Today, I listened to a podcast that was recorded on the 14th of this month by a fairly popular financial radio talk show host. A listener called in asking for advice about joining an investment club. The host advised it was very good idea until the caller mentioned that the club was asking for her SSN because they were a partnership. At that point the host turned partly negative stating that he was not into investment clubs that needed that.
I would like to respond to this host but first can you tell me if belonging to an investment club without being partnership is legal? I’m looking at this as a good opportunity to tout investment clubs that use real money and software developed to measure each member’s valuation in the club.
Laurie, your answer will help me respond correctly and legally. J And do you have a short response that may help my response.
Marty
Mark Johnson on
Is it not a legal requirement that the club issue K-1 tax reports every year, to document interest received and capital gains distributions? Are there any exceptions? As I understand it you cannot issue a K-1 without the SSN.
I understand clubs used to use something called "Section 765" so they were not treated as partnerships for tax purposes. But I am told the IRS expressed disapproval around 1997 and this is no longer considered legitimate. Please correct me if I am wrong.
Today, I listened to a podcast that was recorded on the 14th of this month by a fairly popular financial radio talk show host. A listener called in asking for advice about joining an investment club. The host advised it was very good idea until the caller mentioned that the club was asking for her SSN because they were a partnership. At that point the host turned partly negative stating that he was not into investment clubs that needed that.
I would like to respond to this host but first can you tell me if belonging to an investment club without being partnership is legal? I'm looking at this as a good opportunity to tout investment clubs that use real money and software developed to measure each member's valuation in the club.
Laurie, your answer will help me respond correctly and legally. J And do you have a short response that may help my response.
Marty
Roy Chastain on
I don't know who the radio talk show host is but I'm guessing that "there was a failure to communicate." What we agree are investment clubs are a group of people who form a partnership and pool money to invest while learning (and honing skills) about investing. Thus, we do need to provide SSNs.
I understand from discussions with some people that some people think are "investment clubs" are more like book clubs. They read investment books and possibly do "paper trades" but don't actually invest money together. Perhaps this host was thinking of the latter group. It's too bad this people was able to disseminate bad information.
This is is just my supposition, but is based on attempts to fix wrong thinking.
Roy "We make a living by what we get, we make a life by what we give." (Ronald Reagan, 8/8/1992)
Is it not a legal requirement that the club issue K-1 tax reports every year, to document interest received and capital gains distributions? Are there any exceptions? As I understand it you cannot issue a K-1 without the SSN.
I understand clubs used to use something called "Section 765" so they were not treated as partnerships for tax purposes. But I am told the IRS expressed disapproval around 1997 and this is no longer considered legitimate. Please correct me if I am wrong.
Today, I listened to a podcast that was recorded on the 14th of this month by a fairly popular financial radio talk show host. A listener called in asking for advice about joining an investment club. The host advised it was very good idea until the caller mentioned that the club was asking for her SSN because they were a partnership. At that point the host turned partly negative stating that he was not into investment clubs that needed that.
I would like to respond to this host but first can you tell me if belonging to an investment club without being partnership is legal? I'm looking at this as a good opportunity to tout investment clubs that use real money and software developed to measure each member's valuation in the club.
Laurie, your answer will help me respond correctly and legally. J And do you have a short response that may help my response.
Marty
ira smilovitz on
Roy,
I think you are right. The talk show host was probably thinking of a book club type arrangement. There is no way that an investment club such as would use bivio's services could exist without its members' SSNs.
Ira Smilovitz
On Wed, Jan 21, 2015 at 11:12 PM, Roy Chastain <roy12@me.com> wrote:
I don't know who the radio talk show host is but I'm guessing that "there was a failure to communicate." What we agree are investment clubs are a group of people who form a partnership and pool money to invest while learning (and honing skills) about investing. Thus, we do need to provide SSNs.
I understand from discussions with some people that some people think are "investment clubs" are more like book clubs. They read investment books and possibly do "paper trades" but don't actually invest money together. Perhaps this host was thinking of the latter group. It's too bad this people was able to disseminate bad information.
This is is just my supposition, but is based on attempts to fix wrong thinking.
Roy "We make a living by what we get, we make a life by what we give." (Ronald Reagan, 8/8/1992)
Is it not a legal requirement that the club issue K-1 tax reports every year, to document interest received and capital gains distributions? Are there any exceptions? As I understand it you cannot issue a K-1 without the SSN.
I understand clubs used to use something called "Section 765" so they were not treated as partnerships for tax purposes. But I am told the IRS expressed disapproval around 1997 and this is no longer considered legitimate. Please correct me if I am wrong.
Today, I listened to a podcast that was recorded on the 14th of this month by a fairly popular financial radio talk show host. A listener called in asking for advice about joining an investment club. The host advised it was very good idea until the caller mentioned that the club was asking for her SSN because they were a partnership. At that point the host turned partly negative stating that he was not into investment clubs that needed that.
I would like to respond to this host but first can you tell me if belonging to an investment club without being partnership is legal? I'm looking at this as a good opportunity to tout investment clubs that use real money and software developed to measure each member's valuation in the club.
Laurie, your answer will help me respond correctly and legally. J And do you have a short response that may help my response.
Marty
Laurie Frederiksen on
Hi Marty,
I personally think that you can't really learn to invest without actually doing it. Handling the emotions involved with making real investment purchases and sales is a big part of becoming a good investor.
That's why I think investment clubs like those that use bivio are so valuable. They let you get the full experience of being an investor without taking all the risk on yourself.
A "book club" type investment club doesn't offer you either of those benefits.
If you're in a club that is pooling funds and making real investments you need to file taxes. If you are going to file taxes, you need each members SS number to do so or the club will be faced with large late or incomplete filing penalties.
I wouldn't give my SS number to just anyone. If the person is uncomfortable with the group asking for it, maybe it's not a good group for them to join. But it certainly isn't a blanket reason not to be in an investment club.
Laurie Frederiksen Invest with your friends! www.bivio.com