Earlier this week, final regulations appeared in the Federal Register for the Domestic Production Activities Deduction, also called DPAD or section 199A. As a reminder, section 199A is a tax deduction for U.S. pass-through businesses, and there are special rules built within the deduction that apply specifically to cooperatives.
Members should be aware these new regulations exclude nonpatronage income from the calculation of the deduction, which will reduce the overall value of the deduction for farmers and their cooperatives. Please work with you tax advisor to determine potential impacts on your tax filing.
While disappointed in this modification, Land O’Lakes is pleased Section 199A remains largely intact. Over the years, Land O’Lakes has been committed to passing through a significant portion of its overall deduction to cooperative member-owners to help offset their taxable income. In fact, at $136 million dollars, last year’s pass through was the largest to date, bringing our member-owners’ cumulative total savings to $1.5 billion since its inception in 2007.
Moving forward, Land O’Lakes will continue to work with industry partners to educate policymakers and help protect this valuable deduction into the future.