(b) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to pleadings filed after
the date of the enactment of this Act but only with respect
to determinations (or requests for determinations) made
after January 1, 2001.
SEC. 11. SMALL ETHANOL PRODUCER CREDIT.
(a) ALLOCATION OF ALCOHOL FUELS CREDIT TO
PATRONS OF A COOPERATIVE.—Section 40(g) (relating to
alcohol used as fuel) is amended by adding at the end the
following new paragraph:
‘‘(6) ALLOCATION
OF
SMALL
ETHANOL
PRO-
DUCER CREDIT TO PATRONS OF COOPERATIVE.—
‘‘(A) ELECTION TO ALLOCATE.—
‘‘(i) IN GENERAL.—In the case of a
cooperative organization described in sec-
tion 1381(a), any portion of the credit de-
termined under subsection (a)(3) for the
taxable year may, at the election of the or-
ganization, be apportioned pro rata among
patrons of the organization on the basis of
the quantity or value of business done with
or for such patrons for the taxable year.
‘‘(ii) FORM
AND
EFFECT
OF
ELEC-
TION.—An election under clause (i) for any
taxable year shall be made on a timely
filed return for such year. Such election,
once made, shall be irrevocable for such
taxable year.
‘‘(B) TREATMENT OF ORGANIZATIONS AND
PATRONS.—The amount of the credit appor-
tioned to patrons under subparagraph (A)—
‘‘(i) shall not be included in the
amount determined under subsection (a)
with respect to the organization for the
taxable year,
‘‘(ii) shall be included in the amount
determined under subsection (a) for the
taxable year of each patron for which the
patronage dividends for the taxable year
described in subparagraph (A) are included
in gross income, and
‘‘(iii) shall be included in gross income
of such patrons for the taxable year in the
manner and to the extent provided in sec-
tion 87.
‘‘(C) SPECIAL RULES FOR DECREASE IN
CREDITS FOR TAXABLE YEAR.—If the amount
of the credit of a cooperative organization de-
termined under subsection (a)(3) for a taxable
year is less than the amount of such credit
shown on the return of the cooperative organi-
zation for such year, an amount equal to the
excess of—
‘‘(i) such reduction, over
‘‘(ii) the amount not apportioned to
such patrons under subparagraph (A) for
the taxable year,
shall be treated as an increase in tax imposed
by this chapter on the organization. Such in-
crease shall not be treated as tax imposed by
this chapter for purposes of determining the
amount of any credit under this subpart or sub-
part A, B, E, or G.’’.
(b) IMPROVEMENTS TO SMALL ETHANOL PRODUCER
CREDIT.—
(1) DEFINITION
OF
SMALL
ETHANOL
PRO-
DUCER.—Section 40(g) (relating to definitions and
special rules for eligible small ethanol producer cred-
it) is amended by striking ‘‘30,000,000’’ each place
it appears and inserting ‘‘60,000,000’’.
(2) SMALL ETHANOL PRODUCER CREDIT NOT A
PASSIVE
ACTIVITY
CREDIT.—Clause (i) of section
469(d)(2)(A) is amended by striking ‘‘subpart D’’
and inserting ‘‘subpart D, other than section
40(a)(3),’’.
(3) ALLOWING
CREDIT
AGAINST
MINIMUM
TAX.—
(A) IN GENERAL.—Subsection (c) of sec-
tion 38 (relating to limitation based on amount
of tax) is amended by redesignating paragraph
(3) as paragraph (4) and by inserting after
paragraph (2) the following new paragraph:
‘‘(3) SPECIAL
RULES
FOR
SMALL
ETHANOL
PRODUCER CREDIT.—
‘‘(A) IN
GENERAL.—In the case of the
small ethanol producer credit—
‘‘(i) this section and section 39 shall
be applied separately with respect to the
credit, and
‘‘(ii) in applying paragraph (1) to the
credit—
‘‘(I) subparagraphs (A) and (B)
thereof shall not apply, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable year (other than the small
ethanol producer credit).
‘‘(B) SMALL ETHANOL PRODUCER CRED-
IT.—For purposes of this subsection, the term
‘small ethanol producer credit’ means the credit
allowable under subsection (a) by reason of sec-
tion 40(a)(3).’’.
(B) 
CONFORMING
AMENDMENT.—Sub-
clause (II) of section 38(c)(2)(A)(ii) is amended
by striking ‘‘(other’’ and all that follows
through ‘‘credit)’’ and inserting ‘‘(other than
the empowerment zone employment credit or
the small ethanol producer credit)’’.
(4) SMALL ETHANOL PRODUCER CREDIT NOT
ADDED BACK TO INCOME UNDER SECTION 87.—Sec-
tion 87 (relating to income inclusion of alcohol fuel
credit) is amended to read as follows:
‘‘SEC. 87. ALCOHOL FUEL CREDIT.
‘‘Gross income includes an amount equal to the sum
of—
‘‘(1) the amount of the alcohol mixture credit
determined with respect to the taxpayer for the tax-
able year under section 40(a)(1), and
‘‘(2) the alcohol credit determined with respect
to the taxpayer for the taxable year under section
40(a)(2).’’.
(c) CONFORMING AMENDMENT.—Section 1388 (re-
lating to definitions and special rules for cooperative orga-
nizations), as amended by section 9, is amended by adding
at the end the following new subsection:
‘‘(l) CROSS REFERENCE.—For provisions relating to
the apportionment of the alcohol fuels credit between coop-
erative organizations and their patrons, see section
40(g)(6).’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 12. PAYMENT OF DIVIDENDS ON STOCK OF COOPERA-
TIVES 
WITHOUT 
REDUCING 
PATRONAGE
DIVIDENDS.
(a) IN GENERAL.—Subsection (a) of section 1388
(relating to patronage dividend defined) is amended by
adding at the end the following new sentence: ‘‘For pur-
poses of paragraph (3), net earnings shall not be reduced
by amounts paid during the year as dividends on capital
stock or other proprietary capital interests of the organiza-
tion to the extent that the articles of incorporation or by-
laws of such organization or other contract with patrons
provide that such dividends are in addition to amounts
otherwise payable to patrons which are derived from busi-
ness done with or for patrons during the taxable year.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to distributions in taxable years
beginning after the date of the enactment of this Act.
Æ