Our industry expertise comes from having professionals who worked in agribusiness prior to joining our firm. Agriculture accounting and auditing require specific insight of accounting standards and tax methods which are unique to the agricultural industry.
Audited financial statements are an important product tool for farm co-ops. We take great pride to ensure the information included in those statements is presented fairly in all material respects. We believe in transparent communication with management and ultimately to the board of directors.
Our standard audit procedures include a financial ratio analysis that charts a cooperative’s financial progress. It also includes insights including key ratios and why they have changed from prior years to help you better manage the liquidity, cash flow, and growth of the cooperative.
Our firm works diligently with farm co-operatives identifying best practices to protect your financial assets.
Tax Strategies for Co-ops
The best approach to tax planning is to understand your organization’s immediate and long-term goals through regular interactions. We strive to develop a relationship of communication that allows for proactive identification and solutions for tax hurdles and opportunities.
We make every effort to help our clients plan for maximum tax advantages. Proper planning requires special knowledge of the tax issues and opportunities facing your company. Experience is not the only factor in achieving excellence; it also takes creativity, ability, training, caring, and discipline.
We are members of the National Society of Accountants for Cooperatives (NSAC), the Agricultural Cooperative Council of Oregon (ACCO) and other tax organizations that keep our staff current on new developments in federal and state tax laws for Cooperatives and all other Corporate, LLC and individual business entities.
We have a deep knowledge of the Internal Revenue Code and an understanding of the specific tax code sections impacting cooperatives and their members. We have tax staff that focus on the issues specific to agribusinesses and cooperatives. We understand Subchapter T (Sections 1381-1388) of the Internal Revenue Code, which provides guidance for the taxation of cooperatives and the patronage dividends issued to their members. We have worked with cooperatives issuing both qualified and non-qualified patronage allocations, and understand the tax implications and opportunities of each type of allocation.
In addition, we have experience navigating the complicated rules of IRC 1382, various revenue rulings and tax court case law to best utilize the allocation of patronage income, which could help maximize use of net operating losses.
IRC 199 (Domestic Production Activities Deduction) – We have experience working with cooperatives and the Internal Revenue Service regarding DPAD and the unique application of the complicated DPAD rules to cooperatives. The calculation of DPAD for agricultural cooperatives is unlike any other industry and requires a firm with the experience and knowledge of this complex section of the tax code to maximize the tax savings for not only the cooperative but also its members.
IRC 991-994 (Interest Charge ? Domestic International Sales Corporation) – IC-DISCs can be a powerful tax planning tool for cooperatives and/or their members who produce, grow, assemble, or create products in the US that are ultimately exported. An IC-DISC can create a permanent tax saving by converting income that would otherwise be taxed at ordinary rates (top rate of 39.6%) to a qualified dividend, taxed at a top rate of 23.8%.
IRC 45O (Agricultural Chemicals Security Credit) – We have consulted with clients and assisted with the calculation in maximizing tax credits for securing fertilizer and agricultural chemicals.
IRC 41 (Research and Development Credit) – We regularly work with firms that specialize in performing research and development studies to maximize potential R&D credits for companies that explore new manufacturing processes, environmental improvements or quality enhancements.
IRC 179 and 168(k) (Bonus Depreciation) – While not an issue specific to cooperatives, we have had experience working with both large and small businesses in maximizing the tax benefit of accelerated tax depreciation.
IRC 263A (UNICAP) – We have worked with businesses from a wide range of industries to establish favorable tax accounting methods for calculating UNICAP as this tends to be one of the largest deferred tax assets for companies.
Repairs and Maintenance Regulations – The final tangible property regulations were recently released in September 2013 and provide significant changes to not only repairs and maintenance expenditures, but also materials and supplies, acquisition costs of assets, as well as the disposition of assets. Aldrich has been monitoring the development of these regulations very closely and will be summarizing the new rules with our client base in the coming weeks.