The implications of taxation and tax policies for cooperatives and members

Cooperative businesses in the United States operate under a unique taxation structure. A summary of the structure of cooperative taxation in the U.S. is provided with an emphasis on agricultural cooperatives. The basic tax structure under Sub-Chapter T of the U.S. Internal Revenue Code is summarized along with a brief discussion of the taxation of federated cooperatives and book versus tax accounting issues. Recent changes in cooperative taxation are discussed including the new role of agricultural cooperatives in creating and distributing tax deductions. In addition to that overview of cooperative taxation of review of previous literature is provided. That discussion includes the evolution of the logic of cooperative taxation, the implication of taxation on profit distribution and the growth of cooperative firms, research on the new role of cooperatives in pooling and distributing tax deductions, as well as a brief consideration of comparative international taxation. Suggestions for further research are also provided.