26 U.S.C. § 1383 — Computation of tax where cooperative redeems nonqualified written notices of allocation or nonqualified per-unit retain certificates

(a) General rule If, under section 1382(b)(2) or (4), or (c)(2)(B), a deduction is allowable to an organization for the taxable year for amounts paid in redemption of nonqualified written notices of allocation or nonqualified per-unit retain certificates, then the tax imposed by this chapter on such organization for the taxable year must be the lesser of the following: (1) the tax for the taxable year computed with such deduction; or (2) an amount equal to— (A) the tax for the taxable year computed without such deduction, minus (B) the decrease in tax under this chapter for any prior taxable year (or years) which would result solely from treating such nonqualified written notices of allocation or nonqualified per-unit retain certificates as qualified written notices of allocation or qualified per-unit retain certificates (as the case may be). (b) Special rules (1) If the decrease in tax ascertained under subsections (a)(2)(B) exceeds the tax for the taxable year (computed without the deduction described in subsections (a)) such excess must be considered to be a payment of tax on the last day prescribed by law for the payment of tax for the taxable year, and must be refunded or credited in the same manner as if it were an overpayment for such taxable year. (2) for determining the decrease in tax under subsections (a)(2)(B), the stated dollar amount of any nonqualified written notice of allocation or nonqualified per-unit retain certificate which is to be treated under such subsections as a qualified written notice of allocation or qualified per-unit retain certificate (as the case may be) must be the amount paid in redemption of such written notice of allocation or per-unit retain certificate which is allowable as a deduction under section 1382(b)(2) or (4), or (c)(2)(B) for the taxable year. (3) If the tax imposed by this chapter for the taxable year is the amount determined under subsections (a)(2), then the deduction described in subsections (a) must not be taken into account for any purpose of this subtitle other than for this section.