According to Stofferahn, administrative costs are down for the 5th year in a row. 2018 cost reductions are primarily related to reduced legal expenses (SEC related). “Direct Deposit of distribution payments has also been very helpful in allowing a more efficient refocusing of time to more important tasks.”
Stofferahn addressed additional questions often asked by members:
Question: What are my membership Units worth?
Answer: GGC does not place a value on Units. The best option is to review recent transactions at the www.fncagstock.com website. It is important to understand that Units are very thinly traded. “Arms-length transfers (sales) peaked in 2010 at 1.75% of total Units. In most recent years, however, sales have always accounted for less than 1% transferred per year. Values through FNC peaked in 2014 slightly above $6.00, but more recently have been closer to the $3.00 range.
Question: Why can’t I receive my GGC K-1 sooner?
Answer: First of all, a K-1 is not a 1099 which can be printed shortly after the first of the year. The K-1 requires GGC to: 1) Close our books for the year (mid Jan); 2) Satisfy our Auditor (late Jan); 3) Have our accountant prepare an income estimate (late Jan); 4) Allocate income through Board motion (early Feb); and 5) Have our Accountant determine ND income tax withholding (early Feb). Finally, the K-1 is processed, printed, and mailed (mid Feb). Because many of our members need to file their taxes by the end of February, we proceed as fast as we possibly can. It is not possible to speed up the schedule by cutting corners or ignoring critical process. It is also not legally possible for GGC to change our tax year. IRS rules require our tax year to be the same as the majority of our partners, which is the calendar year.
Question: What are Transfer Requirements?
Answer: At the conclusion of a transfer, the resulting Member(s) must hold a minimum of 4,000 Units. We also require delivery to be completed before a transfer is approved. For Method A pool participants, this means bushels of corn delivered for the year must be equal to or greater than the number of Units to be transferred. For Method B pool participants, the Agency fee of $0.02/bushel must be paid so that GGC can acquire and deliver corn on the member’s behalf. New members must complete a new Uniform Member Agreement (UMA) and a new Annual Delivery Agreement (ADA). Existing members acquiring Units must complete a new ADA to include all Units the member owns.
Question: If I sell my Units, what would be my tax basis?
Answer: GGC does not offer tax advice. You must talk to your tax advisor. When it comes to basis, every member’s situation is different. GGC does provide important information to members or their tax advisors that may be necessary for basis calculations. It is important to recognize that a taxable event occurred when GGC converted from a ND Cooperative to a MN 308B Cooperative in 2009. Units were appraised to have a value of $2.86/Unit. For some, this was a taxable loss, for others it was a taxable gain. Distributions issued to members since t hat time (available on the GGC website) also have an impact on the tax basis. Generally, partnership distributions (characterized as a refund of equity) have the impact of reducing basis. Allocations of income, that have not yet been retired, generally have the impact of increasing basis. Basis is also tied to when a member acquired Units and how much the member paid for them or valued them at the time. GGC may provide information from an individual member’s file to indicate when Units were acquired along with any sales data that may have been involved. Once again, it is best to consult with your tax advisor.