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A housing cooperative sought clarification on whether court-awarded compensation for defective works should be taxed at the cooperative level or directly at the member level. The DGT has determined that, as the cooperative is the claimant, the income belongs to the entity and must be taxed under Corporate Income Tax, after which it may be distributed as a cooperative return.
This ruling clarifies the tax treatment of legal settlements for cooperatives, confirming that income derived from litigation initiated by the entity is subject to Corporate Income Tax rather than being treated as direct income for members.
The tax team reviews your specific situation.
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