As part of the 2017 tax reform bill, Congress passed new Section 199A, which authorizes a deduction for “specified agricultural or horticultural cooperatives.” As discussed in a subsequent post, Congress enacted Section 199A(g) to limit the 199A deduction …
IRS Ruling
New IRS Ruling: The Timing of Patronage Business for Allocations
In a new ruling, the Service considered the period of historical patronage business that should be used to calculate the gain on a liquidation sale.
Coop was a cooperative within the meaning of Subchapter T. It struggled in …
IRS Rules on Telecom Coop Sale of Stock
A recent IRS private letter ruling addresses whether a cooperative’s gain on sale of stock resulted in patronage or non-patronage income. This particular ruling follows many others that focus on the reason for acquiring the asset.
In Year 1, CORP
Cooperative-Subsidiary Consolidation Issues
Many cooperatives provide a range of services to their members. Sometimes these services are provided through subsidiaries. Each cooperative must choose the right mix of services to provide and customers to serve, along with the best corporate structure to provide …
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 …
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 …
Cooperative Exchanges Preferred Stock for QWNAs
Read this Cooperative Tax Brief in PDF format.
As shown in prior posts, the most interesting rulings are those that involve the interplay of cooperative taxation (including Subchapter T) and other tax laws governing traditional corporations. A recent …
REIT’s Receipt of Patronage Dividends is Excluded from REIT Income Tests
In a prior post, we discussed the interaction of Subchapter T (governing cooperatives) and Subchapter M (governing REITs). As explained in the prior post, REITs are Real Estate Investment Trusts that are required to generate a sufficient …
Handling Cooperative Losses
View the PDF version of this Cooperative Tax Brief here.
When it comes to financial losses, many cooperatives are uncertain how to handle them. Because cooperatives attempt to operate at cost, the uncertainty likely arises from the rare occurrence …