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Blogging Beyond the Numbers

Posted by: Bruce Mayer 2 days ago
Many of you have already reached out to us with questions/concerns regarding the impact of COVID-19 on your co-ops and what to do about it.  Hopefully, the information below will provide answers to some of the questions that you may have and ideas to help weather this crisis. Recent Tax Act Last week the federal government passed the Families First Coronavirus Response Act (H.R. 6201) to help Am...
Posted by: Kyle Schaaf 1 month ago
The Solar Investment Tax Credit (ITC) was established as part of the Energy Policy Act of 2005 with the goal of increasing the US renewable energy market. Many cooperatives are interested in using renewable energy.  There are some important things to know about how a co-op corporation can use solar credits that may change how you structure the installation of a solar array.  Contractors and other...
Posted by: Bruce Mayer 3 months ago
This article addresses a suggestion for reporting your patronage dividends income for the 2019 tax year. Please keep in mind the caveat that this is not individual advice and you need to explore all of the nuances of the tax law and your particular tax situation. Your tax software or tax preparer can help with that. Below the discussion for 2019 is a review of self-employment tax and patronage dividends as...
Form 1099
Posted by: Bruce Mayer 1 year ago
The IRS requires reporting of certain 2018 payments on a Form 1099.  This needs to be completed, sent to the recipient, to the IRS and most likely to your home state by January 31, 2019. A 1099 is only required for payments that are not paid by credit card.  There is a separate reporting system in place where the credit card processor reports all payments made on a 1099-K.  So do not issue a 1099 for ...
Posted by: Bruce Mayer 1 year ago
The new tax law was amended in March 2018 to change the patronage dividends rules but did allow them to be eligible for the 20% pass through business deduction.  Co-ops where the recipients of patronage dividends are businesses, or are individuals not paying tax due to the personal use exemption, are not affected by this change.  I will explore what some of the tax advantages are for worker co-ops now tha...
Posted by: Bruce Mayer 1 year ago
On March 23, 2018 Congress passed an amendment to the new tax law that removed the “Grain Glitch” where private grain elevators were significantly disadvantaged.  Using per unit retains, a form of patronage dividends, farmers could deduct 20% from the gross proceeds of their sales to a cooperative grain elevator but not to a privately held grain elevator.  The fix was to remove patronage dividends fro...
Calculator
Posted by: Brian Dahlk 2 years ago
When co-ops acquire new long-term debt, they often incur costs in conjunction with the process. These costs are commonly known as debt issuance costs. Such costs of obtaining financing – such as bank fees, accounting fees to prepare prospective presentations, and legal fees to draft the necessary documents – should not be expensed. In the past, these costs have usually been capitalized as an asset accou...
Posted by: Bruce Mayer 2 years ago
Through December 31, 2017, most employer expenses related to meals, entertainment, and employee transportation were considered legitimate business costs, but might have been subject to 50% deductibility for federal income tax purposes.  The new tax law reduces or eliminates many of those deductions.  The IRS has yet to issue guidance on the new rules so the ideas below may be modified once that is issued....
20%
Posted by: Bruce Mayer 2 years ago
Cooperatives that are taxed as partnerships or S-corporations fall under the general tax rules applicable to all partnerships and S-corporations.  The Subchapter T rules that apply to incorporated cooperatives do not apply to partnerships and S-corporations. Reduction in top corporate tax rate The headline change in the new tax law is the reduction in the top corporate tax rate from 35% to 21%.  That ch...