Agriculture Income Tax Information - Patronage Dividends

If you buy farm supplies through a cooperative, you may receive income from the cooperative in the form of patronage dividends. If you sell your farm products through a cooperative, you may receive either patronage dividends or a per-unit retain certificate, explained later, from the cooperative.

Form 1099-PATR

The cooperative will report the income to you on Form 1099-PATR (PDF) or a similar form and send a copy to the IRS. Form 1099-PATR may also show an alternative minimum tax adjustment that you must include if you are required to file Form 6251, Alternative Minimum Tax--Individuals (PDF). For information on the Alternative Minimum Tax, Refer to Publication 225.

Per-Unit Retain Certificates

A per-unit retain certificate is any written notice that shows the stated dollar amount of a per-unit retain allocation made to you by the cooperative. A per-unit retain allocation is an amount paid to patrons for products sold for them that is fixed without regard to the net earnings of the cooperative. These allocations can be paid in money, other property, or qualified certificates.

Per-unit Retain Certificates issued by a cooperative generally receive the same tax treatment as Patronage Dividends, discussed earlier.

Additional Resources

Farm Income section of Publication 225, Farmer's Tax Guide

Form 1099-PATR (PDF), Taxable Distributions Received From Cooperatives