DEPARTMENT OF AGRICULTURE


of stock or certificates of equity. In this way the mem-
bers who actively use the association own and control it.
Members who furnish capital in earlier years, but who
have moved or for other reasons quit doing business
with the association, are gradually paid off as the new
capital becomes available. This plan has much to recom-
mend it to groups forming new cooperatives or those
reorganizing old associations.

 20. Q. WHAT STATEMENT TO MEMBERS IS
 REQUIRED BY THE FEDERAL INTERNAL
 REVENUE BUREAU?
 A. The Internal Revenue Bureau requires co-
 operatives to send all patrons a statement on a pre-
 scribed Bureau form at the end of each fiscal year. who
 have had $100 or more allocated to them by the cooper-
 ative as a result of the year's operations. The regulation
 on this reads as follows: "Patronage Dividends.-Any
 corporation allocating amounts as patronage dividends.
 rebates, or refunds (whether in cash. merchandise, capi-
 tal stock, revolving fund certificates, retain certificates,
 certificates of indebtedness, letters of advice, or in some
 other manner that discloses to each patron the amount
 of such dividend, refund, or rebate) shall render a cor-
 rect return stating (1) the name and address of each
 patron to whom it has made such allocations amounting
 to $100 or more during the calendar year, and (2) the
 amount of such allocations to each patron. If required
 by the Secretary. any such corporation shall render a
 correct return of all patronage dividends, rebates, or
 refunds made during the calendar year to its patrons.
 This subsection shall not apply in the case of any cor-
 poration 'including any cooperative or nonprofit cor-
 poration engaged in rural electrification) exempt from
 taxation under section 101 (10) or (11) or in the case of
 any corporation subject to a tax imposed by supple-
 ment G."
 "Effective Date.-The amendments made by subsec-