AB 37

Under current law, a person may claim a credit against the person's income or

franchise tax liability that is equal to 10 percent of the amount that the person paid

in the taxable year for dairy manufacturing modernization or expansion related to

the claimant's dairy manufacturing operation. If the amount of the credit exceeds

the amount of the person's tax liability, the person receives a refund. Under current

law, dairy cooperatives are, generally, not subject to state income or franchise taxes

and, therefore, are not eligible to claim the credit for dairy manufacturing

modernization or expansion.

This bill allows the members of a dairy cooperative to claim the credit for the

dairy manufacturing modernization or expansion expenses paid by the cooperative.

The dairy cooperative determines the amount of the credit that each member may

claim, based on the amount of milk each member delivers to the cooperative.