenant-stockholder is of the total outstanding stock of the cor- poration (including any stock held by the corporation). (B) Special rule where allocation of taxes or interest reflect cost to corporation of stockholder’s unit (i) In general If, for any taxable year— (I) each dwelling unit owned or leased by a cooperative housing corporation is separately allocated a share of such cor- poration’s real estate taxes described in subsection (a)(1) or a share of such cor- poration’s interest described in sub- section (a)(2), and (II) such allocations reasonably reflect the cost to such corporation of such taxes, or of such interest, attributable to the tenant-stockholder’s dwelling unit (and such unit’s share of the common areas), then the term ‘‘tenant-stockholder’s pro- portionate share’’ means the shares deter- mined in accordance with the allocations described in subclause (II). (ii) Election by corporation required Clause (i) shall apply with respect to any cooperative housing corporation only if such corporation elects its application. Such an election, once made, may be re- voked only with the consent of the Sec- retary. (4) Stock owned by governmental units For purposes of this subsection, in deter- mining whether a corporation is a cooperative housing corporation, stock owned and apart- ments leased by the United States or any of its possessions, a State or any political sub- division thereof, or any agency or instrumen- tality of the foregoing empowered to acquire shares in a cooperative housing corporation for the purpose of providing housing facilities, shall not be taken into account. (5) Prior approval of occupancy For purposes of this section, in the following cases there shall not be taken into account the fact that (by agreement with the cooperative housing corporation) the person or his nomi- nee may not occupy the house or apartment without the prior approval of such corpora- tion: (A) In any case where a person acquires stock of a cooperative housing corporation by operation of law. (B) In any case where a person other than an individual acquires stock of a cooperative housing corporation. (C) In any case where the original seller acquires any stock of the cooperative hous- ing corporation from the corporation not Page 943 TITLE 26—INTERNAL REVENUE CODE § 216 later than 1 year after the date on which the apartments or houses (or leaseholds therein) are transferred by the original seller to the corporation. (6) Original seller defined For purposes of paragraph (5), the term ‘‘original seller’’ means the person from whom the corporation has acquired the apartments or houses (or leaseholds therein). (c) Treatment as property subject to deprecia- tion (1) In general So much of the stock of a tenant-stock- holder in a cooperative housing corporation as is allocable, under regulations prescribed by the Secretary, to a proprietary lease or right of tenancy in property subject to the allow- ance for depreciation under section 167(a) shall, to the extent such proprietary lease or right of tenancy is used by such tenant-stock- holder in a trade or business or for the produc- tion of income, be treated as property subject to the allowance for depreciation under sec- tion 167(a). The preceding sentence shall not be construed to limit or deny a deduction for depreciation under section 167(a) by a coopera- tive housing corporation with respect to prop- erty owned by such a corporation and leased to tenant-stockholders. (2) Deduction limited to adjusted basis in stock (A) In general The amount of any deduction for deprecia- tion allowable under section 167(a) to a ten- ant-stockholder with respect to any stock for any taxable year by reason of paragraph (1) shall not exceed the adjusted basis of such stock as of the close of the taxable year of the tenant-stockholder in which such de- duction was incurred. (B) Carryforward of disallowed amount The amount of any deduction which is not allowed by reason of subparagraph (A) shall, subject to the provisions of subparagraph (A), be treated as a deduction allowable under section 167(a) in the succeeding tax- able year. (d) Disallowance of deduction for certain pay- ments to the corporation No deduction shall be allowed to a stockholder in a cooperative housing corporation for any amount paid or accrued to such corporation dur- ing any taxable year (in excess of the stock- holder’s proportionate share of the items de- scribed in subsections (a)(1) and (a)(2)) to the ex- tent that, under regulations prescribed by the Secretary, such amount is properly allocable to amounts paid or incurred at any time by the corporation which are chargeable to the cor- poration’s capital account. The stockholder’s adjusted basis in the stock in the corporation shall be increased by the amount of such dis- allowance. (e) Distributions by cooperative housing cor- porations Except as provided in regulations no gain or loss shall be recognized on the distribution by a cooperative housing corporation of a dwelling unit to a stockholder in such corporation if such distribution is in exchange for the stockholder’s stock in such corporation and such dwelling unit is used as his principal residence (within the meaning of section 121). (Aug. 16, 1954, ch. 736, 68A Stat. 71; Pub. L. 87–834, § 28(a), Oct. 16, 1962, 76 Stat. 1068; Pub. L. 91–172, title IX, § 913(a), Dec. 30, 1969, 83 Stat. 723; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), title XXI, § 2101(b), (f)(1), Oct. 4, 1976, 90 Stat. 1834, 1899; Pub. L. 95–600, title V, § 531(a), Nov. 6, 1978, 92 Stat. 2886; Pub. L. 96–222, title I, § 105(a)(6), Apr. 1, 1980, 94 Stat. 219; Pub. L. 99–514, title VI, § 644(a)–(d), Oct. 22, 1986, 100 Stat. 2285, 2286; Pub. L. 100–647, title VI, § 6282(a), Nov. 10, 1988, 102 Stat. 3755; Pub. L. 101–508, title XI, § 11702(i), Nov. 5, 1990, 104 Stat. 1388–516; Pub. L. 105–34, title III, § 312(d)(4), Aug. 5, 1997, 111 Stat. 840; Pub. L. 110–142, § 4(a), Dec. 20, 2007, 121 Stat. 1804.) Editorial Notes AMENDMENTS 2007—Subsec. (b)(1)(D). Pub. L. 110–142 amended sub- par. (D) generally. Prior to amendment, subpar. (D) read as follows: ‘‘80 percent or more of the gross income of which for the taxable year in which the taxes and in- terest described in subsection (a) are paid or incurred is derived from tenant-stockholders.’’ 1997—Subsec. (e). Pub. L. 105–34 substituted ‘‘such dwelling unit is used as his principal residence (within the meaning of section 121)’’ for ‘‘such exchange quali- fies for nonrecognition of gain under section 1034(f)’’. 1990—Subsec. (e). Pub. L. 101–508 substituted ‘‘cor- porations’’ for ‘‘associations’’ in heading and ‘‘corpora- tion’’ for ‘‘association’’ after ‘‘housing’’ in text. 1988—Subsec. (e). Pub. L. 100–647 added subsec. (e). 1986—Subsec. (b)(2). Pub. L. 99–514, § 644(a)(1), sub- stituted ‘‘a person’’ and ‘‘such person’’ for ‘‘an indi- vidual’’ and ‘‘such individual’’, respectively. Subsec. (b)(3). Pub. L. 99–514, § 644(d), added heading and amended text generally. Prior to amendment, text read as follows: ‘‘The term ‘tenant-stockholder’s pro- portionate share’ means that proportion which the stock of the cooperative housing corporation owned by the tenant-stockholder is of the total outstanding stock of the corporation (including any stock held by the corporation).’’ Subsec. (b)(5). Pub. L. 99–514, § 644(a)(2), substituted ‘‘Prior approval of occupancy’’ for ‘‘Stock acquired through foreclosure by lending institution’’ in heading and amended text generally. Prior to amendment, text read as follows: ‘‘If a bank or other lending institution acquires by foreclosure (or by instrument in lieu of foreclosure) the stock of a tenant-stockholder, and a lease or the right to occupy an apartment or house to which such stock is appurtenant, such bank or other lending institution shall be treated as a tenant-stock- holder for a period not to exceed three years from the date of acquisition. The preceding sentence shall apply even though, by agreement with the cooperative hous- ing corporation, the bank (or other lending institution) or its nominee may not occupy the house or apartment without the prior approval of such corporation.’’ Subsec. (b)(6). Pub. L. 99–514, § 644(a)(2), amended par. (6) generally, substituting provisions defining ‘‘original seller’’ for purposes of par. (5) for provisions relating to stock owned by person from whom corporation ac- quired its property, subpar. (A) thereof providing for general rule, subpar. (B) providing that stock acquisi- tion must take place not later than 1 year after trans- fer of dwelling units, subpar. (C) providing that original seller must have right to occupy apartment or house, and subpar. (D) defining ‘‘original seller’’ for purposes of former par. (6). Page 944 TITLE 26—INTERNAL REVENUE CODE § 216 Subsec. (c). Pub. L. 99–514, § 644(b), amended subsec. (c) generally. Prior to amendment, subsec. (c) read as follows: ‘‘So much of the stock of a tenant-stockholder in a cooperative housing corporation as is allocable, under regulations prescribed by the Secretary, to a pro- prietary lease or right of tenancy in property subject to the allowance for depreciation under section 167(a) shall, to the extent such proprietary lease or right of tenancy is used by such tenant-stockholder in a trade or business or for the production of income, be treated as property subject to the allowance for depreciation under section 167(a). The preceding sentence shall not be construed to limit or deny a deduction for deprecia- tion under 167(a) by a cooperative housing corporation with respect to property owned by such a corporation and leased to tenant-stockholders.’’ Subsec. (d). Pub. L. 99–514, § 644(c), added subsec. (d). 1980—Subsec. (b)(6)(A). Pub. L. 96–222, § 105(a)(6)(A), added subpar. (A). Former subpar. (A), which required the original seller who acquired stock of the corpora- tion from the corporation by purchase or foreclosure to be treated as a tenant-stockholder for a period not to exceed 3 years from the date of acquisition, was struck out. Subsec. (b)(6)(B) to (D). Pub. L. 96–222, § 105(a)(6)(A), (B), added subpar. (B), redesignated former subpars. (B) and (C) as (C) and (D), and, in subpar. (D) as so redesig- nated, inserted provisions requiring that the estate of the original seller succeed to, and take into account, the tax treatment of the original seller under this para- graph. 1978—Subsec. (b)(6). Pub. L. 95–600, added par. (6). 1976—Subsec. (b)(2). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Subsec. (b)(5). Pub. L. 94–455, § 2101(f), added par. (5). Subsec. (c). Pub. L. 94–455, §§ 1906(b)(13)(A), 2101(b), struck out ‘‘or his delegate’’ after ‘‘Secretary’’ and in- serted at end ‘‘The preceding sentence shall not be con- strued to limit or deny a deduction for depreciation under 167(a) by a cooperative housing corporation with respect to property owned by such corporation and leased to tenant-stockholders.’’ 1969—Subsec. (b)(4). Pub. L. 91–172 added par. (4). 1962—Pub. L. 87–834 substituted ‘‘Deduction of taxes, interest, and business depreciation by cooperative housing corporation tenant-stockholders’’ for ‘‘Amounts representing taxes and interest paid to coop- erative housing corporation’’ in section catchline, and added subsec. (c). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2007 AMENDMENT Pub. L. 110–142, § 4(b), Dec. 20, 2007, 121 Stat. 1804, pro- vided that: ‘‘The amendment made by this section [amending this section] shall apply to taxable years ending after the date of the enactment of this Act [Dec. 20, 2007].’’ EFFECTIVE DATE OF 1997 AMENDMENT Amendment by Pub. L. 105–34 applicable to sales and exchanges after May 6, 1997, with certain exceptions, see section 312(d)[(e)] of Pub. L. 105–34, set out as a note under section 121 of this title. EFFECTIVE DATE OF 1990 AMENDMENT Amendment by Pub. L. 101–508 effective as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 11702(j) of Pub. L. 101–508, set out as a note under section 59 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Pub. L. 100–647, title VI, § 6282(b), Nov. 10, 1988, 102 Stat. 3755, provided that: ‘‘The amendment made by this section [amending this section] shall take effect as if included in the amendments made by section 631 of the Tax Reform Act of 1986 [section 631 of Pub. L. 99–514, see Tables for classification].’’ EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–514, title VI, § 644(f), Oct. 22, 1986, 100 Stat. 2289, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section] shall apply to taxable years beginning after December 31, 1986. ‘‘(2) SUBSECTION (e).— ‘‘(A) Except as provided in subparagraph (B), sub- section (e) [set out below] shall apply to taxable years beginning before January 1, 1986. ‘‘(B) Subsection (e)(7) [set out below] shall apply to amounts paid or incurred, and property acquired, in taxable years beginning, after December 31, 1985.’’ EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–222 effective, except as oth- erwise provided, as if it had been included in the provi- sions of the Revenue Act of 1978, Pub. L. 95–600, to which such amendment relates, see section 201 of Pub. L. 96–222, set out as a note under section 32 of this title. EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95–600, title V, § 531(b), Nov. 6, 1978, 92 Stat. 2887, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to stock ac- quired after the date of the enactment of this Act [Nov. 6, 1978].’’ EFFECTIVE DATE OF 1976 AMENDMENT Pub. L. 94–455, title XXI, § 2101(f)(2), Oct. 4, 1976, 90 Stat. 1900, provided that: ‘‘The amendment made by paragraph (1) [amending this section] shall apply to stock acquired by banks or other lending institutions after the date of the enactment of this Act [Oct. 4, 1976].’’ EFFECTIVE DATE OF 1969 AMENDMENT Pub. L. 91–172, title IX, § 913(b), Dec. 30, 1969, 83 Stat. 723, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply to tax- able years beginning after December 31, 1969.’’ EFFECTIVE DATE OF 1962 AMENDMENT Pub. L. 87–834, § 28(c), Oct. 16, 1962, 76 Stat. 1068, pro- vided that: ‘‘The amendments made by subsection (a) [amending this section] shall be effective with respect to taxable years beginning after December 31, 1961.’’ TREATMENT OF AMOUNTS RECEIVED IN CONNECTION WITH REFINANCING OF INDEBTEDNESS OF CERTAIN CO- OPERATIVE HOUSING CORPORATIONS; TREATMENT OF AMOUNTS PAID FROM QUALIFIED REFINANCING-RE- LATED RESERVE Pub. L. 99–514, title VI, § 644(e), Oct. 22, 1986, 100 Stat. 2287, provided that: ‘‘(1) PAYMENT OF CLOSING COSTS AND CREATION OF RE- SERVE EXCLUDED FROM GROSS INCOME.—For purposes of the Internal Revenue Code of 1954 [now 1986], no amount shall be included in the gross income of a qualified cooperative housing corporation by reason of the payment or reimbursement by a city housing devel- opment agency or corporation of amounts for— ‘‘(A) closing costs, or ‘‘(B) the creation of reserves for the qualified coop- erative housing corporation, in connection with a qualified refinancing. ‘‘(2) INCOME FROM RESERVE FUND TREATED AS MEMBER INCOME.— ‘‘(A) IN GENERAL.—Income from a qualified refi- nancing-related reserve shall be treated as derived from its members for purposes of— ‘‘(i) section 216 of the Internal Revenue Code of 1954 [now 1986] (relating to deduction of taxes, in- terest, and business depreciation by cooperative housing corporation tenant-stockholder), and ‘‘(ii) section 277 of such Code (relating to deduc- tions incurred by certain membership organizations in transactions with members). Page 945 TITLE 26—INTERNAL REVENUE CODE § 217 ‘‘(B) NO INFERENCE.—Nothing in the provisions of this paragraph shall be construed to infer that a change in law is intended with respect to the treat- ment of deductions under section 277 of the Internal Revenue Code of 1954 [now 1986] with respect to coop- erative housing corporations, and any determination of such issue shall be made as if such provisions had not been enacted. ‘‘(3) TREATMENT OF CERTAIN INTEREST CLAIMED AS DE- DUCTION.—Any amount— ‘‘(A) claimed (on a return of tax imposed by chapter 1 of the Internal Revenue Code of 1954 [now 1986]) as a deduction by a qualified cooperative housing cor- poration for interest for any taxable year beginning before January 1, 1986, on a second mortgage loan made by a city housing development agency or cor- poration in connection with a qualified refinancing, and ‘‘(B) reported (before April 16, 1986) by the qualified cooperative housing corporation to its tenant-stock- holders as interest described in section 216(a)(2) of such Code, shall be treated for purposes of such Code as if such amount were paid by such qualified cooperative hous- ing corporation during such taxable year. ‘‘(4) QUALIFIED COOPERATIVE HOUSING CORPORATION.— ‘‘(A) IN GENERAL.—For purposes of this subsection, the term ‘qualified cooperative housing corporation’ means any corporation if— ‘‘(i) such corporation is, after the application of paragraphs (1) and (2), a cooperative housing cor- poration (as defined in section 216(b) of the Internal Revenue Code of 1954 [now 1986]), ‘‘(ii) such corporation is subject to a qualified limited-profit housing companies law, and ‘‘(iii) such corporation either— ‘‘(I) filed for incorporation on July 22, 1965, or ‘‘(II) filed for incorporation on March 5, 1964. ‘‘(B) QUALIFIED LIMITED-PROFIT HOUSING COMPANIES LAW.—For purposes of subparagraph (A), the term ‘qualified limited-profit housing companies law’ means any limited-profit housing companies law which limits the resale price for a tenant-stock- holder’s stock in a cooperative housing corporation to the sum of his basis for such stock plus his propor- tionate share of part or all of the amortization of any mortgage on the building owned by such corporation. ‘‘(5) QUALIFIED REFINANCING.—For purposes of this subsection, the term ‘qualified refinancing’ means any refinancing— ‘‘(A) which occurred— ‘‘(i) with respect to a qualified cooperative hous- ing corporation described in paragraph (4)(A)(iii)(I) on September 20, 1978, or ‘‘(ii) with respect to a qualified cooperative hous- ing corporation described in paragraph (4)(A)(iii)(II) on November 21, 1978, and ‘‘(B) in which a qualified cooperative housing cor- poration refinanced a first mortgage loan made to such corporation by a city housing development agency with a first mortgage loan made by a city housing development corporation and insured by an agency of the Federal Government and a second mortgage loan made by such city housing develop- ment agency, in the process of which a reserve was created (as required by such Federal agency) and closing costs were paid or reimbursed by such city housing development agency or corporation. ‘‘(6) QUALIFIED REFINANCING-RELATED RESERVE.—For purposes of this subsection, the term ‘qualified refi- nancing-related reserve’ means any reserve of a quali- fied cooperative housing corporation with respect to the creation of which no amount was included in the gross income of such corporation by reason of para- graph (a). ‘‘(7) TREATMENT OF AMOUNTS PAID FROM QUALIFIED RE- FINANCING-RELATED RESERVE.— ‘‘(A) IN GENERAL.—With respect to any payment from a qualified refinancing-related reserve out of amounts excluded from gross income by reason of paragraph (1)— ‘‘(i) no deduction shall be allowed under chapter 1 of such Code, and ‘‘(ii) the basis of any property acquired with such payment (determined without regard to this sub- paragraph) shall be reduced by the amount of such payment. ‘‘(B) ORDERING RULES.—For purposes of subpara- graph (A), payments from a reserve shall be treated as being made— ‘‘(i) first from amounts excluded from gross in- come by reason of paragraph (1) to the extent there- of, and ‘‘(ii) then from other amounts in the reserve.’’ § 217. Moving expenses (a) Deduction allowed There shall be allowed as a deduction moving expenses paid or incurred during the taxable year in connection with the commencement of work by the taxpayer as an employee or as a self-employed individual at a new principal place of work. (b) Definition of moving expenses (1) In general For purposes of this section, the term ‘‘mov- ing expenses’’ means only the reasonable ex- penses— (A) of moving household goods and per- sonal effects from the former residence to the new residence, and (B) of traveling (including lodging) from the former residence to the new place of res- idence. Such term shall not include any expenses for meals. (2) Individuals other than taxpayer In the case of any individual other than the taxpayer, expenses referred to in paragraph (1) shall be taken into account only if such indi- vidual has both the former residence and the new residence as his principal place of abode and is a member of the taxpayer’s household. (c) Conditions for allowance No deduction shall be allowed under this sec- tion unless— (1) the taxpayer’s new principal place of work— (A) is at least 50 miles farther from his former residence than was his former prin- cipal place of work, or (B) if he had no former principal place of work, is at least 50 miles from his former residence, and (2) either— (A) during the 12-month period imme- diately following his arrival in the general location of his new principal place of work, the taxpayer is a full-time employee, in such general location, during at least 39 weeks, or (B) during the 24-month period imme- diately following his arrival in the general location of his new principal place of work, the taxpayer is a full-time employee or per- forms services as a self-employed individual on a full-time basis, in such general loca- tion, during at least 78 weeks, of which not less than 39 weeks are during the 12-month period referred to in subparagraph (A). For purposes of paragraph (1), the distance be- tween two points shall be the shortest of the