Electric Cooperative Check

[Burke]

For the past 3 years, my client has received a check (2 actually - one to her deceased husband as well) from her electric co-op provider that states it is a Capital Credit retirement check. It says "this represents the retirement of year 1990 and/or approx 4.15% of the balance of your total capital credit allocation. Capital credits are paid back in cash to the members as the Cooperative is financially able to make repayments." No 1099 is issued. I don't think this is taxable income. Any opinions.

[Gretel]

I agree with you. Non-taxable if it pertains to an individual and taxable if associated with a business.

[neallove]

Neal

If it was taxable they would have sent a 1099

[Gretel]

If it was taxable they would have sent a 1099

....but only if it was $600 or more.

[Burke]

I agree with you. Non-taxable if it pertains to an individual and taxable if associated with a business.

The reason being, that if it is a business, they would have deducted the electricity cost from taxable income, I am assuming?

[Gretel]

The reason being, that if it is a business, they would have deducted the electricity cost from taxable income, I am assuming?

Yes, this is what it is. Same as receiving a refund from business insurance company or any other refund associated with the business.

[Jiggers]

If the taxpayers didn't deduct any of their utility expense from a Schedule C, E, or F, then the capital credit rebate is tax free.

If they deducted the extense, then it is taxable.

If they deducted only a percentage of the expense, then the rebate is taxable at the same percentage rate.