|Missouri Dairy Business Update|
|Volume 8, Number 12|
Update on the Domestic Production Activities Deduction (DPAD)
IRS has recently provided a private letter ruling to several dairy cooperatives determining that,
The co-ops are now sending letters to members announcing this change. In some cases, this
The good news is that there is a change in the way the coop reports milk proceeds which allows
Caution will need to be used to make sure that milk proceeds are being reported as patronage income so that there is no double-dipping on the calculation of DPAD on the farm producer’s tax return.
The bad news is that dairy farmers who included their 2007 milk sales to cooperatives in their own 2007 calculation of domestic production gross receipts to arrive at their 2007 DPAD may need to amend their 2007 returns. That is because they should re-compute their QPAI without regard to their milk sales because their cooperative is using those proceeds in their own calculation and passing the deduction on to their members this year.
Source: First Pioneer Farm Credit
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