The tax-reform deal eliminates the Section 199 deduction that cooperatives pass down to their farmer members. However, there is a replacement contained in a late amendment to the bill sponsored by Senators John Thune of South Dakota and John Hoeven of North Dakota. South Dakota Association of Cooperatives Executive Director Brenda Forman says they’re calling it Section 199A and it will be beneficial for co-ops.
She says federal lawmakers are voting on the tax reform measure this week. The conference report passed the House Monday and if it passes in the Senate Section 199A will go into effect the first of the year.
Forman says farmers will benefit overall from the tax reform deal struck by the conference committee.
The 20-percent pass through deduction contained in Section 199A can be claimed by cooperatives on gross income, less payment to patrons. That treatment will help minimize any potential increase in the tax burden on farmer owned cooperatives.
