§ 521. Exemption of farmers’ cooperatives from tax
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(a)Exemption from tax A farmers’ cooperative organization described in subsection (b)(1) shall be exempt from taxation under this subtitle except as otherwise provided in part I of subchapter T (sec. 1381 and following). Notwithstanding part I of subchapter T (sec. 1381 and following), such an organization shall be considered an organization exempt from income taxes for purposes of any law which refers to organizations exempt from income taxes.
(b)Applicable rules
(1)Exempt farmers’ cooperatives The farmers’ cooperatives exempt from taxation to the extent provided in subsection
(a)are farmers’, fruit growers’, or like associations organized and operated on a cooperative basis
(A)for the purpose of marketing the products of members or other producers, and turning back to them the proceeds of sales, less the necessary marketing expenses, on the basis of either the quantity or the value of the products furnished by them, or
(B)for the purpose of purchasing supplies and equipment for the use of members or other persons, and turning over such supplies and equipment to them at actual cost, plus necessary expenses.
(2)Organizations having capital stock Exemption shall not be denied any such association because it has capital stock, if the dividend rate of such stock is fixed at not to exceed the legal rate of interest in the State of incorporation or 8 percent per annum, whichever is greater, on the value of the consideration for which the stock was issued, and if substantially all such stock (other than nonvoting preferred stock, the owners of which are not entitled or permitted to participate, directly or indirectly, in the profits of the association, upon dissolution or otherwise, beyond the fixed dividends) is owned by producers who market their products or purchase their supplies and equipment through the association.
(3)Organizations maintaining reserve Exemption shall not be denied any such association because there is accumulated and maintained by it a reserve required by State law or a reasonable reserve for any necessary purpose.
(4)Transactions with nonmembers Exemption shall not be denied any such association which markets the products of nonmembers in an amount the value of which does not exceed the value of the products marketed for members, or which purchases supplies and equipment for nonmembers in an amount the value of which does not exceed the value of the supplies and equipment purchased for members, provided the value of the purchases made for persons who are neither members nor producers does not exceed 15 percent of the value of all its purchases.
(5)Business for the United States Business done for the United States or any of its agencies shall be disregarded in determining the right to exemption under this section.
(6)Netting of losses Exemption shall not be denied any such association because such association computes its net earnings for purposes of determining any amount available for distribution to patrons in the manner described in paragraph
(1)of section 1388(j).
(7)Cross reference For treatment of value-added processing involving animals, see section 1388(k).
(Aug. 16, 1954, ch. 736, 68A Stat. 176; Pub. L. 87–834, § 17(b)(1), Oct. 16, 1962, 76 Stat. 1051; Pub. L. 99–272, title XIII, § 13210(b), Apr. 7, 1986, 100 Stat. 324; Pub. L. 108–357, title III, § 316(b), Oct. 22, 2004, 118 Stat. 1469.)
Connections19 cite this · traces to 2
Cited by 19 sections · top 12
statutes-at-large
- Public Law 87–834
- Public Law 91–547
- Public Law 85–859
- Public Law 88–272
- Public Law 99–272To provide for reconciliation pursuant to section 2 of the first concurrent resolution on the budget for fiscal year 1986 (S
- Public Law 108–357To amend the Internal Revenue Code of 1986 to remove impediments in such Code and make our manufacturing, service, and high-technology businesses and workers more competitive and productive both at Oct. 22, 2004[[H
- Public Law 96–223To impose a windfall profit tax on domestic crude oil, and for other purposes
- Public Law 97–248To provide for tax equity and fiscal responsibility, and for other purposes
Traces to 2 documents
14 references not yet in our index
- Aug. 16, 1954, ch. 736
- 68A Stat. 176
- Pub. L. 87–834, § 17(b)(1)
- 76 Stat. 1051
- Pub. L. 99–272, title XIII, § 13210(b)
- 100 Stat. 324
- Pub. L. 108–357, title III, § 316(b)
- 118 Stat. 1469
- Pub. L. 108–357
- Pub. L. 99–272
- Pub. L. 87–834
- Pub. L. 108–357, title III, § 316(c)
- section 13210(c) of Pub. L. 99–272
- section 17(c) of Pub. L. 87–834
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cites case law
§ 521
Exemption of farmers’ cooperatives from tax
Stat.×13
U.S.C.×4
IRM×2
ActAug. 16, 1954, ch. 736
Stat.68A Stat. 176
Pub. L.Pub. L. 87–834, § 17(b)(1)
Stat.76 Stat. 1051
Pub. L.Pub. L. 99–272, title XIII, § 13210(b)
Cites 16 · showing 7Cited by 19 across 3 sources