The Section 199A tax break in the Tax Cuts and Jobs Act has created an unintended consequence that could direct ag sales away from private companies, as it provides a tax advantage to farmers marketing to cooperatives. National Grain and Feed Association President Randy Gordon says farmers can cut down on their taxable income if they sell their commodities to ag cooperatives by using the 20-percent deduction on business income, in addition to part of their taxable income equal to 20-percent of their coop dividend. So, he says they’re asking Congress for a solution.
He says they want a fix that still allows farmers to retain the tax break for coop members, but in a way that doesn’t punish those who sell to private companies.
Gordon says his group’s members sell to both coops and private grain outlets.
USDA also recognizes the problem and Undersecretary of Marketing and Regulatory Programs Greg Ibach issued a statement asking Congress for a solution.
