New Partnership Rules
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New Partnership Rules Not sure I understand all of it. My question we have a member whose name on roster is listed with Trust. should that be changed to just her name? Other member of the club do have trusts but I do not know who has what. Do we as a club, need to know who has a trust? Can we still opt out of audit? We have 13 members, should we just hope to never get audited ? Judy Chagnon It's a double edged sword. If someone creates a trust and transfers their club membership into the trust, the club must be informed and must list the trust name as the "member". The club needs to be informed because if the club doesn't change its membership entry, the purpose of creating the trust in the first place will be defeated. (Usually, but not always, this is an estate planning technique.) Having a trust as a member of the club means you cannot opt out of the new audit rules. This creates a conflict between the interests of the club and those of individual members. On the other hand, the likelihood of an investment club being audited is extremely low as long as the club restricts its investments to the typical stocks, bonds, mutual funds, and ETFs and files its returns in a timely fashion. As more and more transactions involve covered securities (where the broker reports cost basis), the chances of an audit will get smaller. There isn't much that will appear on the club's 1065 that the IRS can't verify through the 1099s. Ira Smilovitz Not sure I understand all of it. My question we have a member whose name on roster is listed with Trust. should that be changed to just her name? Other member of the club do have trusts but I do not know who has what. Do we as a club, need to know who has a trust? Can we still opt out of audit? We have 13 members, should we just hope to never get audited ? |
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