COOPERATIVE AGRICULTURE IN FLORIDA


cooperative regardless of whether or not the cooperative
has received a letter of exemption and regardless of
whether or not the cooperative had any net income for
the year.
 40. Q. CAN PATRON REFUNDS TO NON-MEM-
 BERS BE MADE IN THE FORM OF BOOK
 CREDIT TOWARD THE PURCHASE OF
 VOTING STOCK OR ACQUIRING MEM-
 BERSHIP?
 A. Yes, the Treasury Department has ruled that
patronage refunds may be credited to the nonmember
until he pays for voting stock or pays his membership
dues, and still meet the requirement that the association
deal with members and nonmembers alike.
 41. Q WHAT IS THE REASON FOR EXEMPTING
 COOPERATIVES FROM THE FEDERAL IN-
 COME TAXES PAID BY MANY OTHER
 CORPORATIONS?
 A. A cooperative acts as the agent for the patron
Produce is processed or marketed or supplies are pur-
chased for the member. The association deliberately
under-pays the farmer for his produce or overcharges
him for his supplies and services. The cooperative con-
tracts with its patrons to refund the amounts withheld,
after paying the costs of doing busmess and setting up
necessary business reserves. Amounts so withheld by
the association are for the account of the patron, held
temporarily in the business and eventually returned to
the rightful owner as final settlements of business trans-
actions It is a well established principle of law that an
agent, as such, is not liable for tax on funds he tempo-
rarily holds in trust for the principal The difference be-
tween the savings dollar of a cooperative and the profit
dollar of a commercial business is that the savings dollar
goes back to the patron, who not only owns and finances
the cooperative but whose business made the saving pos-
sible, while the profit dollar of the commercial enter-