Where to Report 1099-PATR on Your Tax Return?

Where you report Form 1099-PATR on your tax return depends on why you did business with the cooperative. Patronage from an active farm goes on Schedule F. Patronage from any other business goes on Schedule C. Distributions tied to personal or family purchases are generally not reported at all. Withholding, pass-through credits, and the Section 199A information in the later boxes each have their own destinations on Form 1040 or a dedicated form. The sections below walk through each box and the line it belongs on.

Personal Purchases Usually Aren’t Reported

If the dividend relates to things you bought from the co-op for personal or family use, such as groceries from a food co-op or electricity from a rural electric cooperative, it is generally excluded from gross income. Federal law exempts patronage dividends “attributable to personal, living, or family items.”¹ The dividend functions as a rebate that reduces the cost of what you bought.

If every amount on your 1099-PATR relates to personal purchases, you can generally set the form aside. The uncommon exception is a dividend that somehow exceeded what you originally paid.

Active Farmers: Schedule F

If you actively farm and the patronage came through a farming cooperative, report Box 1 patronage dividends, Box 2 nonpatronage distributions, and Box 3 per-unit retain allocations on Schedule F, Profit or Loss From Farming, on its line for cooperative distributions. These amounts become part of your net farm income and are subject to self-employment tax.

Timing depends on whether a distribution is qualified or nonqualified. A qualified notice of allocation is taxable in the year you receive it at face value, even if no cash has changed hands. A nonqualified notice isn’t taxable until the co-op redeems it, which later appears in Box 5.¹

Non-Farm Businesses: Schedule C

Not every cooperative is agricultural. If you run a business that buys supplies through a purchasing cooperative or markets products through a marketing cooperative, report the patronage dividends on Schedule C, Profit or Loss From Business, with your other business revenue. Box 3 per-unit retain allocations follow the same rule when the underlying transactions were part of that business. These amounts are subject to self-employment tax.

Farm Landlords Who Don’t Materially Participate: Form 4835

If you own farmland and receive cooperative distributions under a crop-share or livestock-share arrangement but do not materially participate in running the farm, use Form 4835, Farm Rental Income and Expenses, instead of Schedule F. Form 4835 has its own line for cooperative distributions from 1099-PATR.²³

Income reported on Form 4835 is generally not subject to self-employment tax, while Schedule F income is. The dividing line is material participation in day-to-day farm management decisions. If you both farm and lease ground to a tenant, the two activities belong on different forms.

Box 4: Federal Income Tax Withheld

Box 4 shows backup withholding the cooperative applied to your distributions, usually because it didn’t have your taxpayer identification number on file. Claim this amount as a credit on Form 1040, Line 25b, regardless of which schedule the underlying income appears on.⁴ It reduces your tax dollar-for-dollar and can generate a refund if it exceeds what you owe.

Box 5: Redeemed Nonqualified Notices

Box 5 reports cash you received when the cooperative redeemed nonqualified written notices of allocation or nonqualified per-unit retain certificates issued in a prior year. This is the income you deferred when the original notice was issued.

A point that trips up both taxpayers and some tax software: gain from redeeming a nonqualified notice is ordinary income, not capital gain. IRS regulations specify that such gain “shall be considered as gain from the sale or exchange of property which is not a capital asset.”⁵ Report Box 5 on the same schedule you use for the underlying business: Schedule F for farmers, Schedule C for other business patrons.

If you reduced the basis of cooperative stock or other property by the face amount of the nonqualified notice when you first received it, the redemption is first treated as a recovery of that basis reduction, and only the excess over your adjusted basis is additional income. The character stays ordinary either way.

Boxes 6–9: Section 199A Information

These boxes are not income you add to a schedule. They provide the figures you need to calculate the Section 199A qualified business income deduction.

Box 6 reports the Section 199A(g) deduction the cooperative calculated and passed through to you. Only specified agricultural and horticultural cooperatives use this box.⁶
Box 7 reports qualified payments you received from the cooperative. If you received qualified payments, you must reduce your own Section 199A(a) deduction accordingly.⁷
Box 8 reports the net amount of qualified business income items in your distributions, other than from specified service trades or businesses.
Box 9 reports qualified items attributable to specified service trades or businesses, kept separate because they face additional limitations.

Carry these figures to Form 8995 (simplified) or Form 8995-A (standard). Patrons of specified agricultural or horticultural cooperatives must use Form 8995-A. For the 2025 tax year, the simplified Form 8995 is available if your taxable income before the QBI deduction is $394,600 or less (married filing jointly) or $197,300 or less for other filing statuses, and you are not a patron of a specified agricultural or horticultural cooperative.⁸ For 2026 returns, the thresholds are adjusted for inflation.

Boxes 10–12: Pass-Through Credits

Box 10 reports the investment credit the cooperative earned on qualifying property and allocated to you. Claim it on Form 3468, Investment Credit. Box 11 reports the work opportunity credit. Box 12 covers any other credits or deductions the cooperative passed through, and the form or an attached statement should explain what is in Box 12 and which form claims it.

None of these are income items. They don’t belong on Schedule F or Schedule C. They flow to the credit lines of Form 1040 once you complete the relevant credit form.

If the Form Is Wrong

Contact the cooperative first and ask for a corrected 1099-PATR. If you can’t get a corrected form by the end of February, you can call the IRS at 800-829-1040 for assistance; have the cooperative’s name, address, and phone number ready along with your own taxpayer information.⁹

File on time even if the corrected form hasn’t arrived. Use your own records of distributions received during the year. If a corrected 1099-PATR comes later and the numbers differ, file Form 1040-X, Amended U.S. Individual Income Tax Return, to update the figures.⁹

1
Office of the Law Revision Counsel. 26 U.S. Code 1385 – Amounts Includible in Patrons Gross Income
2
Internal Revenue Service. Form 4835 – Farm Rental Income and Expenses
3
Internal Revenue Service. About Form 4835, Farm Rental Income and Expenses
4
Internal Revenue Service. Instructions for Form 1040 – Line 25b
5
eCFR. 26 CFR 1.1385-1 – Amounts Includible in Patrons Gross Income
6
Internal Revenue Service. Instructions for Form 1099-PATR
7
eCFR. 26 CFR 1.199A-7 – Section 199A(a) Rules for Cooperatives and Patrons
8
Internal Revenue Service. Instructions for Form 8995
9
Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect