Instructions For Form 1099-Patr - 2006 Page 4
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25Box 5. Redemption of Nonqualified Notices and
marketed by the cooperative that its patrons have
manufactured, produced, grown, or extracted. Agricultural or
Retain Allocations
horticultural products also include fertilizer, diesel fuel, and
For farmers’ cooperatives qualifying under section 521 only,
other supplies used in agricultural or horticultural production
enter all redemptions of nonqualified written notices of
that are manufactured, produced, grown, or extracted by the
allocation issued as patronage dividends or nonqualified written
cooperative.
notices of allocation issued as nonpatronage allocations. Also
Written notice. In order for the patron to qualify for the
enter nonqualified per-unit retain certificates issued with respect
deduction, the cooperative is required to designate the patron’s
to marketing.
portion of the section 199 deduction in a written notice mailed to
Pass-Through Credits and Deductions
the patron no later than the 15th day of the ninth month
following the close of the taxable year. The cooperative may
Report in the appropriate boxes the patron’s share of unused
use the same written notice, if any, that it uses to notify patrons
credits and deductions that the cooperative is passing through
of their respective allocations of patronage dividends, or may
to the patron.
use a separate timely written notice to comply with the written
Box 6. Domestic Production Activities
notice requirement for this deduction.
Deduction
Box 7. Investment Credit
The amount of the deduction does not reduce the
Enter the total investment credit for the patron.
!
taxable income of the cooperative under section 1382.
Box 8. Work Opportunity Credit
CAUTION
Enter the total work opportunity credit for the patron.
The deduction for QPAI applies to any cooperative that is
Box 9. Patron’s AMT Adjustment
engaged in manufacturing, producing, growing, or extracting
(MPGE) in whole or significant part of any agricultural or
Enter the total alternative minimum tax (AMT) patronage
horticultural product, or the marketing of agricultural or
dividend adjustment for the patron.
horticultural products. If no written notice (see below) was sent
Box 10. Other Credits and Deductions
within the payment period, leave box 6 blank. If any amount of a
For the patron, state separately in box 10 the type and amount
patronage dividend or qualified per-unit retain allocation is
of each of the following credits and deduction:
received by a patron from the cooperative, and such amount is
•
The employee retention credit (Form 5884-A)
allocable to QPAI that is deductible under section 199(a), then
•
The small ethanol producer credit (Form 6478)
the amount is deductible from the gross income of the patron
•
The renewable electricity, refined coal, and Indian coal
and is reported in box 6.
production credit (Form 8835)
To determine the portion of the cooperative’s QPAI that
•
The empowerment zone and renewal community
would be deductible, the cooperative’s taxable income is
employment credit (Form 8844)
computed without taking into account any deduction allowable
•
The Indian employment credit (Form 8845)
under section 1382(b) or (c) relating to patronage dividends,
•
The welfare-to-work credit (Form 8861)
per-unit retain allocations, and nonpatronage distributions. In
•
The small agri-biodiesel producer credit (Form 8864)
the case of a cooperative engaged in the marketing of
•
The low sulfur diesel fuel production credit (Form 8896)
agricultural and horticultural products, the cooperative is treated
•
The deduction for capital costs incurred by small refiner
as having manufactured, produced, grown, or extracted in
cooperatives when complying with EPA sulfur regulations.
whole or in significant part any qualifying production property
PATR-2
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