Midland Cooperative Wholesale v. Commissioner
United States Board of Tax Appeals
1. A cooperative association, by appropriate resolution of its board of directors, accrued upon its books its earnings, less taxes, interest on its paid-up capital, and an addition to its permanent surplus. A portion of the amounts so accrued was paid over to the members in cash and the remainder was placed in a reserve account. The earnings were all allocated to the members upon the basis of the business transacted by them.
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1. A cooperative association, by appropriate resolution of its board of directors, accrued upon its books its earnings, less taxes, interest on its paid-up capital, and an addition to its permanent surplus. A portion of the amounts so accrued was paid over to the members in cash and the remainder was placed in a reserve account. The earnings were all allocated to the members upon the basis of the business transacted by them. No additional corporate action was required to make the amounts, credited to the members, but not withdrawn, available to them. Held, that the amounts credited to the…
1Opinion of the Court
*830OPINION.
Mellott :
The Commissioner determined that the amounts credited by petitioner to its members and held in its “Patrons’ Equity Reserve” account are not deductible from its gross income for the taxable years. Whether this determination is or is not correct is the first issue to be determined.
■ Both parties recognize that there is no specific statutory provision for the deduction of patronage dividends from the gross income of a cooperative association. The Treasury Department, however, as pointed out in Fruit Growers Supply Co., 21 B. T. A. 315, 326; affd., 56 Fed. (2d) 90, with “great…
2Cases cited3 opinions
- United States v. AndersonSupreme Court of the United States · 1926
- Helvering v. Northwest Steel Rolling Mills, Inc.Supreme Court of the United States · 1940
- Crane-Johnson Co. v. HelveringSupreme Court of the United States · 1940
3Cited by24 opinions
- Farmers Cooperative Co. v. BirminghamDistrict Court, N.D. Iowa · 1949
- United States v. Mississippi Chemical CompanyCourt of Appeals for the Fifth Circuit · 1964
- Consumer-Farmer Milk Cooperative, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1950
- Puget Sound Plywood, Inc. v. CommissionerUnited States Tax Court · 1965
- United Grocers, Ltd. v. United StatesDistrict Court, N.D. California · 1960
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