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.

The fortunes of any company have, historically, been closely tied to how well they managed risk. Written policies, approved by the board of directors and adhered to in practice, are of critical importance to ensure that the company operates within prescribed risk tolerances. In today’s fiercely competitive and challenging environment, an up-to-date policy manual, appropriate to a company’s functions and business plan, may be more important than ever. There are numerous benefits to having a relevant and effective policy manual, and severe consequences to having one that is stale and out of date.