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If the cooperative ceases to exist, file

income required to be reported on lines

Line 2. Cost of Goods Sold

Form 990-C and check the “Final return”

4a through 10. In general, advance

Enter the cost of goods sold on line 2,

box.

payments are reported in the year of

page 1. Before making this entry,

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If the cooperative changed its name

receipt. For how to report income from

complete Form 990-C, Schedule A, on

since it last filed a return, check the

long-term contracts, see section 460. For

page 2. See the Schedule A instructions

“Name change” box. Generally, a

special rules for reporting certain advance

on page 14.

cooperative also must have amended its

payments for goods and long-term

articles of incorporation and filed the

contracts, see Regulations section

Line 4a. Income from Patronage

amendment with the state in which it was

1.451-5. For permissible methods for

Dividends and Per-unit Retain

incorporated.

reporting certain advance payments for

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Allocations

If the cooperative has changed its

services by an accrual method

Attach a schedule listing the name of

address since it last filed a return

cooperative, see Rev. Proc. 2004-34,

each declaring association from which the

(including a change to an “in care of”

2004-22 I.R.B. 991.

cooperative received income from

address), check the “Address change”

Installment sales. Generally, the

patronage dividends and per-unit retain

box. If a change in address occurs after

installment method cannot be used for

allocations, and the total amount received

the return is filed, use Form 8822,

dealer dispositions of property. A “dealer

from each association.

Change of Address, to notify the IRS of

disposition” is: (a) any disposition of

the new address.

personal property by a person who

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Include the items listed below:

If the cooperative must change their

regularly sells or otherwise disposes of

1. Patronage dividends received in:

originally filed return for any year, it

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personal property of the same type on the

Money,

should file a new return including any

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installment plan or (b) any disposition of

Qualified written notices of

required attachments. Use the revision of

real property held for sale to customers in

allocation, or

Form 990-C applicable to the year being

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the ordinary course of the taxpayer’s

Other property (except nonqualified

amended. The amended return must

trade or business.

written notices of allocation).

provide all the information called for by

2. Nonpatronage distributions

the form and instructions, not just the new

These restrictions on using the

received on a patronage basis from

or corrected information. Check the

installment method do not apply to

tax-exempt farmers’ cooperatives in:

dispositions of property used or produced

“Amended return” box.

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Money,

in a farming business or sales of

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Qualified written notices of

Income

timeshares and residential lots for which

allocation, or

the cooperative elects to pay interest

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Except as otherwise provided in the

Other property (except nonqualified

under section 453(I)(3).

Internal Revenue Code, gross income

written notices of allocation), based on

includes all income from whatever source

For sales of timeshares and residential

earnings of that cooperative either from

derived.

lots reported under the installment

business done with or for the United

method, the cooperative’s income tax is

Extraterritorial income. Gross income

States or any of its agencies (or from

increased by the interest payable under

generally does not include extraterritorial

sources other than patronage, such as

section 453(l)(3). To report this addition to

income that is qualifying foreign trade

investment income).

tax, see the instructions for Schedule J,

income. However, the extraterritorial

3. Qualified written notices of

line 9, on page 19.

income exclusion is reduced by 20% for

allocation at their stated dollar amounts

transactions after 2004, unless made

and property at its fair market value

Enter on line 1 (and carry to line 3), the

under a binding contract with an unrelated

(FMV).

gross profit on collections from installment

person in effect on September 17, 2003,

4. Amounts received on the

sales for any of the following:

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and at all times thereafter. Use Form

redemption, sale, or other disposition of

Dealer dispositions of property before

8873, Extraterritorial Income Exclusion, to

nonqualified written notices of allocation.

March 1, 1986.

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figure the exclusion. Include the exclusion

Dispositions of property used or

Generally, patronage dividends from

in the total for Other deductions on line

produced in the trade or business of

purchases of capital assets or

26, Form 990-C.

farming.

depreciable property are not includible in

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Certain dispositions of timeshares and

Income from qualifying shipping

income but must be used to reduce the

residential lots reported under the

activities. For tax years beginning after

basis of the assets. See section 1385(b)

installment method.

and the related regulations.

October 22, 2004, the cooperative’s gross

5. Amounts received (or the stated

income does not include income from

Attach a schedule showing the

dollar value of qualified per-unit retain

qualifying shipping activities (as defined in

following information for the current and

section 1356) if the cooperative makes an

certificates received) from the sale or

the 3 preceding years: (a) gross sales, (b)

election under section 1354 to be taxed

redemption of nonqualified per-unit retain

cost of goods sold, (c) gross profits, (d)

certificates.

on its notional shipping income (as

percentage of gross profits to gross sales,

6. Per-unit retain allocations received

defined in section 1353) at the highest

(e) amount collected, and (f) gross profit

(except nonqualified per-unit retain

corporate rate (35%). If the election is

on the amount collected.

made, the cooperative generally may not

certificates). See section 1385.

Nonaccrual experience method.

claim any loss, deduction, or credit with

Cooperatives that qualify to use the

respect to qualifying shipping activities. A

Payments from the Commodity Credit

nonaccrual experience method (explained

cooperative making this election also may

Corporation to a farmers’ cooperative for

on page 3) should attach a schedule

elect to defer gain on the disposition of a

certain expenses of the co-op’s

showing total gross receipts, the amount

qualifying vessel under section 1359.

farmers-producers under a “reseal”

not accrued as a result of the application

program of the U.S. Department of

Report the 1352(1) tax on Schedule J,

of section 448(d)(5), and the net amount

Agriculture are patronage-source income

line 3, and report the section 1352(2) tax

accrued. Enter the net amount on line 1a.

that may give rise to patronage dividends

on Schedule J, line 9. For Schedule J,

under section 1382(b)(1). See Rev. Rul.

Certain cooperatives that have gross

line 9, check the Other box and attach a

89-97, 1989-2 C.B. 217, for more

receipts of $10 million or more and have

schedule that shows the computation of

information.

patronage and nonpatronage source

the section 1352(2) amount.

income and deductions must complete

Line 1. Gross Receipts

Line 4b. Dividends

and attach Form 8817, Allocation of

Enter gross receipts or sales from all

Patronage and Nonpatronage Income

See the instructions for Schedule C on

business operations except items of

and Deductions, to their return.

page 15, then complete Schedule C and

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Instructions For Form 990-C - Farmers' Cooperative Association Income Tax Return - Internal Revenue Service - 2004 Page 8

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