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Taxes not imposed on the cooperative.

3rd month after the end of the tax year if

The principal purpose of the

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Taxes, including state or local sales

the contributions were authorized by the

contribution was to avoid Federal income

taxes, that are paid or incurred in

board of directors during the current tax

tax by obtaining a deduction for activities

connection with an acquisition or

year. Attach a declaration to the return,

that would have been nondeductible

disposition of property (these taxes must

signed by an officer, stating that the

under the lobbying expense rules if

be treated as part of the cost of the

resolution authorizing the contributions

conducted directly by the donor.

acquired property, or in the case of a

was adopted by the board of directors

Contributions of property other than

disposition, as a reduction in the amount

during the current tax year. Also, attach a

cash. If a cooperative contributes

realized on the disposition).

copy of the resolution.

property other than cash and claims over

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Taxes assessed against local benefits

a $500 deduction for the property, it must

Limitation on deduction. The total

that increase the value of the property

attach a schedule to the return describing

amount claimed may not be more than

assessed (such as for paving, etc.).

the kind of property contributed and the

10% of taxable income (line 30)

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Taxes deducted elsewhere on the

method used to determine its fair market

computed without regard to the following:

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return, such as those reflected in cost of

value (FMV). Generally, cooperatives

Any deduction for contributions;

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goods sold.

must complete and attach Form 8283 to

The special deductions on line 29b,

See section 164(d) for apportionment

their returns for all contributions of

Form 990-C;

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of taxes on real property between the

property (other than money) if the total

Any net operating loss (NOL) carryback

seller and purchaser.

claimed deduction for all property

to the tax year under section 172;

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contributed was more than $5,000.

Line 18. Interest.

Any capital loss carryback to the tax

year under section 1212(a)(1); and

If the cooperative made a “qualified

Note. The deduction for interest is limited

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The deduction allowed under section

conservation contribution” under section

when the cooperative is a policyholder or

249.

170(h), also include the FMV of the

beneficiary with respect to a life

underlying property before and after the

insurance, endowment, or annuity

Carryover. Charitable contributions

donation, as well as the type of legal

contract issued after June 8, 1997. For

over the 10% limitation may not be

interest contributed, and describe the

details, see section 264(f). Attach a

deducted for the tax year but may be

conservation purpose benefited by the

statement showing the computation of the

carried over to the next 5 tax years.

donation.

deduction.

Special rules apply if the cooperative

If a contribution carryover was

Do not deduct the following interest:

has an NOL carryover to the tax year. In

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included, show the amount and how it

Interest on indebtedness incurred or

figuring the charitable contributions

was determined.

continued to purchase or carry obligations

deduction for the tax year, the 10% limit is

the interest on which is wholly exempt

applied using the taxable income after

Reduced deduction for

from income tax. For exceptions, see

taking into account any deduction for the

contributions of certain property. For a

section 265(b).

NOL.

charitable contribution of property, the

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For cash basis taxpayers, prepaid

cooperative must reduce the contribution

To figure the amount of any remaining

interest allocable to years following the

by the sum of:

NOL carryover to later years, taxable

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current tax year (e.g., a cash basis

The ordinary income and short-term

income must be modified (see section

calendar year taxpayer who in 2001

capital gain that would have resulted if the

172(b)). To the extent that contributions

prepaid interest allocable to any period

property were sold at its FMV and

are used to reduce taxable income for this

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after 2001 can deduct only the amount

For certain contributions, the long-term

purpose and increase an NOL carryover,

allocable to 2001).

capital gain that would have resulted if the

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a contributions carryover is not allowed.

Interest and carrying charges on

property were sold at its FMV.

See section 170(d)(2)(B).

straddles. Generally, these amounts must

The reduction for the long-term capital

be capitalized. See section 263(g).

Substantiation requirements.

gain applies to:

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Interest on debt allocable to the

Generally, no deduction is allowed for any

Contributions of tangible personal

production of designated property by a

contribution of $250 or more unless the

property for use by an exempt

cooperative for its own use or for sale.

cooperative gets a written

organization for a purpose or function

This interest must be capitalized. A

acknowledgment from the donee

unrelated to the basis for its exemption

cooperative must also capitalize any

organization that shows the amount of

and

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interest on debt allocable to an asset

cash contributed, describes any property

Contributions of any property to or for

used to produce the above property. See

contributed and gives an estimate of the

the use of certain private foundations,

section 263A(f) and Regulations sections

value of any goods or services provided

except for stock, for which market

1.263A-8 through 1.263A-15 for

in return for the contribution. The

quotations are readily available (section

definitions and more information.

acknowledgment must be obtained by the

170(e)(5)).

Special rules apply to:

due date (including extensions) of the

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Larger deduction. A larger deduction

Interest on which no tax is imposed

cooperative’s return, or, if earlier, the date

is allowed for certain contributions of:

(see section 163(j)).

the return is filed. Do not attach the

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Inventory and other property to certain

Forgone interest on certain

acknowledgment to the tax return, but

organizations for use in the care of the ill,

below-market-rate loans (see section

keep it with the cooperative’s records.

needy, or infants (see section 170(e)(3)

7872).

These rules apply in addition to the filing

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and Regulations section 1.170A-4A);

Original issue discount on certain high

requirements for Form 8283, Noncash

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Scientific equipment used for research

yield discount obligations (see section

Charitable Contributions described below.

to institutions of higher learning or to

163(e) to figure the disqualified portion).

For more information on substantiation

certain scientific research organizations

Line 19. Charitable contributions.

and recordkeeping requirements, see the

(other than by personal holding

Enter contributions or gifts actually paid in

regulations under section 170 and Pub.

companies and service organizations)

the tax year to or for the use of charitable

526, Charitable Contributions.

(see section 170(e)(4)); and

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and governmental organizations

Computer technology and equipment

Contributions to organizations

described in section 170(c) and any

for educational purposes.

conducting lobbying activities.

unused contributions carried over from

Contributions made to an organization

Contributions of computer

prior years.

that conducts lobbying activities are not

technology and equipment for

Cooperatives reporting taxable income

deductible if:

educational purposes. A cooperative

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on the accrual method may elect to treat

The lobbying activities relate to matters

may take an increased deduction under

as paid during the tax year any

of direct financial interest to the donor’s

section 170(e)(6) for qualified

contributions paid by the 15th day of the

trade or business and

contributions of computer technology or

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Instructions For Form 990-C - Farmers' Cooperative Association Income Tax Return - 2001 Page 9

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