Cindy,

The only way to limit the capital gains to the withdrawing partners is to
transfer stock instead of cash.

BUT, that is not recommended because the cost basis is different than a full
withdrawal and requires changes in the cost basis of the club as well as the
receiving partner. If I were treasurer, I would not want to take on the
task.

Charles Bard

-----Original Message-----
From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of Cindy Relick
via bivio.com
Sent: Saturday, September 12, 2020 5:06 PM
To: club_cafe@bivio.com
Subject: [club_cafe] Partial withdrawls || Tax Implications

Our partnership agreement currently states that, "Partial withdrawals are
not allowed".

Our group started several years ago and the members'
holdings are substantial.

The substantial holdings + the volatility of the market has led us to
rethink our own position on this topic and we would like to make a change to
our partnership rules - to allow partial withdrawals, but want to understand
some basic tax implications before we make any changes.

We have 10 members.
If only 3 members reduce their holdings and stock is sold - with cash
distributed to only those 3 members, will all 10 members be subject to
capital gains on their K1's?

If we CAN limit capital gain to those 3 members receiving the cash, what
steps need to be taken to ensure that only those 3 members that receive the
distribution will be subject to capital gains?