Before implementing any corporate structure or entering into any business transaction, the parties must consider the related tax implications, regardless of whether the parties are taxable or tax exempt. Cooperatives, in particular, must always be mindful of the cooperative principles developed by federal tax law and with the pronouncements issued by the Internal Revenue Service. Both taxable and exempt cooperatives are eligible to receive substantial tax benefits, including tax exemption, but only if they follow guidelines established by federal tax law. Accordingly, cooperatives need specialized tax advice directed toward their distinctive cooperative characteristics.
We are uniquely situated to advise cooperatives on the tax implications of their business transactions and organizational matters. We have advised taxable and tax-exempt cooperatives on a wide variety of tax issues concerning cooperative principles in general, on the requirements of Subchapter T, and on the particular requirements for exemption under Section 501(c)(12). Our attorneys have provided cooperative tax planning advice on such issues and matters as power purchase agreements, organizational rules, diversification, subsidiaries, international business implications, compliance with IRS reporting requirements, application of state tax rules to cooperatives, and the cooperative principles of subordination of capital, democratic control, and operation at cost and patronage allocation. We have also assisted clients in obtaining private letter rulings from the IRU.