AGRIS Customer Documentation
Using Equity for NOL Credit Letter
NOL Letter is a Net operating Loss letter.
The coop is taking the equity from years XYZ and issuing, not as cash, but as a NOL Letter. The patron can take this letter and use it as a tax credit for multiple years until the amount is all used up. For example, if they owe $10,000 in taxes and the letter is $9000, their tax bill would only be $1000.
PLEASE NOTE:
This is how to handle this process in AGRIS patronage module.
The legal and tax ramifications should be discussed with your coop’s professional services.
How to handle this in patronage:
setup a new qualified equity type for NOL Credit
Pat > setup > equity code setup
qualified
posts to retained earning account.
It is important that this be qualified because we do NOT want this to appear on their 1099-patr form.Transfer the equity from 2010 and 2011 to this new equity type.
Pat > transactions > Stock/Equity Transfer
be VERY sure to use the original date for the transaction.
This will create a zero-dollar voucher in AP that moves the equity 1 and 3 ledger amounts to equity code N ledger code.when everything is transferred and still has the 2010 and 2011 dates, pay it back WITHOUT A/P.
turn off the AP integration in Past >setup > system integration > stock/equity transfers integrate to AP = N
then pay it back to remove the equity type N from the account balance.
PAT > Transactions > Stock/Equity payback > select equity code N = NOL CREDIT to payback
screen 2, key in 100% of the equity with dates 3/16/10 to 3/16/11
screen 3, payback 100% check (which won't really happen because we are NOT creating vouchers for this)
and issue payback.Turn the ap integration back on.
PAT > setup > system integration > stock/equity transfers integrate to AP = Y
Result:
Everything they gave as a NOL CREDIT is under equity source code N=NOL Credit
That transfer from previous equity types to the newly created equity type created a voucher so the ledger will have the dollar amount removed from EQUITY CODE LEDGER to RETAINED EARNINGS.
By keeping the original dates, you still have a history of exactly what was assigned to the type N=NOL Credit equity.
By turning off the AP integration and doing a payback, the equity is zeroed out of patronage and there is still a history of what was assigned to the patron if the patron looses anything or has questions.
None of this will appear in tax documentation.
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