Rev. Proc. 66-45

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to announce that the Internal Revenue Service will not context a cooperative association's treatment of per-unit retain certificates issued with respect to products marketed for patrons during a taxable year beginning before May 1, 1966, provided that such treatment is consistent with the general principles contained in sections 1.522-1 through 1.522-3 of the Income Tax Regulations, relating to amounts allocated by an association on a patronage basis. Thus, the Service will not contest a cooperative association's treatment of per-unit retain certificates issued with respect to products marketed for patrons during a taxable year beginning before May 1, 1966, where such certificates have been treated in such years, for purposes of computing gross income, as an increase in the association's other cost of goods sold, as provided in section 1.522-3 of the regulations. However, a cooperative association which did not take per-unit retain certificates into account in computing cost of goods sold in the year such certificates were issued may take them into account in the year of redemption, as an amount paid or returned to a patron with respect to products marketed for such patron.

SEC. 2. TAXABLE YEARS BEGINNING AFTER APRIL 30, 1966.

See sections 1.61-5 and 1.521-1(f) of the regulations, as amended by T.D. 6855, C.B. 1965-2, 21, for rules concerning the income tax treatment, at both the cooperative and patron level, of per-unit retain certificates issued by cooperative associations during taxable years beginning after April 30, 1966, with respect to products marketed for patrons during such years.

¹ Based on Technical Information Release 775, dated Oct. 15, 1965.