Source: http://www.law.cornell.edu/uscode/text/26/1388?quicktabs_8=0
Timestamp: 2013-05-22 01:11:24
Document Index: 656275699

Matched Legal Cases: ['§ 1388', '§ 1388', '§ 1388', '§ 17', '§ 211', '§ 911', '§ 1901', '§ 316', '§ 13210', '§ 11813', '§ 312', '§ 312', '§ 316', '§ 1901', '§ 1901', '§ 211', '§ 211', '§ 312']

26 USC § 1388 - Definitions; special rules | Title 26 - Internal Revenue Code | U.S. Code | LII / Legal Information Institute
USC › Title 26 › Subtitle A › Chapter 1 › Subchapter T › Part III › § 1388	prevnext
26 USC § 1388 - Definitions; special rules
Such term does not include any written notice of allocation which is paid as part of a patronage dividend or as part of a payment described in section 1382
(c)(2)(A), unless 20 percent or more of the amount of such patronage dividend, or such payment, is paid in money or by qualified check.
Manner of obtaining consent A distributee shall consent to take a written notice of allocation into account as provided in paragraph (1)(B) only by—
obtaining or retaining membership in the organization after—
Period for which consent is effective (A)
General rule Except as provided in subparagraph (B)—
a consent described in paragraph (2) (A) shall be a consent with respect to all patronage of the distributee with the organization occurring (determined with the application of section 1382
(e)) during the taxable year of the organization during which such consent is made and all subsequent taxable years of the organization; and
a consent described in paragraph (2) (B) shall be a consent with respect to all patronage of the distributee with the organization occurring (determined without the application of section 1382
(e)) after he received the notification and copy described in paragraph (2)(B)(ii).
Revocation, etc. (i)
Any consent described in paragraph (2)(A) may be revoked (in writing) by the distributee at any time. Any such revocation shall be effective with respect to patronage occurring on or after the first day of the first taxable year of the organization beginning after the revocation is filed with such organization; except that in the case of a pooling arrangement described in section 1382
(e), a revocation made by a distributee shall not be effective as to any pool with respect to which the distributee has been a patron before such revocation.
Any consent described in paragraph (2)(B) shall not be effective with respect to any patronage occurring (determined without the application of section 1382
(e)) after the distributee ceases to be a member of the organization or after the bylaws of the organization cease to contain the provision described in paragraph (2)(B)(i).
Qualified check For purposes of this subchapter, the term “qualified check” means only a check (or other instrument which is redeemable in money) which is paid as a part of a patronage dividend, or as a part of a payment described in section 1382
(c)(2)(A), to a distributee who has not given consent as provided in paragraph (2)(A) or (B) with respect to such patronage dividend or payment, and on which there is clearly imprinted a statement that the endorsement and cashing of the check (or other instrument) constitutes the consent of the payee to include in his gross income, as provided in the Federal income tax laws, the stated dollar amount of the written notice of allocation which is a part of the patronage dividend or payment of which such qualified check is also a part. Such term does not include any check (or other instrument) which is paid as part of a patronage dividend or payment which does not include a written notice of allocation (other than a written notice of allocation described in paragraph (1)(A)).
Nonqualified written notice of allocation For purposes of this subchapter, the term “nonqualified written notice of allocation” means a written notice of allocation which is not described in subsection (c) or a qualified check which is not cashed on or before the 90th day after the close of the payment period for the taxable year for which the distribution of which it is a part is paid.
Determination of amount paid or received For purposes of this subchapter, in determining amounts paid or received—
Per-unit retain allocation For purposes of this subchapter, the term “per-unit retain allocation” means any allocation, by an organization to which part I of this subchapter applies, to a patron with respect to products marketed for him, the amount of which is fixed without reference to the net earnings of the organization pursuant to an agreement between the organization and the patron.
Per-unit retain certificate For purposes of this subchapter, the term “per-unit retain certificate” means any written notice which discloses to the recipient the stated dollar amount of a per-unit retain allocation to him by the organization.
Qualified per-unit retain certificate (1)
Defined For purposes of this subchapter, the term “qualified per-unit retain certificate” means any per-unit retain certificate which the distributee has agreed, in the manner provided in paragraph (2), to take into account at its stated dollar amount as provided in section 1385
Manner of obtaining agreement A distributee shall agree to take a per-unit retain certificate into account as provided in paragraph (1) only by—
Period for which agreement is effective (A)
Any agreement described in paragraph (2)(A) may be revoked (in writing) by the distributee at any time. Any such revocation shall be effective with respect to products delivered by the distributee on or after the first day of the first taxable year of the organization beginning after the revocation is filed with the organization; except that in the case of a pooling arrangement described in section 1382
(e) a revocation made by a distributee shall not be effective as to any products which were delivered to the organization by the distributee before such revocation.
Nonqualified per-unit retain certificate For purposes of this subchapter, the term “nonqualified per-unit retain certificate” means a per-unit retain certificate which is not described in subsection (h).
Special rules for the netting of gains and losses by cooperatives For purposes of this subchapter, in the case of any organization to which part I of this subchapter applies—
Optional netting of patronage gains and losses permitted The net earnings of such organization may, at its option, be determined by offsetting patronage losses (including any patronage loss carried to such year) which are attributable to 1 or more allocation units (whether such units are functional, divisional, departmental, geographic, or otherwise) against patronage earnings of 1 or more other such allocation units.
Certain netting permitted after section 381 transactions If such an organization acquires the assets of another such organization in a transaction described in section 381
(a), the acquiring organization may, in computing its net earnings for taxable years ending after the date of acquisition, offset losses of 1 or more allocation units of the acquiring or acquired organization against earnings of the acquired or acquiring organization, respectively, but only to the extent—
In general In the case of any organization which exercises its option under paragraph (1) for any taxable year, such organization shall, on or before the 15th day of the 9th month following the close of such taxable year, provide to its patrons a written notice which—
Certain information need not be provided An organization may exclude from the information required to be provided under clause (ii) of subparagraph (A) any detailed or specific data regarding earnings or losses of such units which such organization determines would disclose commercially sensitive information which—
Failure to provide sufficient notice If the Secretary determines that an organization failed to provide sufficient notice under this paragraph—
such organization shall, upon receipt of such notification, provide to its patrons a revised notice meeting the requirements of this paragraph.
Any such failure shall not affect the treatment of the organization under any provision of this subchapter or section 521.
Patronage earnings or losses defined For purposes of this subsection, the terms “patronage earnings” and “patronage losses” means earnings and losses, respectively, which are derived from business done with or for patrons of the organization.
Cooperative marketing includes value-added processing involving animals For purposes of section 521 and this subchapter, the marketing of the products of members or other producers shall include the feeding of such products to cattle, hogs, fish, chickens, or other animals and the sale of the resulting animals or animal products.
(Added Pub. L. 87–834, § 17(a),Oct. 16, 1962, 76 Stat. 1049; amended Pub. L. 89–809, title II, § 211(c),Nov. 13, 1966, 80 Stat. 1582; Pub. L. 91–172, title IX, § 911(b),Dec. 30, 1969, 83 Stat. 722; Pub. L. 94–455, title XIX, § 1901(a)(153),Oct. 4, 1976, 90 Stat. 1789; Pub. L. 95–600, title III, § 316(b)(3),Nov. 6, 1978, 92 Stat. 2830; Pub. L. 99–272, title XIII, § 13210(a),Apr. 7, 1986, 100 Stat. 323; Pub. L. 101–508, title XI, § 11813(b)(24),Nov. 5, 1990, 104 Stat. 1388–555; Pub. L. 108–357, title III, §§ 312(a), 316
(a),Oct. 22, 2004, 118 Stat. 1467, 1469.)
2004—Subsec. (a). Pub. L. 108–357, § 312(a), inserted at end of concluding provisions “For purposes 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 organization to the extent that the articles of incorporation or bylaws 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 business done with or for patrons during the taxable year.”
Subsec. (k). Pub. L. 108–357, § 316(a), added subsec. (k).
1990—Subsec. (k). Pub. L. 101–508struck out subsec. (k) which cross-referenced section 46
(h) for provisions relating to apportionment of investment credit between cooperative organizations and their patrons.
1986—Subsecs. (j), (k). Pub. L. 99–272added subsec. (j) and redesignated former subsec. (j) as (k).
1978—Subsec. (j). Pub. L. 95–600added subsec. (j).
1976—Subsec. (c)(2)(B)(i). Pub. L. 94–455, § 1901 (a)(153)(A), substituted “October 16, 1962” for “the date of the enactment of the Revenue Act of 1962”.
Subsec. (h)(2)(B)(i). Pub. L. 94–455, § 1901(a)(153)(B), substituted “November 13, 1966” for “the date of the enactment of this subsection”.
1969—Subsec. (f). Pub. L. 91–172struck out reference to allocations made by organizations other than by payment of money or other property except per-unit retain certificates.
1966—Subsec. (e). Pub. L. 89–809, § 211(c)(1), inserted references to per-unit retain certificates.
Subsecs. (f) to (i). Pub. L. 89–809, § 211(c)(2), added subsecs. (f) to (i).
Pub. L. 108–357, title III, § 312(b),Oct. 22, 2004, 118 Stat. 1467, provided that: “The amendment made by this section [amending this section] shall apply to distributions in taxable years beginning after the date of the enactment of this Act [Oct. 22, 2004].”
Amendment by section 316(a) ofPub. L. 108–357applicable to taxable years beginning after Oct. 22, 2004, see section 316(c) ofPub. L. 108–357, set out as a note under section 521 of this title.
Section 13210(c) ofPub. L. 99–272provided that:
“(1) In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section and section 521 of this title] shall apply to taxable years beginning after December 31, 1962.
“(2) Notification requirement.—The provisions of section 1388(j)(3) of the Internal Revenue Code of 1954 [now 1986] (as added by subsection (a)) shall apply to taxable years beginning on or after the date of the enactment of this Act [Apr. 7, 1986].
“(3) No inference.—Nothing in the amendments made by this section [amending this section and section 521 of this title] shall be construed to infer that a change in law is intended as to whether any patronage earnings may or not be offset by nonpatronage losses, and any determination of such issue shall be made as if such amendments had not been enacted.”
Amendment by Pub. L. 95–600applicable to taxable years ending after October 31, 1978, see section 316(c) ofPub. L. 95–600, set out as a note under section 46 of this title.
Amendment by Pub. L. 91–172applicable to per-unit retain allocations made after Oct. 9, 1969, see section 911(c) ofPub. L. 91–172, set out as a note under section 1382 of this title.
Section 211(f) ofPub. L. 89–809provided that a written agreement between a patron and a cooperative association which met certain qualifications and was entered into after Oct. 14, 1965 and before Nov. 13, 1966, and which was in effect on Nov. 13, 1966, was to be treated for purposes of subsec. (h) of this section as if entered into after Nov. 13, 1966.