Farmers Cooperative Co. v. Commissioner
United States Tax Court
Petitioners were tax-exempt farmers' cooperatives that had been granted exempt status in 1929 and 1956. Each petitioner was audited for 2 years during the period 1977 through 1980. Respondent determined that both petitioners failed to meet the requirement of sec. 521, I.R.C. 1954, that substantially all of the capital stock be owned by producers who market products or purchase supplies and equipment through the cooperatives.
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Petitioners were tax-exempt farmers' cooperatives that had been granted exempt status in 1929 and 1956. Each petitioner was audited for 2 years during the period 1977 through 1980. Respondent determined that both petitioners failed to meet the requirement of sec. 521, I.R.C. 1954, that substantially all of the capital stock be owned by producers who market products or purchase supplies and equipment through the cooperatives. Respondent's determination to revoke tax-exempt status was predicated upon an 85-percent minimum threshold for the "substantially all" requirement of sec. 521(b)(2),…
1DissentWhitaker, J.
I do not believe there is any basis in the statute or the regulations thereunder for the adoption of a "bright-line” test at the level of 85 percent as articulated by respondent in Rev. Rul. 73-248, 1973-1 C.B. 295. The majority opinion effectively adopts this bright-line test and applies it to the facts before us. While arguably the majority felt impelled to reach this result by the rule of Golsen v. Commissioner, 54 T.C. 742, 756-758 (1970), affd. 445 F.2d 985 (10th Cir. 1971), cert. denied 404 U.S. 940 (1971), and the opinion of the eighth circuit in West Central Cooperative v. United…
2Cases cited8 opinions
- Jack E. Golsen and Sylvia H. Golsen v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1971
- Helvering v. WinmillSupreme Court of the United States · 1938
- Stubbs, Overbeck & Associates, Inc. v. United StatesCourt of Appeals for the Fifth Circuit · 1971
- Ronald P. Anselmo and Kay W. Anselmo v. Commissioner, Internal RevenueCourt of Appeals for the Eleventh Circuit · 1985
- Anselmo v. CommissionerUnited States Tax Court · 1983
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