OAR 150-317-1160: Farmer’s Sales to Agricultural Cooperatives

(1) For purposes of the exclusion provided under ORS 317A.100(1)(b)(TT), “farmer’s sales” means a taxpayer’s receipts from the sale of agricultural commodities, livestock, poultry, dairy products, and similar products or by-products produced through agricultural activity, to an agricultural cooperative in Oregon, provided it is a cooperative organization described in section 1381of the Internal Revenue Code. (2) “Farmer’s sales” does not include: (a) receipts of a taxpayer who is not in the trade or business of growing or raising agricultural commodities, livestock, poultry, dairy products, and similar products or by-products produced through agricultural activity; or (b) receipts from the sale of any items that were not produced through activities described in section (1) of this rule. (3) Examples. Example 1: Bravo Farms is in the business of growing and harvesting blackberries, blueberries, and strawberries. Bravo sells 300 bushels of blackberries to PNW Cooperative in Oregon. PNW is an agricultural cooperative organization described in section 1381 of the Internal Revenue Code. Bravo Farms will exclude receipts from the sale of blackberries to PNW Cooperative from Bravo’s commercial activity. Example 2: Tony Lawncare LLC is a multi-national business that sells a variety of consumer lawncare products. Tony Lawncare packages and sells products such as pesticide, fertilizer and grass seed for home lawns, but is not involved in growing or harvesting the grass seed or other products that it sells. Tony Lawncare sells four hundred 12-lb bags of Bermuda grass seed to Cal-Or Supply Cooperative in Oregon. Cal-Or Supply is an agricultural cooperative organization described in section 1381 of the Internal Revenue Code. However, as Tony Lawncare is not in the trade or business of growing or raising agricultural commodities, Tony Lawncare’s receipts from the sale of grass seed to Cal-Or Supply Cooperative are not excludable under ORS 317A.100(1)(b)(TT). Tony Lawncare must include receipts from the sale of grass seed in their commercial activity.