Fillable Form 1028

What is Form 1028?

Form 1028, Application for Recognition of Exemption Under Section 521 of the Internal Revenue Code, is an IRS form used by a farmers’ cooperative in applying for recognition to exempt its status under Section 521 of the Internal Revenue Code.

According to the Internal Revenue Code, a farmers’ cooperative is an association of farmers, fruit growers, or persons with the same occupations organized and operated on a cooperative basis.

You may download a PDF copy of the 1028 form on the IRS website. But you may electronically fill it out on PDFRun for your convenience.

How to fill out Form 1028?

Provide the necessary information in filling out Form 1028. Read the instructions carefully, and make sure that all information you entered is true, accurate, and correct.

Part I - Identification

Item 1a

Enter the full name of the organization.

Item 1b

Enter the employer identification number.

Item 2a

Enter the number, street, and room or suite number. If the mail couldn’t be delivered to the street address, enter the PO box number.

Item 2b

Enter the city or town, county, state, and ZIP code.

Item 3

Enter the name and telephone number of the person to be contacted during business hours. Make sure to include the area code.

Item 4

Enter the date the organization was incorporated or formed.

Item 5

Enter the month the annual accounting period ends.

Item 6a

Mark “Yes” to determine if the organization has filed federal income tax returns. Otherwise, mark “No.”

Item 6b

If you marked “Yes” on item 6a, enter the form numbers, years film, and the Internal Revenue office where the federal income tax returns were filed.

Part II - Type of Entity and Organizational Documents

Check the applicable box to determine the type of entity, and attach a conformed copy of the organizing and operations documents listed. You may select:

• Corporation - Articles of Incorporation, bylaws
• Other - Constitution or Articles of Association, bylaws

Part III - Activities and Operational Information

There are three columns in this portion, namely: Shares, Aluntm, and Rate of Dividend. Enter the appropriate amounts on the required columns.

Item 1

Enter the number of shares of each class of capital stock currently outstanding, if any, the value of the consideration for which issued, and the rate of dividend paid:

• A - Preferred stock (voting)
• B - preferred stock (nonvoting)
• C - Common stock (voting)
• D - Common Stock (nonvoting)

Item 2

Enter the number of shares of capital stock (other than nonvoting preferred) on the “Rate of Dividend” column owned by the following:

• A - Producers
• B - Nonproducers
• C - Current and active producers
• D - Total number of shares
• E - Percentage owned by current and active producers

To get the results of Item 2D, add Items 2A and 2B. For Item 2E, divide Item 2C by Item 2D.

Item 3

Enter what provision is made for retiring the voting stock held by a nonproducer.

Item 4

Enter the description of who is accorded voting rights in the cooperative and how many votes one person may have. If a person may be entitled to more than one vote, explain in detail how voting rights are acquired.

Item 5

Enter the legal rate of interest in the state where the association is located.

Certification

This portion states that under you are declaring that you are authorized to sign this application on behalf of the organization, and you examined that the information you entered in this application is true, correct, and complete. Otherwise, you will be penalized for perjury.

Signature

Affix your signature.

Title or authority of signer

Enter your title or authority.

Date

Enter the date you signed the form.

Item 6

Enter the explanation of whether the owners, upon dissolution or liquidation, may participate in the profits of the association beyond fixed dividends, if the association issues any nonvoting preferred stock.

Item 7a

Mark “Yes” to determine if the state law requires the accumulation and maintenance of reserves. Otherwise, mark “No.”

Item 7b

If you marked “Yes” on 7a, enter the name and purposes of the reserves and enter the amount of each.

Item 8a

Mark “Yes” to determine if the association maintains or plans to maintain any reserve or reserves other than those required by the state law. Otherwise, mark “No.”

Item 8b

If you marked “Yes” on Item 8a, enter the names and purposes of the reserves and enter the amount of each.

Item 9

Mark “Yes” to determine if the association deals or plans to deal with both members and nonmembers. Otherwise, mark “No.”

Item 10a

Mark “Yes” to determine if the association pays or plans to pay patronage dividends. Otherwise, mark “No.”

Item 10b

If you marked “Yes” on Item 10a, mark “Yes” to determine if they paid or will be paid to all patrons, both member and nonmember, on the same basis. Otherwise, mark “No.”

Item 11a

Mark “Yes” to determine if the allocation patronage dividends are based on an obligation in existence before the cooperative received the amounts allocated. Otherwise, mark “No.”

Item 11b

If you marked “Yes” on Item 11a, mark the appropriate box to determine the type of obligation. You may select:

• Organizing document
• Bylaws

If you marked “Organizing document,” specify what type of organizing document it is.

Item 12

Enter the explanation of all of the activities in which the association is or will be engaged.

Item 13

Enter the explanation of how the distribution is or will be made of the proceeds marketed for members and nonmembers. If the organization operates on a basis of allocated units, enter also the explanation of how losses are or will be treated.

Item 14

Enter the explanation of how the association charges for supplies and equipment bought for members and nonmembers.

Item 15

Enter the explanation of the requirements for membership in the association.

Item 16

Federated cooperatives should answer this item.

Item 16a

Mark “Yes” to determine if all association’s member cooperatives are exempted under Section 521. Otherwise, mark “No.”

Item 16b

If you marked “No” on Item 16a, mark “Yes” to determine if the nonexempt member cooperative has the same annual accounting period as the association. Otherwise, mark “No.”

Item 16c

If you marked “No” on 16b, check the appropriate box to determine the method the association used or will use, to provide a common or comparable unit of time for analyzing and evaluating its operations and those of its members. You may select:

• Method 1 - The association uses the operations of members for those months that correspond to the months that make up its tax year.
• Method 2 - The association uses the tax years of members that end within its tax year.
• Method other than 1 or 2 above

If you checked “Method other than 1 or 2 above,” explain the type of method the association uses.

Take note that the methods listed do not apply to the filing of returns or how operating results are reported by a federated cooperative and its members.

Item 17

Enter the value of agricultural products marketed or handle for the following:

• Members
  • Actually produced by members
  • Not actually produced by members but marketed by them through the association
• Nonmembers
  • Actually produced by nonmembers
  • Not actually produced by nonmembers but marketed by the through the association
• Nonproducers (purchased from nonproducers for marketing by the association)

Item 18

Enter the value of supplies and equipment purchased for or sold to the following:

• Members who were producers
• Nonmembers who were producers
• Members and nonmembers who were not producers

Item 19

Enter the amount of business done with the United States Government or any of its agencies.

For items 17 to 19, there are four columns, namely:

• Current tax year
  • (a) From and To
• 3 prior tax years
  • (b) From and To
  • (c) From and To
  • (d) From and To

Enter the appropriate amounts in the respective columns.

Item 20

Mark “Yes” to determine if the association plans to do business with the United States Government or any of its agencies in the future. Otherwise, mark “No.”

Item 21a

Mark “Yes” to determine if all of the net earnings (after payment of dividends, if any, on capital stock), for the years shown on Items 17 to 19 are distributed as patronage dividends. Otherwise, mark “No.”

Item 21b

If you marked 21b “No,” mark “Yes” to determine if there were undistributed net earnings apportioned on the records to all patrons on a patronage basis. Otherwise, mark “No.”

Item 22a

Mark “Yes” to determine if the organization operated in a manner consistent with the information given since the date formed. Otherwise, mark “No.”

Item 22b

If you marked 22b “No,” enter the changes that have occurred and the dates of the changes.

Part IV - Financial Data

Statement of Receipts and Expenditures

Enter the period ending for the association’s statement of receipts and expenditures.

Receipts

Item 1

Enter the gross dues and assessments from members.

Item 2

Enter the gross dues and assessments from affiliated organizations.

Item 3a

Enter the gross amount derived from activities related to the organization’s exempt purpose.

Item 3b

Enter the less cost of goods sold.

Item 4a

Enter the gross amount from other business activities.

Item 4b

Enter the less cost of goods sold.

Item 5a

Enter the gross amount received from the sale of assets, excluding inventory items.

Item 5b

Enter the less cost or other basis and sales expense of assets sold.

Item 6

Enter the interest, dividends, rents, and loyalties.

Item 7

Enter other receipts.

Item 8

Enter the total receipts by adding Items 1 to 7.

Expenditures

Item 9

Entre the compensation of officers, directors, and trustees.

Item 10

Enter other salaries and wages.

Item 11

Enter the interest.

Item 12

Enter the rent.

Item 13

Enter the depreciation and depletion.

Item 14

Enter the dues and assessments to affiliated organizations.

Item 15

Enter other expenditures.

Item 16

Enter patronage dividends.

Item 17

Enter the total expenditures by adding items 9 to 16.

Item 18

Enter the excess of receipts over expenditures.

Balance Sheets

Enter the beginning date and ending dates on the right column. Make sure to enter the amounts in both columns.

Assets

Item 19

Enter the amount of cash.

Item 20

Enter the trade notes and accounts receivable.

Item 21

Enter the inventories.

Item 22

Enter the investments.

Item 23

Enter other current assets.

Item 24

Enter depreciable and depletable assets.

Item 25

Enter land (net of any amortization).

Item 26

Enter other assets.

Item 27

Enter the total assets.

Liabilities and Capital

Item 28

Enter accounts payable.

Item 29

Enter mortgages, notes, and bonds payable in less than one year.

Item 30

Enter other current liabilities.

Item 31

Enter mortgages, notes, bonds payable in one year or more.

Item 32

Enter other liabilities.

Item 33

Enter patronage dividends allocated in non-cash form, other than capital stock and interest-bearing obligations.

Item 34

Enter per-unit retains allocated in non-cash form.

Item 35

Enter the capital stock in numbers and end of the year.

From Items 35a to 35d, there are three more columns, namely: number of shareholders, number of shares issued for money, and issued as patronage benefits. Enter the appropriate amounts in the respective columns.

Item 35a

Enter the voting preferred stock.

Item 35b

Enter the nonvoting preferred stock.

Item 35c

Enter the voting common stock.

Item 35d

Enter the nonvoting common stock.

Item 36

Enter the paid-in capital or capital surplus.

Item 37

Enter the retained earnings.

Item 38

Enter the less costs of treasury stock.

Item 39

Enter the total liabilities and capital.

How to file Form 1028?

File the completed Form 1028 IRS, along with all required information and Form 8718, User Fee for Exempt Organization Determination Letter Request, to the address indicated in the Instructions of Form 8718.