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Title 26, Internal Revenue CodeRelease 119-110

§1381 Organizations to Which Part Applies

Title 26 › Subtitle A — Income Taxes › CHAPTER 1 — NORMAL TAXES AND SURTAXES › Subchapter T — Cooperatives and Their Patrons › PART I — TAX TREATMENT OF COOPERATIVES › § 1381

Last updated Sep 22, 2026|Official source

Summary

Applies to certain cooperatives and corporations that operate on a cooperative basis. It includes any group that is tax-exempt under section 521 (farmers’ cooperatives). It also covers corporations running as cooperatives, except those that are tax-exempt under this chapter, those covered by part II of subchapter H (for example, mutual savings banks) or by subchapter L (insurance companies), or those that provide electric power or telephone service in rural areas. Organizations described under section 521 must pay the tax imposed by section 11. For how to treat income from load loss transactions of the rural electric or telephone providers above, see section 501(c)(12)(H).

Full Legal Text

Title 26, §1381

Internal Revenue Code, Source: USLM XML via OLRC

(a)In general
This part shall apply to—
(1)any organization exempt from tax under section 521 (relating to exemption of farmers’ cooperatives from tax), and
(2)any corporation operating on a cooperative basis other than an organization—
(A)which is exempt from tax under this chapter,
(B)which is subject to the provisions of—
(i)part II of subchapter H (relating to mutual savings banks, etc.), or
(ii)subchapter L (relating to insurance companies), or
(C)which is engaged in furnishing electric energy, or providing telephone service, to persons in rural areas.
(b)Tax on certain farmers’ cooperatives
An organization described in subsection (a)(1) shall be subject to the tax imposed by section 11.
(c)Cross reference
For treatment of income from load loss transactions of organizations described in subsection (a)(2)(C), see section 501(c)(12)(H).

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

2017—Subsec. (b). Pub. L. 115–97 substituted “tax imposed by section 11” for “taxes imposed by section 11 or 1201”. 2004—Subsec. (c). Pub. L. 108–357 added subsec. (c).

Statutory Notes and Related Subsidiaries

Effective Date

of 2017 AmendmentAmendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 13001(c)(1) of Pub. L. 115–97, set out as a note under section 11 of this title.

Effective Date

of 2004 AmendmentAmendment by Pub. L. 108–357 applicable to taxable years beginning after Oct. 22, 2004, see section 319(e) of Pub. L. 108–357, set out as a note under section 501 of this title.

Effective Date

Pub. L. 87–834, § 17(c), Oct. 16, 1962, 76 Stat. 1051, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(1) For the cooperatives.—Except as provided in paragraph (3), the

Amendments

made by subsections (a) and (b) [enacting this subchapter, amending section 521 and 6072 of this title, and repealing section 522 of this title] shall apply to taxable years of organizations described in section 1381(a) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by subsection (a)) beginning after
December 31, 1962. “(2) For the patrons.—Except as provided in paragraph (3), section 1385 of the Internal Revenue Code of 1986 (as added by subsection (a)) shall apply with respect to any amount received from any organization described in section 1381(a) of such Code, to the extent that such amount is paid by such organization in a taxable year of such organization beginning after
December 31, 1962. “(3) Application of existing law.—In the case of any money, written notice of allocation, or other property paid by any organization described in section 1381(a)—“(A) before the first day of the first taxable year of such organization beginning after
December 31, 1962, or “(B) on or after such first day with respect to patronage occurring before such first day, the tax treatment of such money, written notice of allocation, or other property (including the tax treatment of gain or loss on the redemption, sale, or other disposition of such written notice of allocation) by any person shall be made under the Internal Revenue Code of 1986 without regard to subchapter T of chapter 1 of such Code [this subchapter].”

Reference

Citations & Metadata

Citation

26 U.S.C. § 1381

Title 26, Internal Revenue Code

Last Updated

Sep 22, 2026

Release point: 119-110