Farmland Industries, Inc. - Page 89




                                       - 84 -                                         
                  from patronage sources, depending upon the                          
                  circumstances.  Cotter & Co. v. United States,                      
                  765 F.2d 1102 (Fed. Cir. 1985); St. Louis Bank                      
                  for Coops. v. United States, 224 Ct. Cl. 289, 624                   
                  F.2d 1041 (1980); Rev. Rul. 74-160, 1974-1 C.B.                     
                  245.  Dividend income has sometimes likewise been                   
                  held to be patronage-sourced.  Land O'Lakes, Inc.                   
                  v. United States, 675 F.2d 988 (8th Cir. 1982);                     
                  Linnton Plywood Association v. United States, 410                   
                  F. Supp. 1100 (D. Ore. 1976); Rev. Rul. 75-228,                     
                  1975-1 C.B. 278.  Rental income has also been                       
                  held to be patronage-sourced, on occasion.                          
                  Cotter & Co. v. United States, supra; Rev. Rul.                     
                  63-58, 1963-1 C.B. 109 (semble); and some capital                   
                  gains income has been held to be income from                        
                  patronage sources, under the circumstances                          
                  presented in the particular case.  Astoria                          
                  Plywood Corp. v. United States, an unreported                       
                  case (D. Ore. 1979), 43 AFTR 2d 79-1114, 79-1                       
                  USTC par. 9197; contra Rev. Rul. 74-160, 1974-1                     
                  C.B. 245. [Id.]                                                     

             Significantly, in the last case cited above, in response to              
             the Government’s argument that “all capital gains are not                
             patronage source income,” the court stated:  “In my view,                
             capital gains may be patronage source income.  In each                   
             instance, it depends on whether the income is 'directly                  
             related’ to Astoria's activities.”  Astoria Plywood Corp.                
             v. United States, 43 AFTR 2d 79-1114, 79-1119, 79-1 USTC                 
             par. 9197, at 86,349 (D. Or. 1979).                                      
                  Moreover, the Commissioner has twice ruled that in                  
             appropriate circumstances capital gains can be classified                
             as patronage income.  See Rev. Rul. 74-24, 1974-1 C.B. 244;              
             Rev. Rul. 71-439, 1971-2 C.B. 321.  Each of those rulings                
             involves a nonexempt cooperative engaged in the manufacture              





Page:  Previous  74  75  76  77  78  79  80  81  82  83  84  85  86  87  88  89  90  91  92  93  Next

Last modified: May 25, 2011