How do I report patronage dividends I received that are included on a Form 1099-PATR?
Regarding Form 1099-PATR, report patronage dividends the same way you deducted them. Use one of these:
- Schedule C: Profit or Loss From Business
- Schedule F: Profit or Loss From Farming
- Form 4835: Farm Rental Income and Expenses
- Form 1040 (used when previous deductions were taken on Schedule A)
Don’t report as income any patronage dividends from buying personal or family items including:
- Fuel bought for personal use
- Basic local telephone service
- Personal long-distance calls
Patronage dividends from buying capital assets or depreciable property would reduce the basis of the property. If the dividend is more than the adjusted basis of the property, you must report the excess as income.
If you don’t know if the dividend is for business or personal items, report the entire amount as income.
The first step in how to calculate long-term capital gains tax is generally to find the difference between what you paid for your property and how much you sold it for —adjusting for commissions or fees. Depending on your income level, your capital gain will be taxed federally at either 0%, 15% or 20%.
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