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104TH CONGRESS

1ST SESSION H. R. 2232

To amend the Internal Revenue Code of 1986 to allow the small ethanol

producer credit to be allocated to patrons of a cooperative in certain cases.

IN THE HOUSE OF REPRESENTATIVES

AUGUST 4, 1995

Mr. MINGE (for himself, Mr. LATHAM, Ms. DANNER, Mr. GUTKNECHT, Mr.

POMEROY, Mr. OBERSTAR, Mr. PETERSON of Minnesota, and Mr. JOHNSON of South Dakota) introduced the following bill; which was referred

to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow the

small ethanol producer credit to be allocated to patrons

of a cooperative in certain cases.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. ALLOCATION OF SMALL ETHANOL PRODUCER

4 CREDIT TO PATRONS OF A COOPERATIVE.

5 (a) IN GENERAL.—Subsection (d) of section 40 of the

6 Internal Revenue Code of 1986 (relating to alcohol used

7 as fuel) is amended by adding at the end the following

8 new paragraph:
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1 ‘‘(6) ALLOCATION OF SMALL ETHANOL PRO2 DUCER CREDIT TO PATRONS OF COOPERATIVE.—

3 ‘‘(A) IN GENERAL.—In the case of a coop4 erative organization described in section

5 1381(a), any portion of the credit determined

6 under subsection (a)(3) for the taxable year

7 may, at the election of the organization made

8 on a timely filed return (including extensions)

9 for such year, be apportioned pro rata among

10 patrons on the basis of the quantity or value of

11 business done with or for such patrons for the

12 taxable year. Such an election, once made, shall

13 be irrevocable for such taxable year.

14 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

15 PATRONS.—The amount of the credit appor16 tioned to patrons pursuant to subparagraph

17 (A)—

18 ‘‘(i) shall not be included in the

19 amount determined under subsection (a)

20 for the taxable year of the organization,

21 and

22 ‘‘(ii) shall be included in the amount

23 determined under subsection (a) for the

24 taxable year of each patron in which the

25 patronage dividend for the taxable year re-
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1 ferred to in subparagraph (A) is includible

2 in gross income.

3 ‘‘(C) SPECIAL RULE FOR DECREASING

4 CREDIT FOR TAXABLE YEAR.—If the amount of

5 the credit of a cooperative organization deter6 mined under subsection (a)(3) for a taxable

7 year is less than the amount of such credit

8 shown on the cooperative organization’s return

9 for such year, an amount equal to the excess of

10 such reduction over the amount not apportioned

11 to the patrons under subparagraph (A) for the

12 taxable year shall be treated as an increase in

13 tax imposed by this chapter on the organiza14 tion. Any such increase shall not be treated as

15 tax imposed by this chapter for purposes of de16 termining the amount of any credit under this

17 subpart or subpart A, B, E, or G of this part.’’

18 (b) TECHNICAL AMENDMENT.—Section 1388 of such

19 Code (relating to definitions and special rules for coopera20 tive organizations) is amended by adding at the end there21 of the following new subsection:

22 ‘‘(k) CROSS REFERENCE.—

‘‘For provisions relating to the apportionment of

the alcohol fuels credit between cooperative organizations and their patrons, see section 40(d)(6).’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1994.

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