October 13th, 2017
In an effort to keep you informed of the decisions made by your cooperative this past year as they relate to year-end tax planning we have summarized key points below for 2017:
Qualified Patronage Allocation - Wheat Grower's Board of Directors has approved a $7.5M qualified patronage allocation for 2017 with $3M to be paid in cash. This patronage dividend is made possible due to solid financial results for the fiscal year ended July 31st, 2017. Patronage dividend checks are scheduled to be mailed in December.
Old Year Equity Retirement - In addition to the qualified patronage allocation Wheat Grower's Board has approved payment of two years of old year equity totaling $2.5M. This represents 100% of your equity in Wheat Growers for years 2001 and 2002. With this payment, Wheat Growers is now at a fifteen-year equity revolvement. Old year equity checks are scheduled to be mailed in October.
Non-Qualified Patronage Allocation - In November, Wheat Grower's patrons will receive a letter indicating their portion of a $6M non-qualified patronage allocation approved by the Board of Directors for 2017. Please keep the letter as record of your non-qualified allocation amount. There are no tax consequences to the patron related to the non-qualified patronage allocation in the year of allocation as the Cooperative pays the tax on the non-qualified amount. The issuance of non-qualified patronage allocations are part of a continued effort to get additional equity in the names of the member/owners of the cooperative.
Domestic Production Activities Tax Deduction (Section 199)-Wheat Growers will be passing through $3.4M of this tax deduction to patrons who did grain business with the co-op in FY2017. On a 176M bushel handle this equates to 2 cents per bushel of additional value back to our grain patrons. Over the past eight years, Wheat Growers has passed through over $100M of Domestic Production Activities Tax Deductions to its member/owners.
You may want to share this letter with your tax preparer. Thanks for the opportunity to serve you and stay safe!
South Dakota Wheat Growers Association
Blake L. Bomesberger, CPA
Chief Financial Officer
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