1120-US: Taxable income on Form 1120-C not reduced by the available patronage net operating loss (FAQ)

Show expandable text

New (tax) year, new help!

Fixed Assets and UltraTax CS 2023 help is now on Help and Support. We're still moving articles, but you can find most content for the 2023 tax year there. Continue using the Help & How-To Center for tax years 2022 and older.

Question

Why is the taxable income not being reduced by the available patronage net operating loss?

Answer

Patronage and nonpatronage losses must be calculated separately and carried over or carried back separately. Under Section 1388(j)(1), cooperatives can use losses to offset earnings only to the extent that the earnings and losses are from business done with or for patrons. Any patronage source loss cannot be used to offset nonpatronage income.

Related topic: 1120-US: Form 1120-C - Cooperative associations FAQs

Was this article helpful?

Thank you for the feedback!