Second Circuit weighed in on an oldie-but-goodie, Alphonso v. Com’r., 137 T.C. 247, reversing Judge Chiechi in Alphonso v. Com’r, Docket No. 11-2364-ag, dated 2/6/13. For background, see my blogpost “A New York Cooperative Conundrum”, 3/18/11.
Thanks and praise to Eric Levine and that generous purveyor of pizza and pasta to hungry attorneys and accountants at the joint ABA-NYSBA Committee on Taxation of Cooperatives and Condominiums, Charlie Baller, for winning this one.
Essentially, New York’s crazy-quilt of rights embodied in cooperative apartment corporations’s certificates of incorporation, by-laws, shares, proprietary leases and house rules, which concatenation our State’s highest court has called sui generis, and as a result of our State’s lower courts wrestling with same, equals a property right sufficient to pass the Section 165(c)(3) test for casualty loss deductibility.
While of great interest to New York practitioners, the case is of limited use elsewhere, as State law dictates property rights.
And as for the victorious Ms Alphonso and her 200 fellow tenant-shareholders, IRS may have lost the battle, but there remains the war over whether the property damage was indeed a casualty loss; and that Second Circuit expressly said they did not decide.