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Objective
This document will explain what a pass through credit is, how calculate the credit(s) and how the credit(s) is reported on the 1099-PATR form.
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What are Pass Through Credits
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Alternative Minimum Tax (AMT) 1099-PATR Box 10
Low Sulfur Diesel Tax 1099-PATR Box 12
Small Ethanol Producer 1099-PATR Box 12
Indian Employment 1099-PATR Box 12
Small Refiner Coops
Anchor _GoBack _GoBack 1099-PATR Box 12Qualified Production Activities (also called DPAD) 1099-PATR Box 6
Small Agri-Biodiesel Producer . 1099-PATR Box 12
The system doesn't make a transaction for the pass through credits, so it is important to keep a copy of the report that is generated. This will be important if you have to reprint a 1099 for a patron for a prior year. The system does holds hold the information until the option to Clear All Totals is performed.
For this discussion we will look at Alternative Minimum Tax and Qualified Production Activities. The pass through credits can be calculated by the system or imported. First we will discuss how the system calculates the credit.
Clearing Totals from Prior Year
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Before allocating any pass through credits, be sure and clear all totals |
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This only needs to be done once per 1099 reporting period.
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Go to Patronage
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> 1099 Reporting
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> Pass Through Credits
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Select
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1
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. Clear
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Illustration 1
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Totals for All Patrons, then confirm Y to each option to clear out
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Example: Alternative Minimum Tax
A prorated share of a co-op's alternative minimum tax (AMT) can be passed on to patrons. The amount is not a part of the refund, does not impact Accounts Receivable or Accounts Payable and does not change the patron's stock/equity balances, but the patron will have to report it as income.
The formula for calculating each patron's share of the AMT is: (Individual patronage allocation divided by Total patronage amount) times Alternative minimum tax allocated = Patron's alternative minimum tax allocation. The steps for processing the AMT are as follows:
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Steps to Process AMT
PAT > 1099 Reporting > Pass Through Credits > 2. Alternative Minimum Tax
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Alternative Minimum Tax Amount to Allocate – : Type the total alternative minimum tax to be used in the calculation of each patron's share of the alternative minimum tax. Refer to the formula above. There will a report generated when the process is finished, it is recommended that this report be sent to the spool.
For the Calculation Option select 1 – Refund Based
Begin/End Transaction Date – Type the dates that define the range in which a patronage refund was completed and is to be used to calculate each patron's share of the total patronage refund.
Enter in any other parameters that may be necessary.
Illustration 3, which can be found on the next page, is an example of the report.
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Example of Alternative Minimum Tax (AMT) Report:
Example: Qualified Production Activities (DPAD)
The Qualified Production Activities is based on grain purchased from the member patrons during the Co-operative's fiscal year. From the menu shown in Illustration 1 select Option 7 –
Steps to Process DPAD
PAT > 1099 Reporting > Pass Through Credits > 7. Qualified Production Activities
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Credit
Key the Amount To Allocate
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: Type the amount of the credit to be allocated to the patrons.
Calculation Option
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Option 1 will calculate the credit based on refund dollars
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Option 2 will calculate based on activity.
Transaction/Activity Date
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If using Option 1, enter the date range of the refund to be used to calculate the credit
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If using Option 2, enter the date range of the activity that is to be used to calculate the credit
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Click OK.
If
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using
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Option 1, at this point the credit will be calculated
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If using Option 2, there are additional parameters to enter.
Because the allocation is based on activity
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, enter the parameters that you use to specify who is eligible to participate in a patronage refund.
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Purchase/Sales
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: Enter a P, beginning and ending
Accounting Type
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: The options are 2 – 4. Enter the accounting type that is designated on the commodity patronage code
Product Code
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: Enter the range of the commodity patronage codes for which the credit is to use in the calculation.
Location Code
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: Enter a location range if there is activity in a direct ship location that they do not want to allocate on.
Proration Option – Enter 1 – Quantity Based or enter 2 for Amount Based.
Click OK, the credit will now be calculated.
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Example of Qualified Production Activities
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Report:
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How to Edit a
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Patron’s Pass Through Credit
If the necessity arises, there is a way to correct A pass through credit can be corrected or re-enter a pass through credit entered for a patron. To do this go to
Go to PAT > Account Balance Inquiry
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> select the patron you wish to make a change to.
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Select the Edit button to open the fields to be edited
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Edit the Qualified Production Credit
Building a Spreadsheet to Import DPAD
To utilize this function, Excel must be installed on your computer or the terminal server. Remember if you are going to import
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If importing the credit |
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, you will need to manually calculate the credit for each individual |
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To build a spreadsheet that can be imported, you will need the file layouts for imports. These can be found by going
Go to Maintenance
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(Across the
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top of your AGRIS
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) > File Layouts for
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Imports
Select the PAT - Pass Through Credits
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option
The file layout provides the necessary information to build the spreadsheet.
The first column on the report indicates the column of the spreadsheet and what is in the Comments column tells you what goes in the column. See the example of a spreadsheet below.
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~ Documentation ~Documentation Written by: Alisa Mueller and Sherelyn Roberson 11/2015
~Document edited by S. Pykare 02/2025