The Internal Revenue Service released its final rule on how farm income from cooperatives will be handled for tax purposes. The Hagstrom Report says the regulation has been a source of dispute since Congress passed the 2017 Tax and Jobs Act.

The IRS said Section 199A of the law provides taxpayers a deduction of up to 20% of income from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust, or estate.

The IRS said that “Section 199A(b)(7) requires patrons of Specified Cooperatives to reduce their Section 199A(a) deduction if those patrons receive certain payments from Specified Cooperatives.”

Farm leaders said that interpretation doesn’t follow congressional intent and called it the “grain glitch” in the law. However, the IRS issued the rule which will be published on Tuesday, the day before Donald Trump leaves office.

“We find it deeply troubling that in the final days of the administration, the IRS ignored what Congress wanted and issued final regulations implementing Section 199A that will raise taxes on farmers across the country,” said Chuck Conner, president of the National Council of Farmer Cooperatives.

“The Treasury Department is siding with large multinational grain companies and Wall Street at the expense of hardworking farmers and rural communities,” Conner continued.​

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