|
Congress Overrides Veto of Farm Bill; Measures Become Law
Congress has voted to override a Presidential veto of H.R. 2419, the Farm, Nutrition, and Bioenergy Act of 2007—the “farm bill.”
The House approved its version of the farm bill in July 2007, and the Senate its version in December 2007. A conference agreement was reached and approved by the House and Senate in May 2008, and the bill was vetoed by the President on May 21, 2008. Subsequently, the House yesterday and the Senate today voted to override the veto.
KPMG Observation
There is a quirk in connection with the veto-override vote. The bill that was enrolled and sent to the President (and that was vetoed) did not include one section of provisions concerning trade—Title III of the conference agreement. However, other trade measures and the tax provisions are in Title XV. Normally, the bill would become law with the votes to override the veto. However, in this situation, what happens next is unclear.
|
Tax Provisions Affecting Cooperative Patrons
The legislation includes certain trade and tax provisions as revenue raisers to pay for the provisions in the bill. Among these revenue provisions in the farm bill that affect patrons of cooperatives are the following:
- A limitation of the amount of farming losses that can be used to offset non-farm business income to the greater of $300,000 or the net farm income that the taxpayer has received over the last five years. The Statement of Managers to the conference agreement explains that farming activities of a cooperative are attributed to each member for purposes of this rule. Thus, a member of a cooperative who raises a commodity and sells it to the cooperative for processing is considered to be the processor of that commodity. In this situation, patronage dividends received from a cooperative that is engaged in a farming business are considered to be income from a farming business for purposes of this provision.
- A modification to the farm optional self-employment tax method, with an increased and indexed dollar threshold
Other Measures
Concerning cooperatives, the farm bill includes a number of non-tax measures with respect to specific commodities—ranging from the use of nonrecourse marketing assistance loans by cooperatives to market peanuts, to cooperatives’ participation in dairy forward pricing programs. Other measures address banks-for-cooperatives voting stock; extend value-added agricultural product marketing development grants; provide for loans to rural electric cooperatives for generation and transmission of renewable energy; and provide rules to cooperatives for the treatment of certain energy-related credits. More information about these provisions is available in the text of the legislation:
H.R. 2914
|
For more information, contact KPMG’s National Director of Cooperative Tax Services:
Teree Castanias, in Sacramento, (916) 554-1146,
tcastanias@kpmg.com
|
