Patronage Dividend

外汇网2021-06-19 14:18:00 137

A pidend or distribution that a co-operative pays to its members or investors. Patronage pidends are given based on a proportion of profit made by the business. Once this amount is figured out the pidend is calculated according to how much each member has used the co-op's services. Tax rules view these profits essentially as an overcharge, which can be returned to patrons and deducted from the co-op's taxable income.

As the name implies, patronage pidends are paid to inpiduals as a result of belonging to the co-operative. One example can be seen when families purchase groceries through a co-operative and receive income or a credit on their account in return. Although they are taxed as ordinary pidend income, they may also contain an alternative minimum tax adjustment amount and are usually reported on Form 1099-PATR. Some co-ops will use the pidends to reduce the selling price of items, thus, in a way, the more you spend the more you receive.

Patronage Dividend

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