COOPERATIVE AGRICULTURE IN FLORIDA


 36. Q. DO COOPERATIVES PAY TAXES?
 A. Yes Cooperatives pay the usual state, county,
city and school taxes on their property. They also pay
excise, transportation, communication, unemployment
taxes, social security, occupational license taxes and a
special annual license fee collected from farmers' co
operatives only. In fact, cooperatives pay taxes on the
same basis as comparable businesses owned by partner-
ships or individuals. Cooperatives meeting the strict
requirements of the statutes may obtain exemption from
federal income tax. Margins distributed to the patrons
of a tax exempt cooperative do not escape income tax
as they become taxable income to the recipient. Ap-
proximately one-half of the farmers' co-operatives in the
nation have obtained exemption from federal income tax.

 37. Q. WHAT REQUIREMENTS MUST AN ASSO-
 CIATION MEET TO BE EXEMPT FROM
 FEDERAL INCOME TAXES?

 A Briefly stated, a cooperative must meet the
following requirements to qualify for a letter of exemp-
tion from federal income tax:
 1. The association must be owned by producers
 of agricultural commodities. Substantially
 all voting rights must be owned by actual
 producers who patronize the association.
 2. The association must not do more business
 with non-members than with members.
 3. The rate of dividends (or interest) on capi-
 tal shares must not exceed 8 percent or the
 legal interest rate of the state, whichever
 is greater.
 4. Operations must be of a mutual nature with
 non-member patrons treated equally with
 members in business dealing and in the
 distribution of savings