This thesis, although dealing specifically with Oregon Agricultural cooperatives, has significance for agricultural cooperatives on a national basis when discussing equity financing. The central issue is whether a patron may in effect transfer his cooperative equity holding to another person without impairing the total function of the cooperative? To answer this question it is necessary to further define the nature of cooperative equities and also provide clearer information into the legal, tax, accounting and operational techniques used in cooperative equity financing. This study examined cooperative bylaws which make specific references to the handling of equities including transfers under different circumstances. The Internal Revenue Code provisions and specific IRS rulings with regard to equity issuance, transfer and redemption are dealt with in depth and summarized into probable tax consequences. Securities regulation with respect to cooperative equity allocations are also examined. Existing statute and regulation as well as proposed reforms are reviewed and summarized. Alternate methods of equity transfers are then identified and analyzed with respect to cash flow and taxation. Alternate methods of equity transferability are identified and thoroughly analyzed with respect to taxation, investment opportunity and cash flow. Comparative illustrations are utilized to present differences in holding various equities versus transferring equities at a discounted value given assumptions of tax rates, investment opportunities, revolving periods, etc. In conclusion, a number of decision criteria must be considered prior to evaluating a program of equity transferability which are as follows: 1) Cash Needs of Patrons - Cooperative patrons generally have a need for on-farm capital and may face a substantial opportunity cost in holding equities. 2) Distribution of Equity Holding - Certain patrons may be personally well-capitalized and willing to finance equity holding while undercapitalized patrons, former patrons, and estates of deceased patrons may seek to redistribute equity holdings. 3) Establishment of a Market - Methods and standards of equity valuation in transfer which could be established in a market may lead to both beneficial and costly effects for the cooperative and patron in both the long and short term. 4) Cooperative Benefits - A number of benefits accrue to the patron through operation of a cooperative such as the effect on the market structure, economies of scale, farmer participation in ownership and control, etc. These benefits should be understood and evaluated when considering tradeoffs caused through potential costs associated with equity transferability. 5) External Considerations - Perhaps the most important single factor is the effect of costs associated with potential alteration of government control or regulation of cooperative taxation, securities regulation, and marketing practices. Recommendations in the area of equity transferability are intended to improve cooperative service and response to cash needs of patrons while limiting cooperative exposure to adverse or costly regulation. It is suggested that a judicious program of equity transferability may be feasible for "tax-exempt" (as defined by I.R.S.) cooperatives. Cooperative bylaws and operating procedures should be reviewed to assure the handling of transfers, the scope of transferability, the rights of non-patron equity holders, and adequate disclosure of information meets the approval of directors and/or legal counsel in limiting potential problem areas. Consideration is also given to alternate capital programs and methods of equity distribution which may meet both cooperative and patron goals. / Graduation date: 1978