MKC announces favorable private letter ruling

MKC announced that it has received a favorable private letter ruling from the Internal Revenue Service with respect to the application of the rules in subchapter T of the Internal Revenue Code (concerning the taxation of cooperatives and their patrons) and the calculation of the Domestic Production Activities Deduction (section 199).

According to Danny Posch, Chief Financial Officer, the ruling will allow the cooperative to significantly increase the annual tax deduction allowed under the Domestic Production Activities Deduction.  “The ruling supports our position that with modest changes to the grain settlement process, grain purchased from our members through Team Marketing Alliance (TMA) can be considered per-unit retain allocations paid in money with respect to the Domestic Production Activities Deduction calculation,” states Posch.  “This simple clarification will allow the cooperative to increase the annual tax deduction from approximately $300,000 to $3.5 million.” 

 

Posch added that this deduction, once calculated, can be utilized as a cooperative deduction or passed through to its' members to be utilized on their personal tax returns.  "We anticipate to be fully utilizing this deduction by next year and will be communicating to our membership over the next 10 to 12 months about the benefits of the deduction and how it affects inidividual members."