DPAD DEDUCTION GOES BACK TO PATRONS

Nov 21, 2019


The Domestic Production Activities Deduction (DPAD) serves as a benefit unique to cooperatives and is one of the many positive attributes of doing business with Agtegra Cooperative.

The deduction is generated by the cooperative’s activity each year, with this year’s deduction totaling $28 million. At the end of each year, the cooperative decides how much of it will be used at the cooperative level and how much will be passed on to farmers; this year, the entire deduction was passed through to Agtegra’s patrons. Letters regarding each patron’s portion of the deduction were sent on November 13.

Chris Pearson, Agtegra Chief Executive Officer, further explains the benefit of DPAD: “The cooperative has been exceedingly deliberate in the use and passing through of this benefit, and as a result, has created valuable tax deductions over the years for our patrons.”

So, what does this mean for Agtegra’s patrons?
Patrons will receive statements with their pro-rated share of this $28 million. For easy calculation and reference, if everyone paid at the 30% tax rate, the sum total of these deductions will be worth $8.4 million in cash back to farmers. Through individual conversations with tax preparers, decisions can be made regarding the possibility of deducting and other options that will best fit each individual.

Each letter contains the addressed patron’s portion of the $28 million deduction. Patrons may contact their tax preparers for a possible tax planning opportunity regarding this pass-through deduction as well.
 

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