Should we sell the stocks or tranfer member shares into their own accounts?Is there a certain way to transfer stocks that we purchased a number of times?Are the stocks transfer into their account treated as new stock and need to be held for 1 year for tax purposes?
Thanks you
CRIG
Lester Aaron on
When my previous club (1995 to 2004) closed, we transferred stock and cash to new accounts, for all members. We provided the allocation percentages (stock shares and dollars) to the club's brokerage, and then asked that any odd-ball shares or cash be distributed to the club's president. The transfers included stocks that we had purchased a number of times. After transfer, the prices of all stock purchases remained unchanged, so the recipients had the original stock purchase prices, for all stock that they received. Holding the stock for one year was only necessary for those members who wanted to sell newer shares, if they wanted to avoid paying the higher (20%) short-term capital gains tax, as compared with the lower taxation (15%) for long-term capital gains.
On Saturday, April 29, 2023 at 05:51:33 PM PDT, Judith Chagnon via bivio.com <user*18234200001@bivio.com> wrote:
Should we sell the stocks or tranfer member shares into their own accounts?Is there a certain way to transfer stocks that we purchased a number of times?Are the stocks transfer into their account treated as new stock and need to be held for 1 year for tax purposes? Thanks you CRIG
Stuart Lange on
Simplest usually is to liquidate holdings then split cash according to ownership percentage.
When my previous club (1995 to 2004) closed, we transferred stock and cash to new accounts, for all members. We provided the allocation percentages (stock shares and dollars) to the club's brokerage, and then asked that any odd-ball shares or cash be distributed to the club's president. The transfers included stocks that we had purchased a number of times. After transfer, the prices of all stock purchases remained unchanged, so the recipients had the original stock purchase prices, for all stock that they received. Holding the stock for one year was only necessary for those members who wanted to sell newer shares, if they wanted to avoid paying the higher (20%) short-term capital gains tax, as compared with the lower taxation (15%) for long-term capital gains.
Should we sell the stocks or tranfer member shares into their own accounts?Is there a certain way to transfer stocks that we purchased a number of times?Are the stocks transfer into their account treated as new stock and need to be held for 1 year for tax purposes? Thanks you CRIG
Lisa Robertson on
Liquidating and paying cash can create huge tax liabilities for many, if the club has been around for a while. Transferring appreciated stock delays the tax liability until convenient. Any stock with a loss should be sold and that cash distributed. Sometimes the easy way out can cost folks a lot of money.
Lisa Robertson
On 04/29/2023 7:23 PM Stuart Lange via bivio.com <user*25028600001@bivio.com> wrote:
Simplest usually is to liquidate holdings then split cash according to ownership percentage.
When my previous club (1995 to 2004) closed, we transferred stock and cash to new accounts, for all members. We provided the allocation percentages (stock shares and dollars) to the club's brokerage, and then asked that any odd-ball shares or cash be distributed to the club's president. The transfers included stocks that we had purchased a number of times. After transfer, the prices of all stock purchases remained unchanged, so the recipients had the original stock purchase prices, for all stock that they received. Holding the stock for one year was only necessary for those members who wanted to sell newer shares, if they wanted to avoid paying the higher (20%) short-term capital gains tax, as compared with the lower taxation (15%) for long-term capital gains.
Should we sell the stocks or tranfer member shares into their own accounts?Is there a certain way to transfer stocks that we purchased a number of times?Are the stocks transfer into their account treated as new stock and need to be held for 1 year for tax purposes?
Thanks you
CRIG
Scott Freeman on
There are two things to consider when deciding whether
disburse cash or stocks. First, when do you want to realize
gains and have a tax liability and secondly, how much work
you want to do in disbursing the assets.
When stock is transferred to a partner, the Withdrawal
report will show what the partner's cost basis in the stock
and this is sometimes different from the partnership's cost
basis. If the transferred stock has an unrealized capital
gain, then the partner can hold the shares and not create a
tax liability until the shares are sold. Transferring shares
with unrealized losses is probably not good and I would
suggest reading the Help pages:
Partial Withdrawal https://www.bivio.com/trez_talk/mail-thread?p=69429100003
Full Withdrawal https://www.bivio.com/trez_talk/mail-thread?p=69428600003
Transferring stocks is more work for the treasurer and one
must interact with the broker to make sure the lots
transferred in the records at bivio are the same ones
transferred in the broker's records with the cost basis
assigned in the Withdrawal Report. When a withdrawal of
stock is entered in bivio the treasurer will have the
opportunity to identify which shares of stock where there
are multiple lots are to be transferred.
Good luck - scott
M. D. on
Scott,
This is what I am struggling with right now. Our club has been in existence since 1998. We are now all retired and when we started the club we thought it would be good for us to have some extra when we retire. My BAD is that I 'assumed' that like in previous years when I would run a withdrawal and Bivio would tell me how much the person that was withdrawing would get in Cash, that it would also do that (tell us what stocks to give)if we decided to distribute stocks. I was told that would be up to me to plug in to the Withdrawal. It does seem like a lot of work, and it makes me nervous that I might mess something up.
Bivio did offer their Concierge service, but I'm not sure what that all involves.
I have read the 'disbanding a Club' information, I understand about selling the losers first, but still very nervous. Our club has already been moved over to Schwab from TD who I had a great relationship with.
Any thoughts, or anyone out there who has disbanded a club by distributing Stocks and can give me any Help? I would be very grateful.
On Sunday, April 30, 2023 at 07:19:25 AM EDT, Scott Freeman via bivio.com <user*1595500001@bivio.com> wrote:
There are two things to consider when deciding whether disburse cash or stocks. First, when do you want to realize gains and have a tax liability and secondly, how much work you want to do in disbursing the assets.
When stock is transferred to a partner, the Withdrawal report will show what the partner's cost basis in the stock and this is sometimes different from the partnership's cost basis. If the transferred stock has an unrealized capital gain, then the partner can hold the shares and not create a tax liability until the shares are sold. Transferring shares with unrealized losses is probably not good and I would suggest reading the Help pages: Partial Withdrawal https://www.bivio.com/trez_talk/mail-thread?p=69429100003 Full Withdrawal https://www.bivio.com/trez_talk/mail-thread?p=69428600003
Transferring stocks is more work for the treasurer and one must interact with the broker to make sure the lots transferred in the records at bivio are the same ones transferred in the broker's records with the cost basis assigned in the Withdrawal Report. When a withdrawal of stock is entered in bivio the treasurer will have the opportunity to identify which shares of stock where there are multiple lots are to be transferred.
Good luck - scott
SB on
Glad to answer further questions. Not sure I reached out to the correct address in an attempt to do so in a more private manner.
This is what I am struggling with right now. Our club has been in existence since 1998. We are now all retired and when we started the club we thought it would be good for us to have some extra when we retire. My BAD is that I 'assumed' that like in previous years when I would run a withdrawal and Bivio would tell me how much the person that was withdrawing would get in Cash, that it would also do that (tell us what stocks to give)if we decided to distribute stocks. I was told that would be up to me to plug in to the Withdrawal. It does seem like a lot of work, and it makes me nervous that I might mess something up.
Bivio did offer their Concierge service, but I'm not sure what that all involves.
I have read the 'disbanding a Club' information, I understand about selling the losers first, but still very nervous. Our club has already been moved over to Schwab from TD who I had a great relationship with.
Any thoughts, or anyone out there who has disbanded a club by distributing Stocks and can give me any Help? I would be very grateful.
There are two things to consider when deciding whether disburse cash or stocks. First, when do you want to realize gains and have a tax liability and secondly, how much work you want to do in disbursing the assets.
When stock is transferred to a partner, the Withdrawal report will show what the partner's cost basis in the stock and this is sometimes different from the partnership's cost basis. If the transferred stock has an unrealized capital gain, then the partner can hold the shares and not create a tax liability until the shares are sold. Transferring shares with unrealized losses is probably not good and I would suggest reading the Help pages: Partial Withdrawal https://www.bivio.com/trez_talk/mail-thread?p=69429100003 Full Withdrawal https://www.bivio.com/trez_talk/mail-thread?p=69428600003
Transferring stocks is more work for the treasurer and one must interact with the broker to make sure the lots transferred in the records at bivio are the same ones transferred in the broker's records with the cost basis assigned in the Withdrawal Report. When a withdrawal of stock is entered in bivio the treasurer will have the opportunity to identify which shares of stock where there are multiple lots are to be transferred.
Good luck - scott
Linda Glein on
Please read what Scott wrote. Some of the other advice given is not correct.
Should we sell the stocks or tranfer member shares into their own accounts?Is there a certain way to transfer stocks that we purchased a number of times?Are the stocks transfer into their account treated as new stock and need to be held for 1 year for tax purposes?
Thanks you
CRIG
ira smilovitz on
Lester,
This procedure was wrong. When you transfer stock as part of a complete withdrawal, you do not transfer the club's cost basis. Each member gets a cost basis in the shares that they receive that is based on their tax basis in their club membership less any cash received. You can see that clearly if you generate a withdrawal report. By transferring appreciated shares and not adjusting the cost basis correctly, your members probably paid more tax than they owed since they kept the lower club basis for the shares as well as paying the full tax on the difference between the value they received and their tax basis on withdrawal.
When my previous club (1995 to 2004) closed, we transferred stock and cash to new accounts, for all members. We provided the allocation percentages (stock shares and dollars) to the club's brokerage, and then asked that any odd-ball shares or cash be distributed to the club's president. The transfers included stocks that we had purchased a number of times. After transfer, the prices of all stock purchases remained unchanged, so the recipients had the original stock purchase prices, for all stock that they received. Holding the stock for one year was only necessary for those members who wanted to sell newer shares, if they wanted to avoid paying the higher (20%) short-term capital gains tax, as compared with the lower taxation (15%) for long-term capital gains.
Should we sell the stocks or tranfer member shares into their own accounts?Is there a certain way to transfer stocks that we purchased a number of times?Are the stocks transfer into their account treated as new stock and need to be held for 1 year for tax purposes? Thanks you CRIG
ira smilovitz on
Scott Freeman wrote (in part):
Transferring stocks is more work for the treasurer and one
must interact with the broker to make sure the lots
transferred in the records at bivio are the same ones
transferred in the broker's records with the cost basis
assigned in the Withdrawal Report. When a withdrawal of
stock is entered in bivio the treasurer will have the
opportunity to identify which shares of stock where there
are multiple lots are to be transferred.
While this is more work for the treasurer, it really isn't important that the broker transfer the correct lots since the cost basis of the transferred shares will be reset based on the tax basis of the member receiving the shares and independent of the club's cost basis in the shares. The calculations behind the withdrawal report insure that the cost basis of the distributed shares is independent of which shares are transferred.
If you want to see this for yourself, you can play around with withdrawals in "My Demo Club" which can be found in the drop down list opened by clicking the yellow triangle next to your club ID in the upper right corner of the screen. Create a withdrawal for one of the members and fund it with shares from one of the multiple lot stocks. Print the withdrawal report. Delete the withdrawal and repeat, this time using a different lot of the same stock. (You must choose the same number of shares.) Print the new withdrawal report and compare the two reports.
Ira Smilovitz
SB on
Thanks Ira
My recent experience was that the broker assigned the club's cost basis to the shares transferred to individual partners rather than using the partner cost basis that I provided. Only one of the several call center staff I spoke with at TDAm even asked why the cost basis of the partnership was different than that of the recipient individual.
Transferring stocks is more work for the treasurer and one
must interact with the broker to make sure the lots
transferred in the records at bivio are the same ones
transferred in the broker's records with the cost basis
assigned in the Withdrawal Report. When a withdrawal of
stock is entered in bivio the treasurer will have the
opportunity to identify which shares of stock where there
are multiple lots are to be transferred.
While this is more work for the treasurer, it really isn't important that the broker transfer the correct lots since the cost basis of the transferred shares will be reset based on the tax basis of the member receiving the shares and independent of the club's cost basis in the shares. The calculations behind the withdrawal report insure that the cost basis of the distributed shares is independent of which shares are transferred.
If you want to see this for yourself, you can play around with withdrawals in "My Demo Club" which can be found in the drop down list opened by clicking the yellow triangle next to your club ID in the upper right corner of the screen. Create a withdrawal for one of the members and fund it with shares from one of the multiple lot stocks. Print the withdrawal report. Delete the withdrawal and repeat, this time using a different lot of the same stock. (You must choose the same number of shares.) Print the new withdrawal report and compare the two reports.
Ira Smilovitz
Lester Aaron on
Ira,
Thank you very much, for explaining the errors that my previous club made, when we processed our complete withdrawal. Obviously, we were ignorant. Bivio probably did not exist, at the time, so we entered each member's ownership percentage into a spreadsheet, and then allocated shares of stock and cash, accordingly. My new club is using Bivio, so withdrawals should be processed properly. Thanks, again.
On Sunday, April 30, 2023 at 09:53:12 AM PDT, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:
Lester,
This procedure was wrong. When you transfer stock as part of a complete withdrawal, you do not transfer the club's cost basis. Each member gets a cost basis in the shares that they receive that is based on their tax basis in their club membership less any cash received. You can see that clearly if you generate a withdrawal report. By transferring appreciated shares and not adjusting the cost basis correctly, your members probably paid more tax than they owed since they kept the lower club basis for the shares as well as paying the full tax on the difference between the value they received and their tax basis on withdrawal.
When my previous club (1995 to 2004) closed, we transferred stock and cash to new accounts, for all members. We provided the allocation percentages (stock shares and dollars) to the club's brokerage, and then asked that any odd-ball shares or cash be distributed to the club's president. The transfers included stocks that we had purchased a number of times. After transfer, the prices of all stock purchases remained unchanged, so the recipients had the original stock purchase prices, for all stock that they received. Holding the stock for one year was only necessary for those members who wanted to sell newer shares, if they wanted to avoid paying the higher (20%) short-term capital gains tax, as compared with the lower taxation (15%) for long-term capital gains.
Should we sell the stocks or tranfer member shares into their own accounts?Is there a certain way to transfer stocks that we purchased a number of times?Are the stocks transfer into their account treated as new stock and need to be held for 1 year for tax purposes? Thanks you CRIG
ira smilovitz on
Brokers almost always get this wrong because they don't understand the tax rules and they aren't required to make these adjustments in their records. The cost basis shown in the withdrawal report is the correct one to use. When the shares are sold, if the broker reports cost basis to the IRS (Form 8949 section A or D), the member should report the correct cost basis (that is, the withdrawal basis) by entering the broker basis as usual, but indicate that the cost basis was changed by entering code B in column f of Form 8949, the appropriate amount in column g (positive or negative) to adjust the broker basis to the withdrawal basis. If the broker doesn't report the basis to the IRS, the member should use the correct cost basis and enter the sale in section B or E of Form 8949.
My recent experience was that the broker assigned the club's cost basis to the shares transferred to individual partners rather than using the partner cost basis that I provided. Only one of the several call center staff I spoke with at TDAm even asked why the cost basis of the partnership was different than that of the recipient individual.
Transferring stocks is more work for the treasurer and one
must interact with the broker to make sure the lots
transferred in the records at bivio are the same ones
transferred in the broker's records with the cost basis
assigned in the Withdrawal Report. When a withdrawal of
stock is entered in bivio the treasurer will have the
opportunity to identify which shares of stock where there
are multiple lots are to be transferred.
While this is more work for the treasurer, it really isn't important that the broker transfer the correct lots since the cost basis of the transferred shares will be reset based on the tax basis of the member receiving the shares and independent of the club's cost basis in the shares. The calculations behind the withdrawal report insure that the cost basis of the distributed shares is independent of which shares are transferred.
If you want to see this for yourself, you can play around with withdrawals in "My Demo Club" which can be found in the drop down list opened by clicking the yellow triangle next to your club ID in the upper right corner of the screen. Create a withdrawal for one of the members and fund it with shares from one of the multiple lot stocks. Print the withdrawal report. Delete the withdrawal and repeat, this time using a different lot of the same stock. (You must choose the same number of shares.) Print the new withdrawal report and compare the two reports.
Ira Smilovitz
Lisa Robertson on
When I was treasurer of a club that was disbanding, I asked each of the partners to give me the names of two stocks in the portfolio they would like to own going forward, and two that they would rather not own. I then created an Excel spreadsheet to work out who would get which stocks. My goal was for no one to own more than two or three stocks that they would later have to deal with the cost basis issue with their broker. Since it doesn't matter what the club's cost basis in a stock is when distributing all the stocks, only what the value is on the distribution-calculation date, no one needs to get some of every stock in the portfolio. Everyone ended up getting some or most of what they wanted, and nobody got stuck with a stock they didn't want. Getting to that result is a little like solving a Sudoku puzzle - it takes a while, but the result is elegant.
Lisa Robertson
On 04/30/2023 6:27 AM M. D. via bivio.com <user*9437600001@bivio.com> wrote:
Scott,
This is what I am struggling with right now. Our club has been in existence since 1998. We are now all retired and when we started the club we thought it would be good for us to have some extra when we retire. My BAD is that I 'assumed' that like in previous years when I would run a withdrawal and Bivio would tell me how much the person that was withdrawing would get in Cash, that it would also do that (tell us what stocks to give)if we decided to distribute stocks. I was told that would be up to me to plug in to the Withdrawal. It does seem like a lot of work, and it makes me nervous that I might mess something up.
Bivio did offer their Concierge service, but I'm not sure what that all involves.
I have read the 'disbanding a Club' information, I understand about selling the losers first, but still very nervous. Our club has already been moved over to Schwab from TD who I had a great relationship with.
Any thoughts, or anyone out there who has disbanded a club by distributing Stocks and can give me any Help? I would be very grateful.
On Sunday, April 30, 2023 at 07:19:25 AM EDT, Scott Freeman via bivio.com <user*1595500001@bivio.com> wrote:
There are two things to consider when deciding whether
disburse cash or stocks. First, when do you want to realize
gains and have a tax liability and secondly, how much work
you want to do in disbursing the assets.
When stock is transferred to a partner, the Withdrawal
report will show what the partner's cost basis in the stock
and this is sometimes different from the partnership's cost
basis. If the transferred stock has an unrealized capital
gain, then the partner can hold the shares and not create a
tax liability until the shares are sold. Transferring shares
with unrealized losses is probably not good and I would
suggest reading the Help pages:
Partial Withdrawal
https://www.bivio.com/trez_talk/mail-thread?p=69429100003 Full Withdrawal
https://www.bivio.com/trez_talk/mail-thread?p=69428600003
Transferring stocks is more work for the treasurer and one
must interact with the broker to make sure the lots
transferred in the records at bivio are the same ones
transferred in the broker's records with the cost basis
assigned in the Withdrawal Report. When a withdrawal of
stock is entered in bivio the treasurer will have the
opportunity to identify which shares of stock where there
are multiple lots are to be transferred.
Good luck - scott
John Munn on
THANK YOU IRA for your great explanation of how to address this issue. I was wondering how the correct cost basis was going to be reported/adjusted/reconciled with the broker's 1099 statement.
Brokers almost always get this wrong because they don't understand the tax rules and they aren't required to make these adjustments in their records. The cost basis shown in the withdrawal report is the correct one to use. When the shares are sold, if the broker reports cost basis to the IRS (Form 8949 section A or D), the member should report the correct cost basis (that is, the withdrawal basis) by entering the broker basis as usual, but indicate that the cost basis was changed by entering code B in column f of Form 8949, the appropriate amount in column g (positive or negative) to adjust the broker basis to the withdrawal basis. If the broker doesn't report the basis to the IRS, the member should use the correct cost basis and enter the sale in section B or E of Form 8949.
My recent experience was that the broker assigned the club's cost basis to the shares transferred to individual partners rather than using the partner cost basis that I provided. Only one of the several call center staff I spoke with at TDAm even asked why the cost basis of the partnership was different than that of the recipient individual.
Transferring stocks is more work for the treasurer and one
must interact with the broker to make sure the lots
transferred in the records at bivio are the same ones
transferred in the broker's records with the cost basis
assigned in the Withdrawal Report. When a withdrawal of
stock is entered in bivio the treasurer will have the
opportunity to identify which shares of stock where there
are multiple lots are to be transferred.
While this is more work for the treasurer, it really isn't important that the broker transfer the correct lots since the cost basis of the transferred shares will be reset based on the tax basis of the member receiving the shares and independent of the club's cost basis in the shares. The calculations behind the withdrawal report insure that the cost basis of the distributed shares is independent of which shares are transferred.
If you want to see this for yourself, you can play around with withdrawals in "My Demo Club" which can be found in the drop down list opened by clicking the yellow triangle next to your club ID in the upper right corner of the screen. Create a withdrawal for one of the members and fund it with shares from one of the multiple lot stocks. Print the withdrawal report. Delete the withdrawal and repeat, this time using a different lot of the same stock. (You must choose the same number of shares.) Print the new withdrawal report and compare the two reports.