
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: 26USC1383]

 
                     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. 1383. Computation of tax where cooperative redeems 
        nonqualified written notices of allocation or nonqualified per-
        unit retain certificates
        

(a) General rule

    If, under section 1382(b)(2) or (4), or (c)(2)(B), a deduction is 
allowable to an organization for the taxable year for amounts paid in 
redemption of nonqualified written notices of allocation or non-
qualified per-unit retain certificates, then the tax imposed by this 
chapter on such organization for the taxable year shall be the lesser of 
the following:
        (1) the tax for the taxable year computed with such deduction; 
    or
        (2) an amount equal to--
            (A) the tax for the taxable year computed without such 
        deduction, minus
            (B) the decrease in tax under this chapter for any prior 
        taxable year (or years) which would result solely from treating 
        such nonqualified written notices of allocation or nonqualified 
        per-unit retain certificates as qualified written notices of 
        allocation or qualified per-unit retain certificates (as the 
        case may be).

(b) Special rules

    (1) If the decrease in tax ascertained under subsection (a)(2)(B) 
exceeds the tax for the taxable year (computed without the deduction 
described in subsection (a)) such excess shall be considered to be a 
payment of tax on the last day prescribed by law for the payment of tax 
for the taxable year, and shall be refunded or credited in the same 
manner as if it were an overpayment for such taxable year.
    (2) For purposes of determining the decrease in tax under subsection 
(a)(2)(B), the stated dollar amount of any nonqualified written notice 
of allocation or nonqualified per-unit retain certificate which is to be 
treated under such subsection as a qualified written notice of 
allocation or qualified per-unit retain certificate (as the case may be) 
shall be the amount paid in redemption of such written notice of 
allocation or per-unit retain certificate which is allowable as a 
deduction under section 1382(b)(2) or (4), or (c)(2)(B) for the taxable 
year.
    (3) If the tax imposed by this chapter for the taxable year is the 
amount determined under subsection (a)(2), then the deduction described 
in subsection (a) shall not be taken into account for any purpose of 
this subtitle other than for purposes of this section.

(Added Pub. L. 87-834, Sec. 17(a), Oct. 16, 1962, 76 Stat. 1047; amended 
Pub. L. 89-809, title II, Sec. 211(a)(5)-(7), Nov. 13, 1966, 80 Stat. 
1581.)


                               Amendments

    1966--Pub. L. 89-809, Sec. 211(a)(5), inserted ``or nonqualified 
per-unit retain certificates'' in section catchline.
    Subsec. (a). Pub. L. 89-809, Sec. 211(a)(6), substituted ``section 
1382(b)(2) or (4)'' for ``1382(b)(2)'' and inserted references to per-
unit retain certificates.
    Subsec. (b)(2). Pub. L. 89-809, Sec. 211(a)(7), substituted 
``section 1382(b)(2) or (4)'' for ``section 1382(b)(2)'' and inserted 
references to per-unit retain certificates.


                    Effective Date of 1966 Amendment

    Amendment by Pub. L. 89-809 applicable to per-unit retain 
allocations made during taxable years of an organization described in 
section 1381(a) of this title (relating to organizations to which part I 
of subchapter T of chapter 1 applies) beginning after Apr. 30, 1966, 
with respect to products delivered during such years, see section 
211(e)(1) of Pub. L. 89-809, set out as a note under section 1382 of 
this title.


                             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.
