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Oklahoma Agricultural Cooperative Council

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Oklahoma City, OK, 73112

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The Cooperative's Role in Pooling Tax Deductions

4/23/2018
Phil Kenkel
Bill Fitzwater Cooperative Chair

In my last newsletter article I discussed the revised Section 199A deduction.  As you may recall Section 199A now creates a deduction at the cooperative level which can be retained or passed on to the producer.  Producers marketing to a cooperative potentially face a reduction in a farm level deduction.  My analysis based on “typical” grain cooperatives and grain producers indicated the cooperative needed to pass on 75% of their Section 199A deduction to hold the member harmless, not considering patronage or 40% if patronage is factored in.  That conclusion is highly dependent on the level of the producer’s W-2 wages.

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