Page:United States Statutes at Large Volume 118.djvu/1457

 118 STAT. 1427 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(i) such person’s allocable share of such wages (without regard to this subparagraph), as determined under regulations prescribed by the Secretary, or ‘‘(ii) 2 times 9 percent of the qualified production activities income allocated to such person for the tax able year. ‘‘(2) APPLICATION TO INDIVIDUALS.—In the case of an indi vidual, subsection (a)(1)(B) shall be applied by substituting ‘adjusted gross income’ for ‘taxable income’. For purposes of the preceding sentence, adjusted gross income shall be determined— ‘‘(A) after application of sections 86, 135, 137, 219, 221, 222, and 469, and ‘‘(B) without regard to this section. ‘‘(3) PATRONS OF AGRICULTURAL AND HORTICULTURAL COOPERATIVES.— ‘‘(A) IN GENERAL.—If any amount described in para graph (1) or (3) of section 1385(a)— ‘‘(i) is received by a person from an organization to which part I of subchapter T applies which is engaged— ‘‘(I) in the manufacturing, production, growth, or extraction in whole or significant part of any agricultural or horticultural product, or ‘‘(II) in the marketing of agricultural or horti cultural products, and ‘‘(ii) is allocable to the portion of the qualified production activities income of the organization which, but for this paragraph, would be deductible under sub section (a) by the organization and is designated as such by the organization in a written notice mailed to its patrons during the payment period described in section 1382(d), then such person shall be allowed a deduction under sub section (a) with respect to such amount. The taxable income of the organization shall not be reduced under section 1382 by reason of any amount to which the preceding sentence applies. ‘‘(B) SPECIAL RULES.—For purposes of applying subparagraph (A), in determining the qualified production activities income which would be deductible by the organization under subsection (a)— ‘‘(i) there shall not be taken into account in com puting the organization’s taxable income any deduction allowable under subsection (b) or (c) of section 1382 (relating to patronage dividends, per unit retain alloca tions, and nonpatronage distributions), and ‘‘(ii) in the case of an organization described in subparagraph (A)(i)(II), the organization shall be treated as having manufactured, produced, grown, or extracted in whole or significant part any qualifying production property marketed by the organization which its patrons have so manufactured, produced, grown, or extracted. ‘‘(4) SPECIAL RULE FOR AFFILIATED GROUPS.—

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