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Tax implications
I am wanting to transfer stocks from our investment Club to
my personal TDA account rather
than to take a cash
withdrawal.. looking at the Member Status Report, will this
defer paying tax on the Tax
Basis by transferring rather than taking a cash withdrawal?
This withdrawal is all profit since I have invested a little
less than I have in Market Value...Am I thinking right?
We reorganized and I am trying to level the playing field
with the new members.
Dear Beth,

If you are not leaving for good, this withdrawal will be a partial withdrawal. The determination of basis of shares received in a partial withdrawal can be complex.

As opposed to a full withdrawal, in general if appreciated shares are used to fund a partial withdrawal, you receive them at the clubs tax basis. If the total basis of the shares you receive plus any cash you receive does not exceed your tax basis in the club, you will not owe any taxes until the shares are sold. But when you do sell them, you may end up owing more tax sooner than you would if you had received your partial withdrawal payment in cash.

Because the tax consequences can be complicated and unexpected when funding a partial withdrawal with stock rather than cash, the usual recommendation is not to do it.

If you wanted to see for yourself, you can get an idea of the specific implications of any withdrawal you are considering by entering it in bivio and then looking at the withdrawal report. It will show any reportable gain you would have as well as the basis of any shares you would receive. It is fine to enter a test case like this and then delete the entry.

Another thing to consider is whether you really need to "level the playing field". bivio is designed to account for unequal ownership quite nicely.



Laurie Frederiksen
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On Sun, Sep 21, 2014 at 2:55 PM, Beth A Theiss <fbtheiss@gmail.com> wrote:
I am wanting to transfer stocks from our investment Club to
my personal TDA account rather
than to take a cash
withdrawal.. looking at the Member Status Report, will this
defer paying tax on the Tax
Basis by transferring rather than taking a cash withdrawal?
This withdrawal is all profit since I have invested a little
less than I have in Market Value...Am I thinking right?
We reorganized and I am trying to level the playing field
with the new members.