Cooperative Taxation

AHC Attorney David Cook Addresses NTCA Regarding Cooperative Taxation

by David R. Cook Jr.
July 26, 2013February 15, 2022

AHC attorney David Cook will address the National Telecommunications Cooperative Association concerning recent developments in cooperative taxation. Cooperatives must comply with special tax rules to qualify, or continue to qualify, for tax advantages such as tax exemption or deduction and exemption of patronage earnings. The session will include options for allocation and retirement of capital credits and patronage dividends, along with recent IRS rulings in this area. He also will cover cooperative tax issues arising from consolidated reporting, the formation of subsidiaries, and various corporate transactions, such as liquidations and mergers. Read More »AHC Attorney David Cook Addresses NTCA Regarding Cooperative Taxation

IRS Scrutinizes Section 501(c)(12) Cooperatives

by David R. Cook Jr.
May 24, 2013February 15, 2022

In its 2013 Workplan, the IRS reported a “high level” of incorrect reporting by Section 501(c)(12) cooperatives. These errors primarily related to “miscalculation and misreporting” of member income percentages.

The IRS conducted a compliance check of Section 501(c)(12) cooperatives. The compliance check involved questionnaires and examinations. The IRS concluded that one-fourth of the cooperatives either (i) failed the Member Income Test or (ii) were not being operated on a cooperative or mutual basis. Given the high number of irregularities, cooperatives would be well advised to review these two important requirements. Read More »IRS Scrutinizes Section 501(c)(12) Cooperatives

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

by David R. Cook Jr.
March 30, 2013February 15, 2022

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

AHC Cooperative Tax Brief: Mutual Ditch and Irrigation Company Denied Exemption

by David R. Cook Jr.
December 20, 2012

The Service recently denied exemption to an organization that sought exemption under Section 501(c)(12) as a mutual ditch and irrigation company. The organization failed to… Read More »AHC Cooperative Tax Brief: Mutual Ditch and Irrigation Company Denied Exemption

AHC Cooperative Tax Brief: Proposed Amendment to Section 501(c)(12) for Water Companies

by David R. Cook Jr.
December 1, 2012

On November 29, 2012, Senator Udall of Colorado submitted a bill to amend Section 501(c)(12) as it relates to mutual ditch and irrigation companies. The… Read More »AHC Cooperative Tax Brief: Proposed Amendment to Section 501(c)(12) for Water Companies

IRS Applies Related-Party Restrictions to Coop’s Patronage-Dividend Deductions

by David R. Cook Jr.
September 10, 2012

In a July 2012 Chief Counsel Advisory (CCA), the Service considered whether cooperatives and their patrons are subject to the related-party rules under Section 267.… Read More »IRS Applies Related-Party Restrictions to Coop’s Patronage-Dividend Deductions

CFTC Proposes Exemption for “Cooperatively-Owned Utilities”

by David R. Cook Jr.
August 18, 2012

On Friday, August 17, 2012, the U.S. Commodity Futures Trading Commission (CFTC) approved a proposed order that would exempt certain transactions by electric cooperatives, among other “Exempt Entities,” from many of the requirements of the Commodity Exchange Act.Read More »CFTC Proposes Exemption for “Cooperatively-Owned Utilities”

AHC Cooperative Tax Brief: Telephone Cooperative’s Sale of Subsidiary

by David R. Cook Jr.
August 4, 2012February 15, 2022

In the latest cooperative tax ruling, the Service ruled that a cooperative’s (“Cooperative”) gain on sale of stock in corporations that offered services to Cooperative’s members was patronage-sourced. The ruling was important to Cooperative because it expected to fail the Member Income Test of Section 501(c)(12), subjecting Cooperative to regular corporate income tax. The favorable ruling allowed Cooperative to avoid substantial taxes in the gain.

AHC Cooperative Tax Brief: U.S. Cooperative Fulfills Global Needs

by David R. Cook Jr.
April 9, 2012February 15, 2022

In the latest Cooperative Tax Brief, AHC Attorney David Cook discusses a recent ruling by the Service that an international financing cooperative (“Finco”) with foreign… Read More »AHC Cooperative Tax Brief: U.S. Cooperative Fulfills Global Needs

AHC Attorney David Cook To Present NSAC Webinar on Cooperative Taxation

by David R. Cook Jr.
March 24, 2012February 15, 2022

AHC attorney David Cook will present a webinar for the National Association of Accountants for Cooperatives entitled “An Annual Update on Cooperative Taxation.” The webinar… Read More »AHC Attorney David Cook To Present NSAC Webinar on Cooperative Taxation

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