Qualified vs Non-Qualified Patronage

June 23, 20212021 will mark the first time RMSI will be distributing “non-qualified equity” as part of our patronage distribution to our farm and ranch accounts.

The difference between “qualified equity” (RMSI traditional equity) and non-qualified equity lies in the tax implications. RMSI will pay the tax on the stock/equity portion of your patronage. The farmer/rancher will pay tax only on the cash portion they receive. Consumer accounts have never had to pay tax on patronage, so they will continue to receive the traditional qualified equity.

Here is an example of how it works:

When the non-qualified equity is retired (paid out), Farmer A would then incur the tax on that equity. The co-op would be able to receive a tax credit upon that distribution.

It is important that we notify as many producers as we can about this change. It is also important that you relay this information to your tax accountants or whoever helps you do your taxes. We will be mailing out an informational letter with the patronage checks.

Patronage is scheduled to be paid in September/October of 2021. Between now and then, please direct your questions to me, Terry Sweeney, at the Belgrade main office. My direct line is (406) 813-5884.