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OPINION
Petitioner is a nonexempt cooperative subject to
subchapter T. See generally Buckeye Countrymark, Inc. v.
Commissioner, 103 T.C. 547, 554-563 (1994), for an overview
of the taxation of nonexempt cooperatives under subchapter
T. The principal issue in this case is whether the gains
and losses that petitioner realized from the disposition
of the property described above should be classified as
patronage or nonpatronage gains and losses for purposes of
subchapter T. The property at issue is petitioner’s stock
in three corporations, Terra, Mex-Am, Seaway, and certain
“property used in a trade or business”, as defined by
section 1231(b), consisting of the assets of petitioner’s
Lamont gas plant, its soybean processing facilities, and
miscellaneous business assets. The bulk of the
deficiencies determined in the notice of deficiency is
attributable to respondent’s reclassification of the gain
from petitioner’s sale of the stock of Terra.
The term “patronage dividend” is defined by section
1388(a) as follows:
(a) PATRONAGE DIVIDEND.--For purposes of this
subchapter, the term “patronage dividend” means
an amount paid to a patron by an organization to
which part I of this subchapter applies--
(1) on the basis of quantity or value
of business done with or for such patron,
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