3 ms·

Ah, that's right. Thanks for pulling me up on that. It's been awhile since I've looked at this. I believe another bone of contention is whether the IRS even al

Ah, that's right. Thanks for pulling me up on that. It's been awhile since I've looked at this. I believe another bone of contention is whether the IRS even allows worker cooperatives to exempt patronage dividends from their taxable profit, to avoid double taxation (corporate, then personal income tax). Technically (under Subchapter T), they should be allowed to. But the IRS is pretty sue-happy about this and refuses to issue much guidance. The last clear ruling was in 1971 and only allowed dividends to be issued on the basis of hours worked, not value earned (or other metrics).

dragonwriter 10y ago
I think you have the impact of the 1971 decisidn almost backwards. Patronage on the basis of earnings derived from work done with the member is explicitly allowed in the statute, hours worked is not an explicitly allowed bases, and it wasn't initio 1971 that there IRS issues a ruling that goes worker was a valid basis for patronage under one of the statutory categories. OTOH, the IRS has been accused of being reluctant (even after a court decision allowing it with specific standard) to allow weighting of work hours vs. flat work hours in determining the amount of earnings attributable to members as a whole (vs nonmembers) in determining how much of the forms revenue is eligible for inclusion in patronage distribution. This may be because actual mechanisms that came before it did not meet the standards of objectivity set on the court decision (that the problem is the application methods it's seen and not the concept entirely seems closest as they've indicated that weighting contribution of different jobs proportional to an applicable union pay scale would be acceptable.) This is an issue for coops with both member and non-member employees.

3 ms·

Ah, that's right. Thanks for pulling me up on that. It's been awhile since I've looked at this. I believe another bone of contention is whether the IRS even al

by monodeldiablo 10y ago

dragonwriter 10y ago
I think you have the impact of the 1971 decisidn almost backwards. Patronage on the basis of earnings derived from work done with the member is explicitly allowed in the statute, hours worked is not an explicitly allowed bases, and it wasn't initio 1971 that there IRS issues a ruling that goes worker was a valid basis for patronage under one of the statutory categories. OTOH, the IRS has been accused of being reluctant (even after a court decision allowing it with specific standard) to allow weighting of work hours vs. flat work hours in determining the amount of earnings attributable to members as a whole (vs nonmembers) in determining how much of the forms revenue is eligible for inclusion in patronage distribution. This may be because actual mechanisms that came before it did not meet the standards of objectivity set on the court decision (that the problem is the application methods it's seen and not the concept entirely seems closest as they've indicated that weighting contribution of different jobs proportional to an applicable union pay scale would be acceptable.) This is an issue for coops with both member and non-member employees.