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 …

Discounted Capital Credits and the Member Income Test: The Creation of a New Equity Account

Cooperatives have been given conflicting guidance from the IRS concerning the proper treatment of discounting of capital credits.  Specifically, some pronouncements indicate that the discount (i.e., the difference between face value and present value) should be treated as non-member income …

Cooperative Litigation Update: N.C. Court Rules on Coop’s Discounting Program

In another lawsuit concerning cooperatives’ capital credit practices, a North Carolina trial court ruled in favor of a cooperative that we previously wrote about in another blog post.

The court ruled, based on the facts at issue, that the …

The Role of the Cooperative Accountant

AHC attorney David R. Cook recently spoke to a group of cooperative accountants about the role of accountants in cooperatives’ board meetings.  The presentation focused on the duties of directors, officers, and in-house accountants to the cooperative and to each …

IRS Confirms the Propriety of Discounting Capital Credits

The latest AHC Cooperative Taxation Brief discusses the Internal Revenue Service’s recent private letter ruling that confirms its long-held stance on discounting capital credits.  The ruling makes a number of key points that deserve revisiting.  This is especially true in …

Class Action Continues Before State Public Service Commission

Another class action proceeding has been filed against Carroll Electric Service Corporation, this time before the Arkansas Public Service Commission.  In a previous post, we discussed the Arkansas Superior Court’s dismissal of a civil action filed against Carroll.  This …

New Capital Credits Lawsuit Targets Practice of Discounting Estates’ Capital Credits

A new class action lawsuit was filed on behalf of deceased members of South River Electric Membership Corporation, based in Dunn, N.C.  The complaint centers around the electric cooperative’s practice of discounting the capital credits of estates to present value, …