
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1382]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
              Subchapter T--Cooperatives and Their Patrons
 
                  PART I--TAX TREATMENT OF COOPERATIVES
 
Sec. 1382. Taxable income of cooperatives


(a) Gross income

    Except as provided in subsection (b), the gross income of any 
organization to which this part applies shall be determined without any 
adjustment (as a reduction in gross receipts, an increase in cost of 
goods sold, or otherwise) by reason of any allocation or distribution to 
a patron out of the net earnings of such organization or by reason of 
any amount paid to a patron as a per-unit retain allocation (as defined 
in section 1388(f)).

(b) Patronage dividends and per-unit retain allocations

    In determining the taxable income of an organization to which this 
part applies, there shall not be taken into account amounts paid during 
the payment period for the taxable year--
        (1) as patronage dividends (as defined in section 1388(a)), to 
    the extent paid in money, qualified written notices of allocation 
    (as defined in section 1388(c)), or other property (except 
    nonqualified written notices of allocation (as defined in section 
    1388(d))) with respect to patronage occurring during such taxable 
    year;
        (2) in money or other property (except written notices of 
    allocation) in redemption of a nonqualified written notice of 
    allocation which was paid as a patronage dividend during the payment 
    period for the taxable year during which the patronage occurred;
        (3) as per-unit retain allocations (as defined in section 
    1388(f)), to the extent paid in money, qualified per-unit retain 
    certificates (as defined in section 1388(h)), or other property 
    (except nonqualified per-unit retain certificates, as defined in 
    section 1388(i)) with respect to marketing occurring during such 
    taxable year; or
        (4) in money or other property (except per-unit retain 
    certificates) in redemption of a nonqualified per-unit retain 
    certificate which was paid as a per-unit retain allocation during 
    the payment period for the taxable year during which the marketing 
    occurred.

For purposes of this title, any amount not taken into account under the 
preceding sentence shall, in the case of an amount described in 
paragraph (1) or (2), be treated in the same manner as an item of gross 
income and as a deduction therefrom, and in the case of an amount 
described in paragraph (3) or (4), be treated as a deduction in arriving 
at gross income.

(c) Deduction for nonpatronage distributions, etc.

    In determining the taxable income of an organization described in 
section 1381(a)(1), there shall be allowed as a deduction (in addition 
to other deductions allowable under this chapter)--
        (1) amounts paid during the taxable year as dividends on its 
    capital stock; and
        (2) amounts paid during the payment period for the taxable 
    year--
            (A) in money, qualified written notices of allocation, or 
        other property (except nonqualified written notices of 
        allocation) on a patronage basis to patrons with respect to its 
        earnings during such taxable year which are derived from 
        business done for the United States or any of its agencies or 
        from sources other than patronage, or
            (B) in money or other property (except written notices of 
        allocation) in redemption of a nonqualified written notice of 
        allocation which was paid, during the payment period for the 
        taxable year during which the earnings were derived, on a 
        patronage basis to a patron with respect to earnings derived 
        from business or sources described in subparagraph (A).

(d) Payment period for each taxable year

    For purposes of subsections (b) and (c)(2), the payment period for 
any taxable year is the period beginning with the first day of such 
taxable year and ending with the fifteenth day of the ninth month 
following the close of such year. For purposes of subsections (b)(1) and 
(c)(2)(A), a qualified check issued during the payment period shall be 
treated as an amount paid in money during such period if endorsed and 
cashed on or before the 90th day after the close of such period.

(e) Products marketed under pooling arrangements

    For purposes of subsection (b), in the case of a pooling arrangement 
for the marketing of products--
        (1) the patronage shall (to the extent provided in regulations 
    prescribed by the Secretary) be treated as patronage occurring 
    during the taxable year in which the pool closes, and
        (2) the marketing of products shall be treated as occurring 
    during any of the taxable years in which the pool is open.

(f) Treatment of earnings received after patronage occurred

    If any portion of the earnings from business done with or for 
patrons is includible in the organization's gross income for a taxable 
year after the taxable year during which the patronage occurred, then 
for purposes of applying paragraphs (1) and (2) of subsection (b) to 
such portion the patronage shall, to the extent provided in regulations 
prescribed by the Secretary, be considered to have occurred during the 
taxable year of the organization during which such earnings are 
includible in gross income.

(g) Use of completed crop pool method of accounting

                           (1) In general

        An organization described in section 1381(a) which is engaged in 
    pooling arrangements for the marketing of products may compute its 
    taxable income with respect to any pool opened prior to March 1, 
    1978, under the completed crop pool method of accounting if--
            (A) the organization has computed its taxable income under 
        such method for the 10 taxable years ending with its first 
        taxable year beginning after December 31, 1976, and
            (B) with respect to the pool, the organization has entered 
        into an agreement with the United States or any of its agencies 
        which includes provisions to the effect that--
                (i) the United States or such agency shall provide a 
            loan to the organization with the products comprising the 
            pool serving as collateral for such loan,
                (ii) the organization shall use an amount equal to the 
            proceeds of such loan to make price support advances to 
            eligible producers (as determined by the United States or 
            such agency), to defray costs of handling, processing, and 
            storing such products, or to pay all or part of any 
            administrative costs associated with the price support 
            program,
                (iii) an amount equal to the net proceeds (as determined 
            under such agreement) from the sale or exchange of the 
            products in the pool shall be used to repay such loan until 
            such loan is repaid in full (or all the products in the pool 
            are disposed of), and
                (iv) the net gains (as determined under such agreement) 
            from the sale or exchange of such products shall be 
            distributed to eligible producers, except to the extent that 
            the United States or such agency permits otherwise.

        (2) Completed crop pool method of accounting defined

        For purposes of this subsection, the term ``completed crop pool 
    method of accounting'' means a method of accounting under which gain 
    or loss is computed separately for each crop year pool in the year 
    in which the last of the products in the pool are disposed of.

(Added Pub. L. 87-834, Sec. 17(a), Oct. 16, 1962, 76 Stat. 1046; amended 
Pub. L. 89-809, title II, Sec. 211(a)(1)-(4), Nov. 13, 1966, 80 Stat. 
1580, 1581; Pub. L. 91-172, title IX, Sec. 911(a), Dec. 30, 1969, 83 
Stat. 722; Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 
90 Stat. 1834; Pub. L. 95-345, Sec. 3, Aug. 15, 1978, 92 Stat. 483.)


                               Amendments

    1978--Subsec. (g). Pub. L. 95-345 added subsec. (g).
    1976--Pub. L. 94-455 struck out ``or his delegate'' after 
``Secretary'' wherever appearing.
    1969--Subsec. (b)(3). Pub. L. 91-172 expanded the category of per-
unit retain allocations that may not be taken into account in 
determining the taxable income of an organization, by including per-unit 
retain allocations paid for in money or other property (except 
nonqualified per-unit retain certificates as defined in section 1388(i) 
of this section).
    1966--Subsec. (a). Pub. L. 89-809, Sec. 211(a)(1), inserted 
reference to amounts paid to patrons as a per-unit retain allocation as 
defined in section 1388(f).
    Subsec. (b). Pub. L. 89-809, Sec. 211(a)(2), inserted ``and per-unit 
retain allocations'' in heading, added pars. (3) and (4), and, in text 
following par. (4), inserted provisions making existing text applicable 
only to amounts described in pars. (1) and (2) and inserted text 
covering the treatment of amounts described in pars. (3) and (4).
    Subsec. (e). Pub. L. 89-809, Sec. 211(a)(3), inserted provision that 
the marketing of products shall be treated as occurring during any of 
the taxable years in which the pool is open.
    Subsec. (f). Pub. L. 89-809, Sec. 211(a)(4), substituted 
``paragraphs (1) and (2) of subsection (b)'' for ``subsection (b)''.


                    Effective Date of 1969 Amendment

    Section 911(c) of Pub. L. 91-172 provided that: ``The amendments 
made by this section [amending this section and section 1388 of this 
title] shall apply to per-unit retain allocations made after October 9, 
1969.''


                    Effective Date of 1966 Amendment

    Section 211(e) of Pub. L. 89-809 provided that:
    ``(1) The amendments made by subsections (a), (b), and (c) [amending 
this section and sections 1383, 1385, and 1388 of this title] shall 
apply to per-unit retain allocations made during taxable years of an 
organization described in section 1381(a) (relating to organizations to 
which part I of subchapter T of chapter 1 applies) beginning after April 
30, 1966, with respect to products delivered during such years.
    ``(2) The amendments made by subsection (d) [amending section 6044 
of this title] shall apply with respect to calendar years after 1966.''


                             Effective Date

    Section applicable, except as otherwise provided, to taxable years 
of organizations described in section 1381(a) of this title beginning 
after Dec. 31, 1962, see section 17(c) of Pub. L. 87-834, set out as a 
note under section 1381 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 941, 943, 1383, 1385, 1388, 
6044 of this title.
