Burgess J.W. Raby & William L. Raby have published The Cooperative as Flow-Through, also available on the Tax Analysts web site as Doc 2005-7593, 2005 TNT 71-80  Here is the Introduction:

What can be done about the C corporation that cannot meet the requirements for an S election, perhaps because of the number or identity of its shareholders (especially other corporations and partnerships), but that wants to distribute its profits to its shareholders without the double tax burden that paying dividends entails?  Nor does it want to convert to a limited liability corporation, because that means for tax purposes it would be liquidating and incurring corporate-level tax over and above the capital gain tax that would result to its shareholders.  Assume that those shareholders also do business with the corporation.  That may have been the situation the IRS addressed in a private letter ruling, LTR 200512001.  The ruling discussed whether what we will call Quality Corp. could convert from a regular C corporation to a corporation "operating on a cooperative basis" (under section 1381) without triggering tax to the corporation or its existing shareholders.