By that we mean, continue to utilize at the Cooperative level, pass the benefit through to the patron or a combination of both. We envision recommending some alternatives that will utilize non-qualified patronage allocations also. Our goal is to help you further strengthen your balance sheets and manage your members’ equity to best fit your situation or long-term plans.

As most of you know, the pooling of interests method simply combined the accounts of each merging company at book value, with no adjustments to reflect market value differences. In addition, retained savings of both companies were also combined.

Several changes have been made to some of the Iowa fuel tax credits. For 2009 (and 2010) the E-85 tax credit amount has been reduced from $.25 per gallon to $.20 per gallon. This amount will continue to decline until it is eliminated, effective calendar year 2021.

While this year brought success for some, most of you missed an opportunity to utilize non-qualified patronage allocations. I use the term “missed” because making a non-qualified allocation with a cooperative that hasn’t utilized or discussed such allocation in advance, is difficult to do at the audit board meeting.

Recently, an issue has been raised with the IRS concerning the deductibility of grain payables recorded in a cooperative’s financial statements, and therefore in its tax return, for deferred payment contracts. The question was posed as to why the cooperative taxpayer should be allowed to deduct in its tax return a payable for grain purchased under a deferred payment arrangement, allowing the farmer/seller the opportunity to defer the reporting of his income to a subsequent tax year.

What an extraordinary year! This year’s audits were some of the most interesting we have seen in a long time. Many of you enjoyed extremely successful years by capitalizing on all of the positives in the short list above. While others not so fortunate were negatively affected by some of the events, a few managed to successfully straddle their ups and downs and come out even.