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The Impact of the Grain Glitch Fix on a Specified Cooperative’s Organizational Form Choice of Exempt or Nonexempt Classification

William D. Terando

ATA Journal of Legal Tax Research2025https://doi.org/10.2308/jltr-2024-004article
AJG 1ABDC C
Weight
0.50

What the paper says

ABSTRACT This paper investigates the impact of the Grain Glitch Fix on a Specified Cooperative’s incentive to elect Exempt Coop classification under I.R.C. §521. Consistent with Exempt Specified Coops being treated as passthrough entities for tax purposes, the results show both the coop and its patrons are better off by sharing the tax savings realized from avoiding the corporate income tax on nonpatronage earnings. The coop receives a direct benefit to unallocated equity by the amount of their retained I.R.C. §199A(g) deduction to offset the initial and ongoing costs of complying with the requirements of I.R.C. §521. The remaining tax savings are allocated to patrons who indirectly benefit through increased coop distributions. This study extends the research on organizational form choice by demonstrating the importance of tax incentives on a Specified Coop’s tax classification election and its choice of operating as a passthrough or C Corp entity. JEL Classifications: K34; M48; Q13.

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https://doi.org/https://doi.org/10.2308/jltr-2024-004

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@article{william2025,
  title        = {{The Impact of the Grain Glitch Fix on a Specified Cooperative’s Organizational Form Choice of Exempt or Nonexempt Classification}},
  author       = {William D. Terando},
  journal      = {ATA Journal of Legal Tax Research},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.2308/jltr-2024-004},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.