Rev. Rul. 69-71

Advice has been requested whether in the light of Revenue Ruling 67-333, C.B. 1967-2, 299, a "completed pool" method of accounting is an acceptable method of accounting for Federal income tax purposes for the marketing of agricultural products.

In general, a "completed pool" method of accounting is a method of accounting employed with respect to pools opening in one taxable year and closing in a subsequent taxable year with the end result being the deferral of the reporting of gain or loss until the taxable year in which the pool is closed.

Revenue Ruling 67-333 provides, in part, that only payments from each such pool paid by a cooperative to its patrons and determined with reference to the net earnings of the cooperative with respect to such pool or pools are patronage dividends. These amounts are determined only in the taxable year in which each pool closes.

Revenue Ruling 67-333 illustrates this principle with an example of entries made on the books of a cooperative with respect to a pool that remains open beyond the close of the cooperative's taxable year. This example illustrates the point that the final payment out of a pool may be a patronage dividend as defined in section 1388(a) of the Internal Revenue Code of 1954 and thus would be deductible by the cooperative for the taxable year in which the pool closes if it otherwise conforms to the provisions of section 1382 of the Code.

It is held that the "completed pool" method, as described above, is not an acceptable method of accounting for Federal income tax purposes. Revenue Ruling 67-333 is not to be construed as holding that such a method of accounting is an acceptable method for Federal income tax purposes.

Revenue Ruling 67-333 is hereby clarified.