Form 1099-PATR: Taxable Distributions from Cooperatives (2025)

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Meta Description: Form 1099-PATR reports patronage dividends and distributions from cooperatives. Learn what's taxable, what's not, and how to report on your return.

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H1

Form 1099-PATR: Taxable Distributions from Cooperatives

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ANSWER SECTION

Form 1099-PATR is an IRS information return used by cooperatives (co-ops) to report patronage dividends and other distributions of $10 or more paid to patrons. Cooperatives issue this form to members who receive distributions of profits based on their business with the cooperative, and the amounts shown are generally taxable income that must be reported on the recipient's federal tax return.

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H2: Understanding Cooperatives and Patronage Dividends

What Is a Cooperative? A cooperative is a business owned and operated by the people who use its services. Common types include:

• Agricultural cooperatives (farm co-ops)
• Rural electric cooperatives
• Credit unions
• Consumer cooperatives
• Housing cooperatives

What Are Patronage Dividends? When a cooperative earns profits, it distributes them to members based on:

• Amount of business conducted with the co-op
• Membership shares held
• Patronage percentage or volume

These distributions are called "patronage dividends" and represent each member's share of the cooperative's profits.

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H2: Boxes on Form 1099-PATR Explained

Form 1099-PATR contains several boxes showing different types of distributions:

Box	Description	Tax Treatment
Box 1	Patronage dividends	Generally taxable as ordinary income
Box 2	Nonpatronage distributions	Taxable (not related to patronage)
Box 3	Per-unit retain allocations	Taxable in year of allocation
Box 4	Federal income tax withheld	Credit on your return
Box 5	Redemption of nonqualified notices	Taxable when redeemed
Box 6	Section 199A deduction passed through	Reduces taxable income
Box 8	Section 199A(g) deduction	Special agricultural deduction

Key Boxes to Watch:

• Box 1 is the most common and represents your share of cooperative profits
• Box 4 shows any backup withholding (usually 24%)
• Box 6 shows the 20% qualified business income deduction passed through from the cooperative

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H2: How to Report 1099-PATR on Your Tax Return

Where you report 1099-PATR income depends on your taxpayer status:

For Individuals:

• Report patronage dividends (Box 1) on Schedule 1 (Form 1040), Line 8
• Specify "1099-PATR" as the source
• Include the amount from Box 1

For Businesses:

• Report on the appropriate business return:
  • Schedule C (sole proprietorship)
  • Form 1065 (partnership)
  • Form 1120-S (S corporation)
  • Form 1120 (C corporation)
• The income should relate to your business activities with the cooperative

Section 199A Deduction (Box 6):

• Individuals: Report on Form 1040 as part of the qualified business income deduction
• This deduction can reduce your taxable income by up to 20%

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H2: When Patronage Dividends Are NOT Taxable

Some distributions on Form 1099-PATR may not be immediately taxable:

Nonqualified Written Notices:

• If the cooperative issues a "nonqualified written notice of allocation"
• Tax is deferred until the notice is redeemed for cash
• Reported in Box 5 when redeemed

Consumer Cooperative Rebates:

• Consumer goods purchased for personal use
• May qualify as nontaxable rebate
• Must be a true patronage dividend (not a pricing discount)

Items Excluded from Box 1:

• Capital gains distributions (reported separately)
• Exempt-interest dividends
• Certain per-unit retain certificates

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H2: Related Tax Questions

For information on cancelled debt and Form 1099-C, see our guide on 1099c form with debt forgiveness reporting rules.

Learn about 1099 reporting requirements for LLCs in our guide on do LLCs get 1099 with the complete entity-type breakdown.

For information on backup withholding rules that may apply to cooperative payments, see our guide on backup withholding with the 24% withholding requirements.

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