1099-patr

[SueBaby]

Client has a 1099-PATR but not a farm, where does that go if not a farm? In box 1 is $360 under patronage dividends. Thank you

[FEDUKE404]

Form 1099-PATR confusion

I've always dumped those onto either a Schedule F or a Form 4835.

However, by coincidence, a client presented me with a 2007 Form 1099-PATR from a farmer's cooperative in his home town. (No farming activity on his part!)

Attached to the document is a cover letter with the following: "If you made purchases for personal comsumption and did not deduct the purchases on your tax return, then the amount in Box 1 is not taxable. However, you should still report the amount....in Part II of Schedule B. Then, in the same section write "Nontaxable Distribution" and deduct the same amount."

I've never heard of anything like this, and to make matters worse my software is not happy with negative entries for dividend income. I somewhat have a problem with the word "dividends" being used in this context.

Right now the problem is on the back burner, as Sch B total (net) income will be a small amount anyway and will not be filed.

Oh well......it's Friday.

FE

[SueBaby]

I've always dumped those onto either a Schedule F or a Form 4835.

However, by coincidence, a client presented me with a 2007 Form 1099-PATR from a farmer's cooperative in his home town. (No farming activity on his part!)

Attached to the document is a cover letter with the following: "If you made purchases for personal comsumption and did not deduct the purchases on your tax return, then the amount in Box 1 is not taxable. However, you should still report the amount....in Part II of Schedule B. Then, in the same section write "Nontaxable Distribution" and deduct the same amount."

I've never heard of anything like this, and to make matters worse my software is not happy with negative entries for dividend income. I somewhat have a problem with the word "dividends" being used in this context.

Right now the problem is on the back burner, as Sch B total (net) income will be a small amount anyway and will not be filed.

Oh well......it's Friday.

FE

Hate to mess anyones Friday up but I put it on the part II sch B, but know it is not right. Called IRS got a person did not know what ever I was talking about. Wasted 32 minutes of hanging on (probably messed her Friday up too).

So call on Monday about this what to do with it. I printed it out on Sch B just for client to go away, but now I have to figure it out the right way before transmit it. Thank you for the info. HAVE A NICE WEEK-END.

[cathyan103]

No sweat!

In this case, the patronage dividend is just ignored. They belong to a coop, but are not farmers, so aren't deducting the original cost, as it would be considered income if they were. They are buying personal use items, but ALL members of the coop receive the patronage dividends. It's just a proportional 'rebate' of the money they spent at the coop.

[FEDUKE404]

Just ignore it?

In this case, the patronage dividend is just ignored. They belong to a coop, but are not farmers, so aren't deducting the original cost, as it would be considered income if they were. They are buying personal use items, but ALL members of the coop receive the patronage dividends. It's just a proportional 'rebate' of the money they spent at the coop.

While I agree with you on the reason for the income, and the reason it should not be taxed to this client, I am a bit concerned with the "ignore" issue.

Generally speaking one would not expect the IRS to overlook any income reported to them, or so I would think. Per the instructions from the co-op to the client, it seems some manner of +/- for the income might be preferable, if I can browbeat my software into clearly showing same.

FE

[joeljj]

I agree

In this case, the patronage dividend is just ignored. They belong to a coop, but are not farmers, so aren't deducting the original cost, as it would be considered income if they were. They are buying personal use items, but ALL members of the coop receive the patronage dividends. It's just a proportional 'rebate' of the money they spent at the coop.

I have run into many 1099-PATR's for taxpayers who have never filed any sort of farm or other business return where they could have deducted an expense that the patronage dividend was reimbursing them for. Have not listed the dividend anywhere. The IRS has never questioned it.