Taxation of Cooperatives and Their Patrons (Portfolio 744)
The Portfolio, Taxation of Cooperatives and Their Patrons, analyzes the federal income tax treatment of cooperatives and patrons.
Bloomberg Tax Portfolio, Taxation of Cooperatives and Their Patrons, No. 744, analyzes the federal income tax treatment of cooperatives and patrons. A cooperative is a business format in which patrons of the cooperative join together to transact business collectively. The principle underlying the federal income tax treatment of cooperatives and their patrons is that earnings derived by a cooperative from transacting business with and for its patrons are taxed once at the patron level, rather than twice, at both the cooperative and patron levels. This tax treatment is accomplished by allowing cooperatives to deduct certain distributions and allocations made to their patrons. The rules governing the taxation of cooperatives and their patrons are contained in subchapter T of the Code, §1381 through 1388. Exempt farmers cooperatives and most nonexempt cooperatives are subject to Subchapter T.
Table of Contents
II. Applicability of Subchapter T
IV. Tax Treatment of Cooperatives
V. Tax Treatment of Patrons
VI. Alternative Minimum Tax Treatment
VII. Returns and Compliance
Tax Management Portfolio Authors