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The determination of whether income derived by a
cooperative from a transaction that is directly related to
the cooperative enterprise and, thus, is patronage income
is a determination that is necessarily fact intensive.
Certified Grocers of Cal., Ltd. v. Commissioner, 88 T.C.
238, 244 (1987); Illinois Grain Corp. v. Commissioner, 87
T.C. 435, 459 (1986); Washington-Oregon Shippers Coop.,
Inc. v. Commissioner, T.C. Memo. 1987-32. In considering
the relatedness of the income-producing transaction to the
cooperative enterprise, it is important to focus on the
“totality of the circumstances” and to view the business
environment to which the income-producing transaction is
related and not to view the transaction so narrowly "as to
limit it only to its income-generating characteristic when
such a characterization is not consistent with the actual
activity." Cotter & Co. v. United States, supra at 1106-
1107; Dundee Citrus Growers Association v. Commissioner,
T.C. Memo. 1991-487.
The “directly related” test applied by the courts is
traceable to published rulings issued by the Commissioner,
such as Rev. Rul. 69-576, 1969-2 C.B. 166, and Rev. Rul.
74-160, 1974-1 C.B. 245, that interpreted patronage income
broadly. See CF Indus., Inc. v. Commissioner, supra at
105; Illinois Grain Corp. v. Commissioner, supra at 453;
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