Useful Information for Member Tax Advisors
From time to time, we receive calls from members inquiring about their basis in share values or the tax treatment of a particular distribution during the year.
Golden Growers is not qualified to offer tax advice. Every member’s tax situation is different. Therefore, we recommend that you consult a qualified tax advisor for questions about the tax status of any allocations or distributions.
It may be useful, however, for Members or their tax advisors to review the historic record of distributions and descriptions for purposes of determining basis levels or current tax implications.
Golden Growers Cooperative Distribution History (Click Link)
Basis levels are important when a Member decides to transfer his or her Units by sale, gift, etc. It is important for each member to keep an individual record of their basis which will vary widely depending on whether a they became a member through the initial equity drive, acquired the Units through inheritance, received them through gift, or purchased them some time after the original offering.
Basis levels are impacted by Partnership Distributions (since the conversion to a Minnesota Cooperative in September 2009). Generally, these type of distributions reduce your basis in Golden Growers Units.
The conversion from a North Dakota Cooperative to a Minnesota Cooperative was a taxable event to Members because it ‘reset’ basis levels for Membership Units at a Fair Market Value (FMV) of $2.86/Unit. For some, this was a taxable loss, for others, it was a taxable gain. It all depended on how much a member paid for their ‘shares’ prior to the conversion.
Distributions issued to members since that time (available here) also have an impact on 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.
Again, every Member’s situation will be different and you should contact a qualified tax advisor for all tax questions.