Land O’Lakes member-owners will soon receive notice of their share of the Domestic Production Activities Deduction (Section 199). This valuable tax deduction that Land O’Lakes chooses to pass through to our members is a key benefit of our cooperative system, and it should be included on members’ 2017 income tax returns.

This deduction allows business owners (farmers are included) that meet certain criteria to not pay income tax on a portion of their taxable business income. Member cooperatives are also able to pass their unused 199 deductions to their owners.

For dairy members, the pass-through totals $90 million which equates to approximately 72 cents per hundredweight. On the ag side, we are passing through $23 million.

Details of the deduction will be in the notice letter, and it will appear on your 2017 1099-PATR. Land O’Lakes suggests all members discuss the deduction with their tax advisors in order to maximize the 2017 tax benefit.

Help protect this deduction

Not all cooperatives share the Domestic Production Activities Deduction with members. It is one of the many benefits Land O’Lakes members enjoy. But the future of the deduction is unclear as Congress ramps up tax reform discussions in Washington and many of the current proposals call for eliminating Sec. 199. Significant changes could be coming to the tax code, and Land O’Lakes firmly believes in retaining the Domestic Production Activities Deduction, since it has a stabilizing effect on farm income.

As a cooperative, we will continue to advocate on your behalf to encourage Congress to protect the deduction in Congress but we need your help. Please contact your elected officials and educate them about the importance of this deduction. The united voice of members in support of the deduction is crucial to prevent it from being repealed.