Legal, Tax, & Accounting

Farmer-owned cooperatives are central to America’s abundant, safe and affordable food, fuel and fiber supply. Without the antitrust protections granted by the Capper Volstead Act, many farmer cooperatives would cease to exist and the farmers and communities they serve would suffer irreparable harm.

A lush green rice field


The tax treatment of farmer cooperatives is found in Subchapter T of the Internal Revenue Code. Under Subchapter T cooperatives may pass through their earnings to their farmer-members without double taxation. Earnings from business conducted with or for a cooperative’s members are subject to single tax treatment as income of farmer members, provided the cooperative pays or allocates the earnings to its members. Earnings used to support the cooperative’s capital funding or other needs are taxed at regular corporate rates when retained, and taxed a second time when distributed to farmer members. Earnings from sources other than business with or for the cooperative’s members are taxed at regular corporate rates.


Without antitrust protections, price discussions among farmers would violate federal antitrust statutes. The Capper-Volstead Act provides limited antitrust immunity to farmers to join together to collectively process, prepare for market, handle and market their products. To qualify, the cooperative’s voting members must all be producers. The cooperative must choose to either operate under one member/one vote or must limit distributions on dividends to eight percent. The cooperative must conduct more than half of its business with members.

  1. Oppose any action that would limit the effectiveness and efficiency of farmer cooperatives as such action would harm American agriculture and rural communities, resulting in a less reliable food, fuel, and fiber
  2. Maintain Capper-Volstead Act protections and coordinate industry response to recent legal challenges regarding the scope and applicability of the
  3. Maintain Internal Revenue Code Subchapter T tax provisions for farmer
  4. Promote tax and accounting policies that allow farmer cooperatives and their members to compete in today’s challenging marketplace and to pass on their operations to the next
  5. Ensure that Section 199A and Section 199A(g), the cooperative-specific provision, are extended beyond the December 31, 2025 expiration date or made a permanent part of the tax code.

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