ncCPAp on the GO!

  • 1.  1099-PATR

    Platinum Most Valuable Member
    Posted 03-08-2019 20:23
    Client (a sub chapter S corporation) took a mortgage through Farm Credit East, ACA.
    Client received a 1099-PATR reporting a total patronage distribution of $224.18.  According to the letter that they received last February stated " ...your Board of Directors has declared a $60m patronage refund from 2017 earning.  This refund is being distributed in the form of cash.  The distribution has been allocated based on the amount of interest earned by the association on its loans to each patron during the year 2017."
    There apparently is also a second "payment" that was credited to "...the association's non-qualified surplus.  ... considers this surplus to be permanently invested in the association." 
    I do not think the above amounts are reported on the 1120-s (Schedule K) as an "ordinary dividend"  Should these two transactions be recorded as a reduction of interest expense in the year they are being reported to my client?
    Thank you for your response.

    David Rothfeld
    Hicksville NY