Roosevelt County Rural Telephone Cooperative Inc

“The cooperative was formed by the members to provide telephone and other telecommunications service at cost on a cooperative basis.”

“The members of the cooperative vote on the board of directors. Elections are done on a one member one vote basis.”

“The following acts require approval of the members of the cooperative: 1. Dissolution/liquidation of the cooperative 2. Merger or consolidation of the cooperative with another organization 3. Disposal of a substantial portion of the cooperative's assets 4. Amendment to the articles of incorporation 5. Amendment to the bylaws”

“Management provided a complete copy of the form 990 to the board subsequent to filing the return.”

“The board of directors is governed by the bylaws of the cooperative. Pursuant to article iv of the bylaws, a director is disqualified from being elected to and serving on the board if he/she is employed by or has a financial interest in a business competing with the cooperative.”

“The general manager's compensation is established by the board of directors. Additionally, the general manager establishes annual performance goals in cooperation with the board to be used in her annual evaluation. Compensation for other employees meeting the irs form 990 definition of officers is established by both the board of directors and the general manager through performance evaluations.”

“The bylaws of the cooperative are available on its website. However, the cooperative will provide a complete copy of its governing documents and audited financial statements to any member who requests a copy of any such document. Annually, the cooperative provides a copy of the audited balance sheet and income statement to the members of the cooperative with the annual report.”

“In order to provide retirement benefits to its employees, the cooperative has established a defined contribution plan under section 401(k) of the internal revenue code. Employer contributions to the plan are made pursuant to the plan document. Additionally, the cooperative participates in a multi-employer defined benefit plan. Contributions to this plan are based on the full funding limitation of such plan. Employer contributions for both plans are available to participating employees, including officers, meeting the eligibility requirements of such plans. The cooperative also provides health and life insurance to all employees through a qualified plan. The amounts reported on part vii, column (f) for the officers are comprised of the amounts contributed to both the defined benefit and defined contribution pension plans and the insurance premiums paid for their benefit. In addition to the above pension plans, the cooperative also provides post-retirement health insurance benefits through a welfare benefit plan. The value per person of these benefits has not been estimated.”

“Patronage dividends result the purchase of supplies and services from other cooperative organizations. The expenses associated with purchases from and payments to such cooperative organizations are a direct component of cost of the telephone service provided by the cooperative to its members.”

“The cooperative annually provides each director who served on the board during the year a questionnaire and time log. The completed questionnaires and time logs are used to complete the applicable questions on the form 990 pertaining to business relationships among directors and officers, as well as to determine if there are any transactions which must be reported in detail on schedule l - "transactions with interested persons". If the cooperative was unable to obtain a completed questionnaire and/or time log, the cooperative relied upon the completed information for the prior year.”

“The accounting records of the cooperative conform to the uniform system of accounts (usoa) prescribed by the federal communication commission for class a telephone companies, modified for telephone borrowers of the rural utilities service. The usoa does not record expenses in the general expense categories provided on part ix lines 1 - 23. The cooperative will break out salaries and wages, employee benefits and payroll taxes that are allocated in accordance with its accounting system, but other expenses that are described in lines 1 - 23 will be reported on line 24 under the expense categories required by the usoa.”

“Salaries and wages are allocated to asset, liability, and expense accounts based on the accounting system described above. The following schedule reconciles amounts reported on lines 5-7 to total wages accrued and/or paid: total per lines 5-7 $ 553,250 plus: allocation to assets 259,175 plus: allocation to affiliated company 969,076 less: director fees reported on form 1099-misc (70,308) less: employee officer benefits reported on line 5 (61,347) total wages accrued and/or paid $ 1,649,846”

“Pursuant to the form 990 instructions, the amount of patronage dividends paid to the members (hereinafter referred to as "patrons") should be reported on part ix, line 4. The phrase "patronage dividends paid" refers to the process, subsequent to year-end, by which the cooperative allocates patronage capital to and, therefore, operates at cost with its patrons. The cooperative's tax exempt purpose is to provide telephone service to its patrons and to do so on a cooperative basis. Tax law defines "operating on a cooperative basis" as subordination of capital, democratic control, and operation at cost. The cooperative operates at cost through the allocation of true patronage dividends (also referred to as allocations of patronage capital) to its patrons. Patronage dividends are considered paid if the allocation is made (1) pursuant to a pre-existing obligation, (2) from the margins produced from the transactions done with or for patrons, and (3) in a fair and equitable manner on the basis of patronage (i.e. Purchases). Additionally, the allocation of patronage dividends should be made within a reasonable time period after the close of the cooperative's calendar tax year-end of december 31. Each one of these requirements for a true patronage dividend is provided for in the non-profit operation article of the cooperative's bylaws. The amount reported on part ix, line 4 represents the amount of patronage capital that is either allocated or to be allocated to the patrons resulting from their purchase of telephone service from the cooperative for the 2019 calendar year. Because patronage dividends are the process by which the cooperative operates at cost with its patrons and thereby a key component to accomplishing its exempt purpose, the cooperative has reported such amounts as an expense for form 990 reporting. Patronage dividends are not an expense for financial statements prepared in accordance with generally accepted accounting principles, however.”

“All grants, sponsorships and/or donations are made to non-profit and civic organizations that are located in the cooperative's service area, and are intended to improve the communities in which our members reside. Each grant, sponsorship and/or donation made during the year was below the reporting threshold of part ii.”

“Other expenses is comprised of the following: provision for uncollectible accounts $ 411 customer operations 57,566 other non-operating expense 19,484 total form 990, part ix, line 24e $ 77,461”

“Equity method loss from subsidiary 1,664,191. Other comprehensive income - postretirement benefits 1,705,667. Patronage capital assignable 1,774,619. Patronage capital retired -100,000.”

“The board as a whole is responsible for overseeing the financial statement audit and selecting the independent financial statement auditor. No procedural changes were made during the year.”