- 95 -
therefrom and then determining whether the income
or loss item in question was an unavoidable
result of transaction which was an integrally
necessary part of the regular course of those
activities.
Under respondent’s new test, gain or loss from the sale of
an asset could never be classified as patronage income,
unless the cooperative is in the trade or business of
selling such assets.
We agree with respondent that the normal operating
activities of a cooperative and the income realized
therefrom should be taken into account in considering
whether an item of income is patronage or nonpatronage.
However, we do not believe that an item of income is
automatically excluded from classification as patronage
income if it does not match the customary operating income
of the cooperative.
Gain from the Sale of Terra Stock and Losses from the
Liquidation of Seaway and the Surrender of Mex-Am Stock
We disagree with respondent’s requested finding that
“the Terra, Seaway and Mex-Am, stock were investments.”
From the facts discussed above, it is evident that the
business of each of the three corporations in issue, Terra,
Seaway, and Mex-Am, was closely and directly related to
petitioner’s cooperative business of supplying petroleum
products to its patrons, and that the formation and
Page: Previous 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 NextLast modified: May 25, 2011