AHC attorney David Cook will present at the National Telecommunications Cooperative Association’s Finance and Accounting Conference concerning two important topics for telecommunications and telephone cooperatives. He will discuss “Strategies for Managing Capital Credits” and “Handling Large Gains and Losses.” Here …
Capital Credits
IRS Approves Patrons’ “Written Consent” by Website
In a prior Cooperative Tax Post, we discussed the Service’s trend of permitting cooperatives to satisfy notification requirements of Subchapter T by modern transmission methods. In this recent private letter ruling, the Service permitted a cooperative to obtain patrons’ …
Patronage QWNAs as Debt or Equity?
Cooperative tax professionals occasionally consider whether patronage dividends, such as QWNAs, are considered equity or debt. The issue was central to a recent decision by the Service’s Chief Counsel Advisory. These promulgations are important because they are issued by the …
Capital Credits Add Up to Big Money for Electric Co-op Consumers
The following article is reprinted with permission from CFC Solutions Newsletter (17 January 2017, Vol.19, No.2)
Capital credits retired by not-for-profit electric distribution cooperatives in 2015 topped $1 billion for the first time, according to recently published data from NRECA, …
IRS Addresses Cooperatives’ Allocation Methods
To view this Cooperative Tax Brief in PDF, click here.
Allocation and distribution of earnings is a fundamental tenant of cooperative operation. It is not only important to comply with bylaws and other contractual agreements with patrons, it is …
Arkansas water co-op heads to court to settle dispute over capital credits
Since 2009, at least 14 cases have been filed against electric cooperatives over patronage capital (or capital credits) in eight states: Alabama, Arkansas, Georgia, Missouri, New Mexico, North Carolina, South Carolina, and Texas. Now the membership of a water utility …
Real Estate Investment Trusts and Cooperatives’ Patronage Dividends
Real Estate Investment Trusts and Cooperatives’ Patronage Dividends
Some of the more interesting cooperative tax cases involve the interplay of cooperative tax law, such as Subchapter T or Section 501(c)(12), and other tax systems. One such other tax system – …
Cooperative Tax Brief: Alternative Methods of Patronage Notification
To view this Cooperative Tax Brief in the traditional PDF format, click here.
Introduction
What counts as notice of patronage under Subchapter T? Traditionally, notices of allocation have been written – in the sense of paper and snail mail. …
USDA Magazine Article Discusses Management of Capital Credits and Patronage Dividends
USDA Magazine Article Discusses Management of Capital Credits and Patronage Dividends
The USDA publishes a bi-monthly magazine, Rural Cooperatives, which covers various issues encountered by cooperatives of all types. Recently the magazine published an article written by attorney David Cook …
Cooperative Tax Brief: Cooperatives May Offset Bad Debt With Capital Credit Balances
Cooperatives May Offset Bad Debt With Capital Credit Balances
Like for-profit companies, cooperatives encounter bad debt of members and patrons. They can initiate collection efforts to pursue bad debts, but because their members are also their owners, debt collection can …