Written notice of allocation
A written notice of allocation is, for federal tax purposes, a capital stock, revolving fund certificate, retain certificate, certificate of indebtedness, letter of advice or other written notice that states the dollar amount allocated and the portion that is a patronage dividend.
This is a federal tax term from 26 U.S.C. 1388(b): capital stock, a revolving fund certificate, retain certificate, certificate of indebtedness, letter of advice or another written notice disclosing the stated dollar amount allocated and the portion, if any, that is a patronage dividend C5, 1388(b).
A qualified written notice meets either the cash-redemption route (redemption at stated value throughout a period beginning when paid and lasting at least 90 days, with written notice of that right when received) or the recipient-consent route. Consent must use the statute's written-consent, notified-bylaw-membership, or qualified-check procedure. For a notice paid as part of a patronage dividend or the specified section 1382(c)(2)(A) payment, at least 20 percent of the total dividend or payment must also be paid in money or by qualified check. Redemption and consent are alternatives, not cumulative requirements C5, 1388(c). This definition alone does not establish a deduction or compliance with payment-period rules; see Understand cooperative tax basics.
See Patronage dividend and Understand cooperative tax basics.
Related
Sources
- C5 26 USC 1388 — Definitions; special rules (2024 edition), U.S. Government Publishing Office / Congress. govinfo.gov (primary; accessed October 16, 2026)