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 119 STAT. 2618

allowed under subsection (a) to such cooperative which is— ‘‘(i) allowed with respect to the portion of the qualified production activities income to which such payment is attributable, and ‘‘(ii) identified by such cooperative in a written notice mailed to such person during the payment period described in section 1382(d). ‘‘(B) COOPERATIVE DENIED DEDUCTION FOR PORTION OF QUALIFIED PAYMENTS.—The taxable income of a specified agricultural or horticultural cooperative shall not be reduced under section 1382 by reason of that portion of any qualified payment as does not exceed the deduction allowable under subparagraph (A) with respect to such payment. ‘‘(C) TAXABLE INCOME OF COOPERATIVES DETERMINED WITHOUT REGARD TO CERTAIN DEDUCTIONS.—For purposes of this section, the taxable income of a specified agricultural or horticultural cooperative shall be computed without regard to any deduction allowable under subsection (b) or (c) of section 1382 (relating to patronage dividends, per-unit retain allocations, and nonpatronage distributions). ‘‘(D) SPECIAL RULE FOR MARKETING COOPERATIVES.— For purposes of this section, a specified agricultural or horticultural cooperative described in subparagraph (F)(ii) 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. ‘‘(E) QUALIFIED PAYMENT.—For purposes of this paragraph, the term ‘qualified payment’ means, with respect to any person, any amount which— ‘‘(i) is described in paragraph (1) or (3) of section 1385(a), ‘‘(ii) is received by such person from a specified agricultural or horticultural cooperative, and ‘‘(iii) is attributable to qualified production activities income with respect to which a deduction is allowed to such cooperative under subsection (a). ‘‘(F) SPECIFIED AGRICULTURAL OR HORTICULTURAL COOPERATIVE.—For purposes of this paragraph, the term ‘specified agricultural or horticultural cooperative’ means 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 horticultural products.’’. (10) Clause (i) of section 199(d)(4)(B) is amended— (A) by striking ‘‘50 percent’’ and inserting ‘‘more than 50 percent’’, and (B) by striking ‘‘80 percent’’ and inserting ‘‘at least 80 percent’’.

26 USC 199.

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PUBLIC LAW 109–135—DEC. 21, 2005

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