Rev. Rul. 58-335

Advice has been requested by a tax exempt cooperative organization regarding the requirements for filing information returns, Form 1099, where it has made patronage refunds and dividend payments in the factual situations described below.

(1) Stockholder A was credited with a patronage refund and also was paid a cash dividend on his shares of stock. Each amount was less than $100.00, but in the aggregate exceeded $100.

(2) Stockholder B was credited with a patronage refund of less than $100.00, and also was paid a cash dividend on his shares of stock in excess of $100.00.

Section 6044 of the Internal Revenue Code of 1954, which is substantially identical to section 148(f) of the Internal Revenue Code of 1939, relating to the required information returns to be prepared by corporations allocating patronage dividends, provides in part as follows:

`(a) PAYMENTS OF $100 OR MORE.-Any corporation allocating amounts as patronage dividends, rebates, or refunds (whether in cash, merchandise, capital stock, revolving fund certificates, retain certificates, certificates of indebtedness, letters of advice, or in some other manner that discloses to each patron the amount of such dividend, refund, or rebate) shall make a return showing-

(1) The name and address of each patron to whom it has made such allocations amounting to $100 or more during the calendar year; and (2) the amount of such allocations to each patron.

Section 39.148(f)-(1)(a) of Regulations 118 made applicable to the Internal Revenue Code of 1954 by virtue of Treasury Decision 6091, C.B. 1954-2, 47, provides that a corporation is required to file an information return when the amounts of patronage dividends, rebates or refunds allocated to each patron aggregate $100 or more during the calendar year.

Section 6042 of the Internal Revenue Code of 1954 provides, in part, that every corporation shall, when required by the Commissioner of Internal Revenue, render a correct return of its payments of dividends, stating the name and address of each shareholder.

Section 39.148(a)-1(b) of Regulations 118, as amended by T.D. 6113, C.B. 1954-2, 236, also applicable herein by virtue of Treasury Decision 6091, supra , provided in part as follows:

* * * In the case of a corporation described in sections 101(10), (11), (12), or (13), or, for calendar years after 1953, in the case of a national farm loan association or a production credit association, making a payment of a dividend or a distribution to any shareholder, the information return on Forms 1096 and 1099 shall be rendered only in the case of payments amounting to $100 or more during the calendar year. * * *

The reference to patronage dividends and ordinary dividends is contained in separate sections of the Code and appear to be two distinct types of dividends, neither one of which appears to supplement the other. The words `amounts aggregating' used in section 39.148(f)-(1)(a) and the words `amounting to' used in section 39.148(a)-1(b) of Regulations 118, as amended, apply to an aggregation of like distributions of income. Thus, it follows that patronage dividends in whatever form allocated and cash dividends paid on stock are not `like' distributions requiring an aggregation.

In view of the foregoing, it is held in situation (1) that since neither the patronage dividend nor the cash dividend, exclusive of each other, is in excess of $100, an information return need not be filed by the corporation. In situation (2) an information return is required to be filed only to cover the payment to B of the cash dividend paid, which is in excess of $100.