Taxable Distributions Received From Cooperatives

2012

Department of the Treasury
Internal Revenue Service

Instructions for Form
1099-PATR
Section references are to the Internal Revenue Code unless
otherwise noted.

What’s New

Statements to Recipients

Truncating recipient identification number on paper payee
statements. Notice 2011-38 allows filers of this form to
truncate a recipient’s identification number (social security
number (SSN), individual taxpayer identification number (ITIN),
or adoption taxpayer identification number (ATIN)) on paper
payee statements for tax years 2011 and 2012. See part M in
the 2012 General Instructions for Certain Information Returns.
Retention of expiring credits. The following credits expired
on December 31, 2011. They are being retained in these
instructions for the benefit of fiscal year reporting cooperatives.
• The biodiesel and renewable diesel fuels credit, under
section 40A(g).
• The Indian employment credit, under section 45A.
• The energy efficient appliance credit, under section 45M(b).

Reminders
General Instructions. In addition to these specific
instructions, you should also use the 2012 General Instructions
for Certain Information Returns. Those general instructions
include information about the following topics.
• Backup withholding.
• Electronic reporting requirements.
• Penalties.
• Who must file (nominee/middleman).
• When and where to file.
• Taxpayer identification numbers.
• Statements to recipients.
• Corrected and void returns.
• Other general topics.
You can get the general instructions at IRS.gov or by calling
1-800-TAX-FORM (1-800-829-3676).
How to get the latest information. If there are changes to the
2012 tax laws that affect this form, you can find them at www.
irs.gov/form1099patr.

Specific Instructions
File Form 1099-PATR, Taxable Distributions Received From
Cooperatives, for each person to whom the cooperative has
paid at least $10 in patronage dividends and other distributions
described in section 6044(b) or from whom you withheld any
federal income tax under the backup withholding rules
regardless of the amount of the payment. A cooperative
determined to be primarily engaged in the retail sale of goods or
services that are generally for personal, living, or family use of
the members may ask for and receive exemption from filing
Form 1099-PATR. See Form 3491, Consumer Cooperative
Exemption Application, for information about how to apply for
this exemption. Report dividends paid on a cooperative’s capital
stock on Form 1099-DIV, Dividends and Distributions.
Report on Form 1099-PATR only items of income,
expenses, and credits that you properly pass through to
CAUTION
patrons for reporting on the patron’s tax return.
Exceptions. Generally, you are not required to file Form
1099-PATR for payments made to a corporation, a tax-exempt

!

Aug 11, 2011

organization including tax-exempt trusts (HSAs, Archer MSAs,
and Coverdell ESAs), the United States, a state, a possession,
or the District of Columbia. See Regulations section
1.6044-3(c).
If you are required to file Form 1099-PATR, you must provide a
statement to the recipient. For more information about the
requirement to furnish an official form or acceptable substitute
statement to recipients in person, by statement mailing or
electronically, see part M in the 2012 General Instructions for
Certain Information Returns.

2nd TIN Not.
You may enter an “X” in this box if you were notified by the IRS
twice within 3 calendar years that the payee provided an
incorrect taxpayer identification number (TIN). If you mark this
box, the IRS will not send you any further notices about this
account. However, if you received both IRS notices in the same
year, or if you received them in different years but they both
related to information returns filed for the same year, do not
check the box at this time. For purposes of the two-notices-in3-years rule, you are considered to have received one notice.
You are not required to send a second “B” notice to the
taxpayer on receipt of the second notice. See part N in the 2012
General Instructions for Certain Information Returns for more
information.
For information on the TIN Matching system offered by
TIP the IRS, see Items You Should Note in the 2012
General Instructions for Certain Information Returns.

Account Number
The account number is required if you have multiple accounts
for a recipient for whom you are filing more than one Form
1099-PATR. Additionally, the IRS encourages you to designate
an account number for all Forms 1099-PATR that you file. See
part L in the 2012 General Instructions for Certain Information
Returns.

Box 1. Patronage Dividends
Enter the total patronage dividends paid in cash (qualified or
“consent” checks), qualified written notices of allocation (face
amount), and other property (except nonqualified written notices
of allocation).

Box 2. Nonpatronage Distributions
This box applies only to farmers’ cooperatives exempt from tax
under section 521. Enter the total nonpatronage distributions
paid in cash (qualified or “consent” checks), qualified written
notices of allocation (face amount), and other property. Do not
include nonqualified written notices of allocation.

Box 3. Per-Unit Retain Allocations
Enter the total per-unit retain allocations paid in cash, qualified
per-unit retain certificates (face amount), and other property.

Box 4. Federal Income Tax Withheld
Enter backup withholding. For example, persons who have not
furnished their TIN to you in the manner required are subject to
withholding at a 28% rate on payments required to be reported
in boxes 1, 2, 3, and 5 to the extent such payments are in cash
or qualified check. See Regulations section 31.3406(b)(2)-5 for
more information on backup withholding by cooperatives.

Cat. No. 27984F

Box 5. Redemption of Nonqualified Notices and
Retain Allocations

the case of a cooperative engaged in the marketing of
agricultural or horticultural products (or both), the cooperative is
treated as having manufactured, produced, grown, or extracted
in whole or in significant part any qualifying production property
marketed by the cooperative that its patrons have
manufactured, produced, grown, or extracted. Agricultural or
horticultural products also include fertilizer, diesel fuel, and
other supplies used in agricultural or horticultural production
that are manufactured, produced, grown, or extracted by the
cooperative.

For farmers’ cooperatives qualifying under section 521 only,
enter all redemptions of nonqualified written notices of
allocation issued as patronage dividends or nonqualified written
notices of allocation issued as nonpatronage allocations. Also
enter nonqualified per-unit retain certificates issued with respect
to marketing.

Pass-Through Credits and Deductions
Report in the appropriate boxes the patron’s share of unused
credits and deductions that the cooperative is passing through
to the patron.

!

Do not reduce the amounts reported in boxes 1 or 3 by
the amount you report in box 6.

CAUTION

Box 6. Domestic Production Activities
Deduction

Written notice. In order for the patron to qualify for the
deduction, the cooperative must designate the patron’s portion
of the section 199 deduction in a written notice mailed to the
patron no later than the 15th day of the ninth month following
the close of the tax year. The cooperative may use the same
written notice, if any, that it uses to notify patrons of their
respective allocations of patronage dividends, or may use a
separate timely written notice to comply with the written notice
requirement for this deduction.

A cooperative must reduce its section 1382 deduction
by an amount equal to the portion of any patronage
CAUTION
dividend or per-unit retain allocation, including any
advances on these paid in cash during the year, that is
attributable to the cooperative’s section 199 deduction passed
through to its patrons during the year. See Regulations section
1.199-6 for more details.
Deduction for domestic production activities income.
Section 199(d)(3) and Regulations section 1.199-6 provide
special rules for cooperatives to pass through, if elected, to their
patrons receiving certain patronage dividends or certain per-unit
retain allocations from the cooperative a deduction equal to
their portion of the cooperative’s qualified production activities
income (QPAI) that would be deductible by the cooperative and
have been designated by the cooperative in a written notice
mailed to its patrons during the payment period specified under
section 1382(d). The deduction for QPAI applies to any
cooperative that is engaged in the manufacturing, producing,
growing, or extracting in whole or significant part of any
agricultural or horticultural product, or the marketing of
agricultural or horticultural products.
If any amount of a patronage dividend or qualified per-unit
retain allocation is passed through to a patron, and such
amount is allocable to QPAI that is deductible under section
199(a), then the amount is reported in box 6. However, if no
written notice (see later) was sent within the payment period or
if the cooperative does not pass through the deduction to the
patron, leave box 6 blank.
To determine the portion of the cooperative’s QPAI that
would be deductible, the cooperative’s taxable income is
computed without taking into account any deduction allowable
under section 1382(b) or (c) relating to patronage dividends,
per-unit retain allocations, and nonpatronage distributions. In

!

Box 7. Investment Credit
Enter the total investment credit for the patron.

Box 8. Work Opportunity Credit
Enter the total work opportunity credit for the patron.

Box 9. Patron’s AMT Adjustment
Enter the total alternative minimum tax (AMT) patronage
dividend adjustment for the patron.

Box 10. Other Credits and Deductions
For the patron, state separately in box 10 the type and amount
of each of the following credits and deductions.
• The small ethanol producer credit (Form 6478).
• The cellulosic biofuel producer credit (Form 6478).
• The renewable electricity, refined coal, and Indian coal
production credit (Form 8835).
• The empowerment zone and renewal community
employment credit (Form 8844).
• The Indian employment credit (Form 8845).
• The small agri-biodiesel producer credit (Form 8864).
• The energy efficient appliance credit (Form 8909).
• The agricultural chemicals security credit (Form 8931).
• The deduction for capital costs incurred by small refiner
cooperatives when complying with EPA sulfur regulations.
• The deduction for expensing qualified refinery property under
section 179C.

-2-

Instructions for Form 1099-PATR (2012)