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its board of directors until 1963. He was a leader in
the farmers’ cooperative movement and believed that
farmers could improve their overall financial condition
by combining their market power.
Petitioner has operated continuously since 1931 as a
farmers’ cooperative. From 1931 to 1947, it was taxed as
an exempt cooperative. From 1947 to 1961, it was taxed as
a nonexempt cooperative under respondent’s administrative
interpretations and practices then in effect. See
generally Farmers Coop. Co. v. Birmingham, 86 F. Supp. 201
(N.D. Iowa 1949). Since 1962, petitioner has been taxed as
a nonexempt cooperative under subchapter T of the Internal
Revenue Code.
Petitioner is a regional cooperative. Its members are
local cooperative associations whose members are farmers
and ranchers. During the years in issue, petitioner’s
membership consisted of more than 2,200 local cooperatives
which were located primarily in the Midwest. With the
exception of petitioner’s president, each member of its
board of directors during the years in issue was either a
working farmer or a manager of a local cooperative.
Petitioner’s articles of incorporation provide that
its primary purpose is to engage in agricultural supply and
marketing activities for the benefit of its patrons. Its
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