For the third year in a row, cooperative distributes Section 199/DPAD benefit
The Domestic Production Activities Deduction (DPAD) serves as a benefit unique to cooperatives and is one of the many positive attributes of doing business with Landus Cooperative
The deduction is generated by the cooperative’s activity each year, with this year’s deduction totaling more than $19.8 million. At the end of each fiscal year, the cooperative decides how much of it will be used at the cooperative level and how much will be passed on to farmers; this year, the entire deduction was passed through to Landus Cooperative members. Letters regarding the specific portion of the deduction will be mailed in December.
Mark Miner, Chief Financial Officer and interim Chief Executive Officer noted the cooperative has issued this DPAD (also known as Section 199 and changed to Section 199a last year) every year since the merger. “We are pleased that our growers are eligible for a tax deduction as a result of doing business with their cooperative.”
All businesses with domestic production (including our individual members) can qualify for Domestic Production Activities Deduction (DPAD); as a cooperative, Landus Cooperative is able to pass unused portions of it to our members.
How it works
$19.8 million will be distributed to members based on the amount of business conducted. The allocation equates to
- 12 cents per bushel of grain
- 4.68% of agronomy purchases
Members are encouraged to contact their tax preparers for possible tax planning opportunities regarding this pass-through deduction.