Article VII
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Surplus and Allocations
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Section 7.1
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Fiscal Year
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The fiscal year of the corporation shall end at the strike of midnight PST on the last day of December of each year.
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Section 7.2
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Surplus Defined
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"Surplus" shall be defined as the excess of revenues and gains over expenses and losses for a fiscal year. Such a surplus shall be determined in accordance with generally accepted accounting principles and shall be computed without regard to any patronage refunds, capital allocations, or income taxes.
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Section 7.3
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Allocations and Distributions of Surplus
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(a)
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Before any patronage distributions are made, any surplus should first be allocated to any deficit in sufficient corporate reserves, "sufficient corporate reserves" being an exact dollar amount set by the Board before the beginning of the fiscal year.
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(b)
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Remaining patronage-sourced surplus shall be distributed as patronage to each member in direct proportion to the member's total earnings, excluding bonuses and benefits, during the fiscal year. A member's earnings shall reflect her or his labor contribution to the cooperative. Patronage shall be distributed thirty percent in cash and seventy percent to each individual Member Account, unless a different division is decided upon by the cooperative within four months of the fiscal year's close; at minimum, twenty percent of patronage benefits will be distributed in cash. Each member shall receive a notice or on demand a written notice of allocation reflecting distributions to the member's account.
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Section 7.4
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Member's Consent to Declare Income for Tax Purposes
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Each member shall, by such act alone, consent that the amount of any distributions, with respect to the member's patronage which are made in written notices of allocation (as defined in 26 U.S.C. Section 1388), and which are received by the member from the Cooperative, will be taken into account by the member at their stated dollar amounts in the manner provided in 26 U.S.C. Section 1385(a) in the taxable year in which such written notices of allocation are received by the member.
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Section 7.5
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Payment Rights Regarding Member Accounts
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(a)
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When a member leaves the corporation -- whether through voluntary withdrawl, expulsion, or death -- the corporation shall pay out the individual's member Account as quickly as commercially prudent. At the end of the year -- measured from the date of membership termination -- in which the corporation has not repaid the full membership Account, interest will accrue at the discount rate -- as set by the Federal Reserve Bank of San Francisco -- on the amount outstanding. At maximum, a Member Account shall be paid within ten year's of membership termination.
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(b)
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The Board, in settling the member's Membership Account, shall have the right to set off any and all indebtedness of the member to the corporation.
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Section 7.6
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Periodic Payment of Member Accounts
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The Board may from time to time reduce the amount in member Accounts by redeeming a portion through cash payment. Any such repayments shall be applied to the largest Member Accounts in such a way as to effect maximum leveling of the amounts members hold in their accounts.
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Section 7.7
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Liquidity of Member Accounts
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The Board shall annually review and act to insure the adequacy of assets available to settle Member Accounts of departing members.
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Section 7.8
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Unclaimed Equity Interests
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Any proprietary interest in the corporation held by a member that would otherwise escheat to the State of California as unclaimed personal property shall instead become the property of the corporation if the corporation gives at least 60 days prior notice of the proposed transfer to the affected member by (1) first-class or second-class mail to the last address of the member shown on the corporation's records, and (2) by publication in a newspaper of general circulation in the county in which the corporation has its principal office. No property or funds shall become the property of the corporation under this section if written notice objecting to the transfer is received by the corporation from the affected member prior to the date of the proposed transfer.
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