Ezel / Tax Rulings / NY
NY TSB-A-94(2)C Corporation Tax 1994-01-19

How does a cooperative housing corporation determine the fair market value of its real property for the Article 9-A capital base when only the assessed valuation is known?

Short answer: By fair market value -- which is a factual determination, not simply the assessed value. For the Article 9-A capital base, a cooperative housing corporation (IRC section 216) is taxed under section 210.1(b), and under section 210.2 its real property is valued at fair market value. Fair market value (20 NYCRR 3-4.5) is the willing-seller/willing-buyer price, and no single rule values every parcel. So even where only the assessed valuation for real property tax purposes is known, the fair market value is a factual matter that cannot be fixed in an advisory opinion. The taxpayer should look at the appropriate indicators related to the property to determine its fair market value.
Currency note: this ruling is from 1994
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion (TSB-A), issued by the Office of Counsel at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. Taxpayer-identifying details are redacted. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

Thomas S. Yang, CPA asked how a cooperative housing corporation (IRC section 216) determines the fair market value of its real property for the Article 9-A capital base when only the assessed valuation (for real property tax purposes) is known.

Use fair market value -- and that is a factual determination, not automatically the assessed value. Section 210.1(b) taxes a cooperative housing corporation's capital base at four-tenths of a mill per dollar allocated to New York, and section 210.2 values real property in that base at fair market value. Fair market value (20 NYCRR 3-4.5) is the price a willing seller and willing buyer, neither compelled, would agree to; no one rule fits every parcel, because each is unique.

So even when the only figure in hand is the assessed valuation, the fair market value is a factual matter that cannot be decided in an advisory opinion. The taxpayer should look at the appropriate indicators relating to the property to determine fair market value. (This is the companion to TSB-A-94(3)C on the same valuation question.)

What this means for you

Assessed value is not automatically fair market value

The capital base uses fair market value. An assessed valuation may be one indicator, but it does not by itself fix the fair market value.

Fair market value is fact-specific

Each parcel is valued on its own circumstances under the willing-buyer/willing-seller standard; there is no single conversion rule.

Valuation is the taxpayer's factual determination

The Department will not set the value in an advisory opinion. Use appropriate indicators of the property's worth (and expect any dispute to be resolved factually on audit).

Common questions

Q: I only have the assessed value of my co-op's real property. Can I just use that for the capital base?
A: Not automatically. The base uses fair market value, which is a factual determination; assessed value may be an indicator but is not necessarily the answer.

Q: How do I find fair market value?
A: By the willing-buyer/willing-seller standard, looking at the appropriate indicators for that specific property.

Q: Will the Department give me a value?
A: No. Fair market value is a factual matter outside the scope of an advisory opinion.

Citations and references

Statutes, regulations, and authorities:
- Tax Law section 210.1(b) (capital-base rate for a cooperative housing corporation as defined in IRC section 216)
- Tax Law section 210.2 (business and investment capital; real property valued at fair market value)
- 20 NYCRR 3-4.5 (fair market value -- willing seller, willing buyer)
- IRC section 216 (cooperative housing corporation)

Source

Original ruling text

New York State Department of Taxation and Finance
TSB-A-94 (2) C
Corporation Tax
January 19, 1994

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. C920630E

On June 30, 1992, a Petition for Advisory Opinion was received from Thomas S. Yang, CPA,
Hampshire Center, Route 311, Patterson, New York 12563.
The issue raised by Petitioner, Thomas S. Yang, CPA is, with respect to a cooperative
housing corporation under Article 9-A of the Tax Law, how one determines the fair market value
of assets for purposes of computing the taxable capital base where only the assessed valuation of the
cooperative for real property tax purposes is known.
Section 210.1(b) of Article 9-A of the Tax Law provides that, for purposes of computing the
capital base, in the case of a cooperative housing corporation as defined in section 216 of the Internal
Revenue Code, the applicable rate is four-tenths of a mill for each dollar of the taxpayer's total
business and investment capital or portion thereof allocated to New York.
Section 210.2 of the Tax Law provides that business and investment capital is determined
by taking the average value of assets included therein (less certain liabilities) and for such purposes,
real property is valued at fair market value.
Fair market value is defined in section 3-4.5 of the Business Corporation Franchise Tax
Regulations as the price at which a willing seller, not compelled to sell, will sell and a willing
purchaser, not compelled to buy, will buy. No one rule can be used to determine the fair market
value of all real property. Each parcel is unique and the valuation must be fixed in accordance with
the particular requirements and circumstances of a particular situation. (See Technical Services
Memorandum TSB-M-85(18.1)C issued December 2, 1993, revoking Technical Services
Memorandum TSB-M-85(18)C issued November 1, 1985.)
Accordingly, the determination of the fair market value of real property is a factual matter
not susceptible of determination in an Advisory Opinion. An Advisory Opinion merely sets forth
the applicability of pertinent statutory and regulatory provisions to a "specified set of facts." Tax
Law, § 171.Twenty-fourth; 20 NYCRR 2376.1(a).
Herein, for purposes of determining the fair market value of real property of a cooperative
housing corporation when computing the taxable capital base, the taxpayer should look at the
appropriate indicators related to the real property to determine the fair market value of such property.

DATED: January 19, 1994

TP-9(9/88)

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.