To view this AHC Cooperative Tax Brief as a PDF, click here. The IRS has rejected an organization’s application for exemption under Section 501(c)(12), even… Read More »Cooperative Tax Brief: Federated Telecommunications Cooperative Denied Exemption
Developers are constantly looking for ways to find capital for their energy development projects. They have solicited all sorts of capital, including banks, angel investors, private equity investors, private development bonds, and other sources. One other potential source of capital for certain types of projects is a Real Estate Investment Trust (REIT). A recent IRS private ruling discusses the limitations and potential viability of REITs for funding energy development projects. Read More »IRS Ruling Address Power Generation by REITs
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 be a complicated endeavor. With regard to former members, a recent IRS private ruling discussed an alternative option for recovering outstanding balances.
Cooperative’s Consolidation and Liquidation of Subsidiaries
Like for-profit corporations owned by investors and shareholders, cooperatives provide services through subsidiaries. Whereas for-profit corporations own and operate subsidiaries to generate greater income for shareholders, cooperatives typically own and operate subsidiaries to provide diverse services to patrons and non-patrons. Like corporations, however, cooperatives occasionally find advantages in liquidating and consolidating subsidiaries when their need for such subsidiaries expires. Read More »Ruling Addresses Cooperative’s Consolidation and Liquidation of Subsidiaries
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
A prior blog post discussed a private ruling by the service regarding the allocation of purchase price among the assets of a renewable energy developer. Attorney David R. Cook discussed the ruling in a webinar on PPA taxation and recommended the participants to read the ruling with a dose of skepticism. As it turns out, on reconsideration, the Service has revoked the prior ruling because it “is not in accord with the current views of the Service.” Read More »IRS Revokes Potentially Beneficial Ruling for Renewable Energy Developers
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 attorneys have been closely following lawsuits against cooperatives’ capital credit management. We recently developed an updated summary of the cases. Take a moment to review the summary by clicking here.Read More »Updated Capital Credits Litigation Summary
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 cooperative had no fiduciary duty to the plaintiffs, which were a group of deceased members’ estates. In addition, it declared that the cooperative had authority to adopt a procedure for retiring deceased members’ capital credits on an accelerated and discounted basis. However, it expressly did not rule on whether the cooperative, in practice, properly discounted the capital credits. In other words, the court reserved judgment on the specific manner of discounting the particular capital credits at issue in this case. Read More »Cooperative Litigation Update: N.C. Court Rules on Coop’s Discounting Program
Earlier this past July, the Texas Court of Appeals ruled on important aspects of the cooperative lawsuit concerning Denton County Electric Cooperative, Inc., d/b/a CoServ Electric (“CoServ”). The court ruled, among other things, that (i) the cooperative was not subject to certain statutory rules governing non-profit corporations, and (ii) the electric cooperative statute did not impose a fiduciary duty on the cooperative itself. Read More »Cooperative Litigation Update: Texas Cooperative Lawsuit Considered on Appeal