Understanding Cooperatives

UNIT 4—Finance and Taxation of Cooperatives

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Printable Documents Unit 4

Teaching Tools:
Instructor Discussion Guide
Quiz 4
Quiz 4 Answers
Unit 4 PowerPoint Slides
S 4.1 Who Finances the Business (Members)
S 4.2 Common Stock 
S 4.3 Preferred Stock
S 4.3 Transferable Delivery Rights
S 4.5 Who Finances the Business (Owners)
S 4.6 Retained Patronage, Per-Unit Retains, Equity Redemption
S 4.7 Who Finances the Business (Creditors)
S 4.8 How Cooperatives are Taxed
S 4.9 Taxation Example
S 4.10 Single Tax Treatment
S 4.12 Flow of Funds to Finance a Business
S 4.13 Flow of Funds Exhibit

Teacher References
CIR 55: Co-ops 101
CIR 45, Section 7: Financing Cooperatives
CIR 45, Section 8: Income Tax Treatment of Cooperatives

Student References
CIR 5: Cooperatives in Agribusiness
CIR 45, Section 7: Financing Cooperatives
CIR 45, Section 8: Income Tax Treatment of Cooperatives

Unit 4 - Finance and Taxation of Cooperatives

Objective

The objective of this unit is to teach the student how a cooperative is financed and taxed.

After completion, the student should:

1.  Be able to explain the difference between the two forms of capital debt and equity.

2.  Be able to explain how equity capital is provided.

3.  Be able to describe the various ways a cooperative can obtain borrowed capital.

4.  Be able to explain the single tax principle and how it works for cooperatives.

5.  Be able to trace the flow of cash through a cooperative business.

Instructor Directions

1. Become familiar with the information provided as well as the reference materials.

2. Lead the discussion using PowerPoint slides and/or selected references provided. The discussion guide serves as an outline.

3. Identify a cooperative in the area, and research its financing characteristics by interviewing the local manager and others.

4. Trace the cash flow through a cooperative business. 
 


Developed by: Rural Development - Cooperative Programs, U.S. Department of Agriculture
Cooperative Programs Website