Does Bivio do this for you (for a fee) or would a tax person do this for us (for a fee)
Fear of doing it wrong! We have a lot of capital gains and member are all elderly and worried about the taxes.
Maggie Distler on
Judith, I talked to Bivio they will help but no, they will not do it for you, there is a fee. I was thinking of talking to my tax person and seeing what they said. It would be worth paying someone to make sure it was done correctly and fairly.
On Monday, May 1, 2023 at 07:59:54 PM EDT, Judith Chagnon via bivio.com <user*18234200001@bivio.com> wrote:
Does Bivio do this for you (for a fee) or would a tax person do this for us (for a fee) Fear of doing it wrong! We have a lot of capital gains and member are all elderly and worried about the taxes.
John Munn on
It's not a difficult task to withdraw partners. Sell stocks that are losers, keep the winners. This will provide a pool of cash to use to make all the partners whole after allocating the stock shares according to each partner's percentage of ownership. bivio's withdrawal screen uses a valuation date and as you apportion shares to partners according to their percentage of ownership, the software uses the partnership's available cash to make up the difference. Withdraw partners over a weekend so that there are no financial transaction hitting the accounts. My approach was to withdraw partners on a Saturday using Friday's valuation date. As the last individual, I didn't withdraw myself until Monday because I used Sunday to post any dividends or other incomes that will be received after everyone else had withdrawn. There was no date in a calendar when some stock was not trading ex-dividend. So these dividends and income received after all the other partners were withdrawn on Saturday were posted into the Suspense account with the Sunday date so as to not alter their withdrawals. They were already off the books, but they are owed the income. As the last partner, I withdrew myself on Monday, using Sunday valuation date, which would incorporate the Friday closing prices and any income (interest/dividends received after my Monday withdrawal when all partners would otherwise be off the books. As the last partner, I received all the dividend income that the partnership received after Friday; it will be included on my own personal tax return and I will reimburse my other partners (who withdrew on Friday) for their share of this income.
I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought.
To facilitate the stock transfers, all partners opened a brokerage account with the club's broker and I directed the broker to transfer shares and cash between the accounts. The bank account's cash was also owed to me for my withdrawal as the last partner. We will keep the broker account open with a zero balance for a month or two to make sure all income is received. If I forgot any income, it will be easy enough to delete my withdrawal, post the new income with the Sunday posting date, re-enter my withdrawal and then transfer the income from the broker to my personal account. As an aside, I failed to consider four stocks that were trading ex-dividend and a small money market interest posting when I initially withdrew us all and this problem was resolved by the work around described above.
Judith, I talked to Bivio they will help but no, they will not do it for you, there is a fee. I was thinking of talking to my tax person and seeing what they said. It would be worth paying someone to make sure it was done correctly and fairly.
Does Bivio do this for you (for a fee) or would a tax person do this for us (for a fee) Fear of doing it wrong! We have a lot of capital gains and member are all elderly and worried about the taxes.
jchags@aol.com on
Thank you for your advise. Will be trying .
On Tuesday, May 2, 2023 at 08:26:51 AM EDT, John Munn via bivio.com <user*223700001@bivio.com> wrote:
It's not a difficult task to withdraw partners. Sell stocks that are losers, keep the winners. This will provide a pool of cash to use to make all the partners whole after allocating the stock shares according to each partner's percentage of ownership. bivio's withdrawal screen uses a valuation date and as you apportion shares to partners according to their percentage of ownership, the software uses the partnership's available cash to make up the difference. Withdraw partners over a weekend so that there are no financial transaction hitting the accounts. My approach was to withdraw partners on a Saturday using Friday's valuation date. As the last individual, I didn't withdraw myself until Monday because I used Sunday to post any dividends or other incomes that will be received after everyone else had withdrawn. There was no date in a calendar when some stock was not trading ex-dividend. So these dividends and income received after all the other partners were withdrawn on Saturday were posted into the Suspense account with the Sunday date so as to not alter their withdrawals. They were already off the books, but they are owed the income. As the last partner, I withdrew myself on Monday, using Sunday valuation date, which would incorporate the Friday closing prices and any income (interest/dividends received after my Monday withdrawal when all partners would otherwise be off the books. As the last partner, I received all the dividend income that the partnership received after Friday; it will be included on my own personal tax return and I will reimburse my other partners (who withdrew on Friday) for their share of this income.
I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought.
To facilitate the stock transfers, all partners opened a brokerage account with the club's broker and I directed the broker to transfer shares and cash between the accounts. The bank account's cash was also owed to me for my withdrawal as the last partner. We will keep the broker account open with a zero balance for a month or two to make sure all income is received. If I forgot any income, it will be easy enough to delete my withdrawal, post the new income with the Sunday posting date, re-enter my withdrawal and then transfer the income from the broker to my personal account. As an aside, I failed to consider four stocks that were trading ex-dividend and a small money market interest posting when I initially withdrew us all and this problem was resolved by the work around described above.
Judith, I talked to Bivio they will help but no, they will not do it for you, there is a fee. I was thinking of talking to my tax person and seeing what they said. It would be worth paying someone to make sure it was done correctly and fairly.
Does Bivio do this for you (for a fee) or would a tax person do this for us (for a fee) Fear of doing it wrong! We have a lot of capital gains and member are all elderly and worried about the taxes.
M. D. on
John,
I have kept your email from the cafe to help when I bite the bullet and try to get going on this, of course once we vote on everything. One question I did have is in regards to this part of your email:
"I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought."
I thought that you had to file your last club tax return within 3 months of disbanding, is that not a thing anymore? TIA
On Tuesday, May 2, 2023 at 08:26:53 AM EDT, John Munn via bivio.com <user*223700001@bivio.com> wrote:
It's not a difficult task to withdraw partners. Sell stocks that are losers, keep the winners. This will provide a pool of cash to use to make all the partners whole after allocating the stock shares according to each partner's percentage of ownership. bivio's withdrawal screen uses a valuation date and as you apportion shares to partners according to their percentage of ownership, the software uses the partnership's available cash to make up the difference. Withdraw partners over a weekend so that there are no financial transaction hitting the accounts. My approach was to withdraw partners on a Saturday using Friday's valuation date. As the last individual, I didn't withdraw myself until Monday because I used Sunday to post any dividends or other incomes that will be received after everyone else had withdrawn. There was no date in a calendar when some stock was not trading ex-dividend. So these dividends and income received after all the other partners were withdrawn on Saturday were posted into the Suspense account with the Sunday date so as to not alter their withdrawals. They were already off the books, but they are owed the income. As the last partner, I withdrew myself on Monday, using Sunday valuation date, which would incorporate the Friday closing prices and any income (interest/dividends received after my Monday withdrawal when all partners would otherwise be off the books. As the last partner, I received all the dividend income that the partnership received after Friday; it will be included on my own personal tax return and I will reimburse my other partners (who withdrew on Friday) for their share of this income.
I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought.
To facilitate the stock transfers, all partners opened a brokerage account with the club's broker and I directed the broker to transfer shares and cash between the accounts. The bank account's cash was also owed to me for my withdrawal as the last partner. We will keep the broker account open with a zero balance for a month or two to make sure all income is received. If I forgot any income, it will be easy enough to delete my withdrawal, post the new income with the Sunday posting date, re-enter my withdrawal and then transfer the income from the broker to my personal account. As an aside, I failed to consider four stocks that were trading ex-dividend and a small money market interest posting when I initially withdrew us all and this problem was resolved by the work around described above.
Judith, I talked to Bivio they will help but no, they will not do it for you, there is a fee. I was thinking of talking to my tax person and seeing what they said. It would be worth paying someone to make sure it was done correctly and fairly.
Does Bivio do this for you (for a fee) or would a tax person do this for us (for a fee) Fear of doing it wrong! We have a lot of capital gains and member are all elderly and worried about the taxes.
John Munn on
I wasn't going to worry about the 3 month time line because filing a return is done for information purposes, and not to collect revenue. Investment clubs get their tax information sent to them on the 1099 forms after the year ends and filing before the year's out means there's a good chance that we miss something and make an error that needs to be corrected through an amended return. I doubt the IRS would fault anyone for not following the 3 month rule so I'm going to file electronically next year when bivio releases the 2023 software and hope that this issue is ignored. And who's to say when the partnership ceases to exist? I've sent out some inquiries to friends to see if they'd like to take it over, so right now, it's a shell hoping to be taken over and filled by the new and younger hermit crabs.
BTW.... Because of the size of our portfolio there was always some stock that was trading ex-dividend, and beware that any cash sitting in the broker's cash account accrues interest. I forgot about the ex-dividends which would be received after the partners were off the books. So after I withdrew my partners and transferred stock and cash to close out their accounts, they were owed money from the stocks that were ex-dividend. In my case, I transferred all the stock and cash out of the broker account to all partners. Then I realized I didn't account for dividends that would be received in the future, and didn't want to re-do all the bivio transactions because I felt that could become messy since all the stock and cash was transferred from the partnership's account to the partners. So rather than reversing the withdrawals for everyone, I just reversed my own and did the following:
The valuation date for all partners but me was a Friday.
All partners but me were withdrawn on Saturday using Friday's closing prices.
All income that was to be received in the future (4 stocks and money market interest) were posted and entered into the Suspense account as if they were received on Sunday. Since I was the last partner, all this income became "mine" according to bivio and would be added as cash to my payout. But recall that this cash was not yet received... it would be received by the broker in the future.
I withdrew myself on Monday using Sunday's valuation. This valuation would include the total value of the partnership including the dividends and interest posted to the Suspense account on Sunday, and the valuation wold use Friday's closing stock prices.
I transferred all the stocks and cash from the broker to my personal account.
When the dividends were received by the broker and bivio recognized them, I deleted the transaction automated transaction since the receipt of the dividends was previously recorded in bivio's Suspense account. I then transferred the dividend and interest income from the broker to my personal account.
At the end of the year, bivio will allocate the dividend income to me since it was received after all the other partners were off the books. Therefore, the tax liability will be mine to include on my state and federal return.
I still need to reimburse my partners for their share of the dividends and that's easy. A member status report on the date the partners were cashed out (or maybe the day before) tells you how much of the partnership each partner owns. So I subtracted 22% (for the federal and state taxes I will pay on the dividends) and multiplied the result by each partner's fractional ownership to figure out how much I need to reimburse each partner. It may not be exact, but it will be close enough.
It sounds complicated, but if you know the ex-dividends ahead of time, you can add them into the books beforehand. As you pay people out you won't have enough cash to fully pay everyone, and can only do that after all the ex-dividends are received.
I have kept your email from the cafe to help when I bite the bullet and try to get going on this, of course once we vote on everything. One question I did have is in regards to this part of your email:
"I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought."
I thought that you had to file your last club tax return within 3 months of disbanding, is that not a thing anymore? TIA
It's not a difficult task to withdraw partners. Sell stocks that are losers, keep the winners. This will provide a pool of cash to use to make all the partners whole after allocating the stock shares according to each partner's percentage of ownership. bivio's withdrawal screen uses a valuation date and as you apportion shares to partners according to their percentage of ownership, the software uses the partnership's available cash to make up the difference. Withdraw partners over a weekend so that there are no financial transaction hitting the accounts. My approach was to withdraw partners on a Saturday using Friday's valuation date. As the last individual, I didn't withdraw myself until Monday because I used Sunday to post any dividends or other incomes that will be received after everyone else had withdrawn. There was no date in a calendar when some stock was not trading ex-dividend. So these dividends and income received after all the other partners were withdrawn on Saturday were posted into the Suspense account with the Sunday date so as to not alter their withdrawals. They were already off the books, but they are owed the income. As the last partner, I withdrew myself on Monday, using Sunday valuation date, which would incorporate the Friday closing prices and any income (interest/dividends received after my Monday withdrawal when all partners would otherwise be off the books. As the last partner, I received all the dividend income that the partnership received after Friday; it will be included on my own personal tax return and I will reimburse my other partners (who withdrew on Friday) for their share of this income.
I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought.
To facilitate the stock transfers, all partners opened a brokerage account with the club's broker and I directed the broker to transfer shares and cash between the accounts. The bank account's cash was also owed to me for my withdrawal as the last partner. We will keep the broker account open with a zero balance for a month or two to make sure all income is received. If I forgot any income, it will be easy enough to delete my withdrawal, post the new income with the Sunday posting date, re-enter my withdrawal and then transfer the income from the broker to my personal account. As an aside, I failed to consider four stocks that were trading ex-dividend and a small money market interest posting when I initially withdrew us all and this problem was resolved by the work around described above.
Judith, I talked to Bivio they will help but no, they will not do it for you, there is a fee. I was thinking of talking to my tax person and seeing what they said. It would be worth paying someone to make sure it was done correctly and fairly.
Does Bivio do this for you (for a fee) or would a tax person do this for us (for a fee) Fear of doing it wrong! We have a lot of capital gains and member are all elderly and worried about the taxes.
ira smilovitz on
The IRS instructions call for partnership returns to be filed by the 15th day of the third month after the end of the tax year. For a partnership that terminates before December 1, that means a short, fiscal year return is the final return. The IRS wants the returns as soon as possible partly to avoid situations where the responsible parties forget to file at the regular time because the partnership is no longer in existence. That said, the IRS really doesn't care if the return is filed by the regular due date as it can't begin processing the return until the computer systems are changed over in late December/early January.
For the reasons that John enumerated, it may be easier/more beneficial for a club to wait to file its last return. That's a decision that only the club treasurer can determine based on the facts at hand.
There is an easier way to accomplish John's withdrawal process if you plan ahead. As he states in the last paragraph, you can enter all of the future dividends and expenses prior to the date that you will use for the final valuation. You can then generate the withdrawal reports for all of the members other than the treasurer and process the withdrawal transactions (stock transfers and cash). You should have enough cash to pay most, if not all, of the members other than the treasurer. The treasurer gets whatever is left at the end - his actual withdrawal plus the small amount of interest that may have been generated if members were slow to cash their withdrawal checks.
I wasn't going to worry about the 3 month time line because filing a return is done for information purposes, and not to collect revenue. Investment clubs get their tax information sent to them on the 1099 forms after the year ends and filing before the year's out means there's a good chance that we miss something and make an error that needs to be corrected through an amended return. I doubt the IRS would fault anyone for not following the 3 month rule so I'm going to file electronically next year when bivio releases the 2023 software and hope that this issue is ignored. And who's to say when the partnership ceases to exist? I've sent out some inquiries to friends to see if they'd like to take it over, so right now, it's a shell hoping to be taken over and filled by the new and younger hermit crabs.
BTW.... Because of the size of our portfolio there was always some stock that was trading ex-dividend, and beware that any cash sitting in the broker's cash account accrues interest. I forgot about the ex-dividends which would be received after the partners were off the books. So after I withdrew my partners and transferred stock and cash to close out their accounts, they were owed money from the stocks that were ex-dividend. In my case, I transferred all the stock and cash out of the broker account to all partners. Then I realized I didn't account for dividends that would be received in the future, and didn't want to re-do all the bivio transactions because I felt that could become messy since all the stock and cash was transferred from the partnership's account to the partners. So rather than reversing the withdrawals for everyone, I just reversed my own and did the following:
The valuation date for all partners but me was a Friday.
All partners but me were withdrawn on Saturday using Friday's closing prices.
All income that was to be received in the future (4 stocks and money market interest) were posted and entered into the Suspense account as if they were received on Sunday. Since I was the last partner, all this income became "mine" according to bivio and would be added as cash to my payout. But recall that this cash was not yet received... it would be received by the broker in the future.
I withdrew myself on Monday using Sunday's valuation. This valuation would include the total value of the partnership including the dividends and interest posted to the Suspense account on Sunday, and the valuation wold use Friday's closing stock prices.
I transferred all the stocks and cash from the broker to my personal account.
When the dividends were received by the broker and bivio recognized them, I deleted the transaction automated transaction since the receipt of the dividends was previously recorded in bivio's Suspense account. I then transferred the dividend and interest income from the broker to my personal account.
At the end of the year, bivio will allocate the dividend income to me since it was received after all the other partners were off the books. Therefore, the tax liability will be mine to include on my state and federal return.
I still need to reimburse my partners for their share of the dividends and that's easy. A member status report on the date the partners were cashed out (or maybe the day before) tells you how much of the partnership each partner owns. So I subtracted 22% (for the federal and state taxes I will pay on the dividends) and multiplied the result by each partner's fractional ownership to figure out how much I need to reimburse each partner. It may not be exact, but it will be close enough.
It sounds complicated, but if you know the ex-dividends ahead of time, you can add them into the books beforehand. As you pay people out you won't have enough cash to fully pay everyone, and can only do that after all the ex-dividends are received.
I have kept your email from the cafe to help when I bite the bullet and try to get going on this, of course once we vote on everything. One question I did have is in regards to this part of your email:
"I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought."
I thought that you had to file your last club tax return within 3 months of disbanding, is that not a thing anymore? TIA
It's not a difficult task to withdraw partners. Sell stocks that are losers, keep the winners. This will provide a pool of cash to use to make all the partners whole after allocating the stock shares according to each partner's percentage of ownership. bivio's withdrawal screen uses a valuation date and as you apportion shares to partners according to their percentage of ownership, the software uses the partnership's available cash to make up the difference. Withdraw partners over a weekend so that there are no financial transaction hitting the accounts. My approach was to withdraw partners on a Saturday using Friday's valuation date. As the last individual, I didn't withdraw myself until Monday because I used Sunday to post any dividends or other incomes that will be received after everyone else had withdrawn. There was no date in a calendar when some stock was not trading ex-dividend. So these dividends and income received after all the other partners were withdrawn on Saturday were posted into the Suspense account with the Sunday date so as to not alter their withdrawals. They were already off the books, but they are owed the income. As the last partner, I withdrew myself on Monday, using Sunday valuation date, which would incorporate the Friday closing prices and any income (interest/dividends received after my Monday withdrawal when all partners would otherwise be off the books. As the last partner, I received all the dividend income that the partnership received after Friday; it will be included on my own personal tax return and I will reimburse my other partners (who withdrew on Friday) for their share of this income.
I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought.
To facilitate the stock transfers, all partners opened a brokerage account with the club's broker and I directed the broker to transfer shares and cash between the accounts. The bank account's cash was also owed to me for my withdrawal as the last partner. We will keep the broker account open with a zero balance for a month or two to make sure all income is received. If I forgot any income, it will be easy enough to delete my withdrawal, post the new income with the Sunday posting date, re-enter my withdrawal and then transfer the income from the broker to my personal account. As an aside, I failed to consider four stocks that were trading ex-dividend and a small money market interest posting when I initially withdrew us all and this problem was resolved by the work around described above.
Judith, I talked to Bivio they will help but no, they will not do it for you, there is a fee. I was thinking of talking to my tax person and seeing what they said. It would be worth paying someone to make sure it was done correctly and fairly.
Does Bivio do this for you (for a fee) or would a tax person do this for us (for a fee) Fear of doing it wrong! We have a lot of capital gains and member are all elderly and worried about the taxes.
cindy gerke on
The plan for CRIG is to transfer stocks with Capital gains to members by percentage ownership in club in Aug and sell the losers leaving the cash in brokerage account until mid Dec. This will allow any dividends to be at brokerage by end of 2023. Bivio is paid until 3/9/2024 allowing CRIG to mark 2023 returns final.
My concern is Ira's ststement that full withdrawal uses cost basis not club cost therefore Club cannot keep cash unless I transfer it to our Credit Union account and close that in Dec
I have withdrawn many cash members during our 27 years transfering stock to last 4 members. Yes it is work for Treasurer. I closed a Club after 4 years in 2002 that did not have large gains and we sold everything. Easier.
Unfortunately Club is now scheduled to transfer from TD to Schwab during Nov long weekend update but CRIG commitee will meet at local Schwab /TD branch this summer after a financial planner explains tax advantages at June meeting.
I wasn't going to worry about the 3 month time line because filing a return is done for information purposes, and not to collect revenue. Investment clubs get their tax information sent to them on the 1099 forms after the year ends and filing before the year's out means there's a good chance that we miss something and make an error that needs to be corrected through an amended return. I doubt the IRS would fault anyone for not following the 3 month rule so I'm going to file electronically next year when bivio releases the 2023 software and hope that this issue is ignored. And who's to say when the partnership ceases to exist? I've sent out some inquiries to friends to see if they'd like to take it over, so right now, it's a shell hoping to be taken over and filled by the new and younger hermit crabs.
BTW.... Because of the size of our portfolio there was always some stock that was trading ex-dividend, and beware that any cash sitting in the broker's cash account accrues interest. I forgot about the ex-dividends which would be received after the partners were off the books. So after I withdrew my partners and transferred stock and cash to close out their accounts, they were owed money from the stocks that were ex-dividend. In my case, I transferred all the stock and cash out of the broker account to all partners. Then I realized I didn't account for dividends that would be received in the future, and didn't want to re-do all the bivio transactions because I felt that could become messy since all the stock and cash was transferred from the partnership's account to the partners. So rather than reversing the withdrawals for everyone, I just reversed my own and did the following:
The valuation date for all partners but me was a Friday.
All partners but me were withdrawn on Saturday using Friday's closing prices.
All income that was to be received in the future (4 stocks and money market interest) were posted and entered into the Suspense account as if they were received on Sunday. Since I was the last partner, all this income became "mine" according to bivio and would be added as cash to my payout. But recall that this cash was not yet received... it would be received by the broker in the future.
I withdrew myself on Monday using Sunday's valuation. This valuation would include the total value of the partnership including the dividends and interest posted to the Suspense account on Sunday, and the valuation wold use Friday's closing stock prices.
I transferred all the stocks and cash from the broker to my personal account.
When the dividends were received by the broker and bivio recognized them, I deleted the transaction automated transaction since the receipt of the dividends was previously recorded in bivio's Suspense account. I then transferred the dividend and interest income from the broker to my personal account.
At the end of the year, bivio will allocate the dividend income to me since it was received after all the other partners were off the books. Therefore, the tax liability will be mine to include on my state and federal return.
I still need to reimburse my partners for their share of the dividends and that's easy. A member status report on the date the partners were cashed out (or maybe the day before) tells you how much of the partnership each partner owns. So I subtracted 22% (for the federal and state taxes I will pay on the dividends) and multiplied the result by each partner's fractional ownership to figure out how much I need to reimburse each partner. It may not be exact, but it will be close enough.
It sounds complicated, but if you know the ex-dividends ahead of time, you can add them into the books beforehand. As you pay people out you won't have enough cash to fully pay everyone, and can only do that after all the ex-dividends are received.
I have kept your email from the cafe to help when I bite the bullet and try to get going on this, of course once we vote on everything. One question I did have is in regards to this part of your email:
"I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought."
I thought that you had to file your last club tax return within 3 months of disbanding, is that not a thing anymore? TIA
It's not a difficult task to withdraw partners. Sell stocks that are losers, keep the winners. This will provide a pool of cash to use to make all the partners whole after allocating the stock shares according to each partner's percentage of ownership. bivio's withdrawal screen uses a valuation date and as you apportion shares to partners according to their percentage of ownership, the software uses the partnership's available cash to make up the difference. Withdraw partners over a weekend so that there are no financial transaction hitting the accounts. My approach was to withdraw partners on a Saturday using Friday's valuation date. As the last individual, I didn't withdraw myself until Monday because I used Sunday to post any dividends or other incomes that will be received after everyone else had withdrawn. There was no date in a calendar when some stock was not trading ex-dividend. So these dividends and income received after all the other partners were withdrawn on Saturday were posted into the Suspense account with the Sunday date so as to not alter their withdrawals. They were already off the books, but they are owed the income. As the last partner, I withdrew myself on Monday, using Sunday valuation date, which would incorporate the Friday closing prices and any income (interest/dividends received after my Monday withdrawal when all partners would otherwise be off the books. As the last partner, I received all the dividend income that the partnership received after Friday; it will be included on my own personal tax return and I will reimburse my other partners (who withdrew on Friday) for their share of this income.
I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought.
To facilitate the stock transfers, all partners opened a brokerage account with the club's broker and I directed the broker to transfer shares and cash between the accounts. The bank account's cash was also owed to me for my withdrawal as the last partner. We will keep the broker account open with a zero balance for a month or two to make sure all income is received. If I forgot any income, it will be easy enough to delete my withdrawal, post the new income with the Sunday posting date, re-enter my withdrawal and then transfer the income from the broker to my personal account. As an aside, I failed to consider four stocks that were trading ex-dividend and a small money market interest posting when I initially withdrew us all and this problem was resolved by the work around described above.
Judith, I talked to Bivio they will help but no, they will not do it for you, there is a fee. I was thinking of talking to my tax person and seeing what they said. It would be worth paying someone to make sure it was done correctly and fairly.
Does Bivio do this for you (for a fee) or would a tax person do this for us (for a fee) Fear of doing it wrong! We have a lot of capital gains and member are all elderly and worried about the taxes.
John Munn on
Thanks Ira. My mistake was to close down without considering the dividends we'd receive after all assets were distributed. After I gave the broker instructions on Saturday to transfer assets (which would happen on Monday), I realized that additional dividends would be received and there would be no partners on the books to receive them. Rather than reverse all withdrawals, post the income and re-enter the withdrawals, I decided to just reverse mine and leave well enough alone and then settle up off the books.
This was the first time I distributed stock in a withdrawal and while it is easy and comprehensible in retrospect, it was intimidating at the time. I want to emphasize that bivio was a great help in resolving the ex-dividend income.
The plan for CRIG is to transfer stocks with Capital gains to members by percentage ownership in club in Aug and sell the losers leaving the cash in brokerage account until mid Dec. This will allow any dividends to be at brokerage by end of 2023. Bivio is paid until 3/9/2024 allowing CRIG to mark 2023 returns final.
My concern is Ira's ststement that full withdrawal uses cost basis not club cost therefore Club cannot keep cash unless I transfer it to our Credit Union account and close that in Dec
I have withdrawn many cash members during our 27 years transfering stock to last 4 members. Yes it is work for Treasurer. I closed a Club after 4 years in 2002 that did not have large gains and we sold everything. Easier.
Unfortunately Club is now scheduled to transfer from TD to Schwab during Nov long weekend update but CRIG commitee will meet at local Schwab /TD branch this summer after a financial planner explains tax advantages at June meeting.
I wasn't going to worry about the 3 month time line because filing a return is done for information purposes, and not to collect revenue. Investment clubs get their tax information sent to them on the 1099 forms after the year ends and filing before the year's out means there's a good chance that we miss something and make an error that needs to be corrected through an amended return. I doubt the IRS would fault anyone for not following the 3 month rule so I'm going to file electronically next year when bivio releases the 2023 software and hope that this issue is ignored. And who's to say when the partnership ceases to exist? I've sent out some inquiries to friends to see if they'd like to take it over, so right now, it's a shell hoping to be taken over and filled by the new and younger hermit crabs.
BTW.... Because of the size of our portfolio there was always some stock that was trading ex-dividend, and beware that any cash sitting in the broker's cash account accrues interest. I forgot about the ex-dividends which would be received after the partners were off the books. So after I withdrew my partners and transferred stock and cash to close out their accounts, they were owed money from the stocks that were ex-dividend. In my case, I transferred all the stock and cash out of the broker account to all partners. Then I realized I didn't account for dividends that would be received in the future, and didn't want to re-do all the bivio transactions because I felt that could become messy since all the stock and cash was transferred from the partnership's account to the partners. So rather than reversing the withdrawals for everyone, I just reversed my own and did the following:
The valuation date for all partners but me was a Friday.
All partners but me were withdrawn on Saturday using Friday's closing prices.
All income that was to be received in the future (4 stocks and money market interest) were posted and entered into the Suspense account as if they were received on Sunday. Since I was the last partner, all this income became "mine" according to bivio and would be added as cash to my payout. But recall that this cash was not yet received... it would be received by the broker in the future.
I withdrew myself on Monday using Sunday's valuation. This valuation would include the total value of the partnership including the dividends and interest posted to the Suspense account on Sunday, and the valuation wold use Friday's closing stock prices.
I transferred all the stocks and cash from the broker to my personal account.
When the dividends were received by the broker and bivio recognized them, I deleted the transaction automated transaction since the receipt of the dividends was previously recorded in bivio's Suspense account. I then transferred the dividend and interest income from the broker to my personal account.
At the end of the year, bivio will allocate the dividend income to me since it was received after all the other partners were off the books. Therefore, the tax liability will be mine to include on my state and federal return.
I still need to reimburse my partners for their share of the dividends and that's easy. A member status report on the date the partners were cashed out (or maybe the day before) tells you how much of the partnership each partner owns. So I subtracted 22% (for the federal and state taxes I will pay on the dividends) and multiplied the result by each partner's fractional ownership to figure out how much I need to reimburse each partner. It may not be exact, but it will be close enough.
It sounds complicated, but if you know the ex-dividends ahead of time, you can add them into the books beforehand. As you pay people out you won't have enough cash to fully pay everyone, and can only do that after all the ex-dividends are received.
I have kept your email from the cafe to help when I bite the bullet and try to get going on this, of course once we vote on everything. One question I did have is in regards to this part of your email:
"I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought."
I thought that you had to file your last club tax return within 3 months of disbanding, is that not a thing anymore? TIA
It's not a difficult task to withdraw partners. Sell stocks that are losers, keep the winners. This will provide a pool of cash to use to make all the partners whole after allocating the stock shares according to each partner's percentage of ownership. bivio's withdrawal screen uses a valuation date and as you apportion shares to partners according to their percentage of ownership, the software uses the partnership's available cash to make up the difference. Withdraw partners over a weekend so that there are no financial transaction hitting the accounts. My approach was to withdraw partners on a Saturday using Friday's valuation date. As the last individual, I didn't withdraw myself until Monday because I used Sunday to post any dividends or other incomes that will be received after everyone else had withdrawn. There was no date in a calendar when some stock was not trading ex-dividend. So these dividends and income received after all the other partners were withdrawn on Saturday were posted into the Suspense account with the Sunday date so as to not alter their withdrawals. They were already off the books, but they are owed the income. As the last partner, I withdrew myself on Monday, using Sunday valuation date, which would incorporate the Friday closing prices and any income (interest/dividends received after my Monday withdrawal when all partners would otherwise be off the books. As the last partner, I received all the dividend income that the partnership received after Friday; it will be included on my own personal tax return and I will reimburse my other partners (who withdrew on Friday) for their share of this income.
I had questions and bivio's support guided me through this process. One thing I did prior to withdrawing everyone was to renew our annual bivio subscription through next year so I could do the 2023 tax return next year. By paying now before all partners were withdrawn, the cost would be shared by all partners and it would be prepaid. This is not a difficult process, but it does take some thought.
To facilitate the stock transfers, all partners opened a brokerage account with the club's broker and I directed the broker to transfer shares and cash between the accounts. The bank account's cash was also owed to me for my withdrawal as the last partner. We will keep the broker account open with a zero balance for a month or two to make sure all income is received. If I forgot any income, it will be easy enough to delete my withdrawal, post the new income with the Sunday posting date, re-enter my withdrawal and then transfer the income from the broker to my personal account. As an aside, I failed to consider four stocks that were trading ex-dividend and a small money market interest posting when I initially withdrew us all and this problem was resolved by the work around described above.
Judith, I talked to Bivio they will help but no, they will not do it for you, there is a fee. I was thinking of talking to my tax person and seeing what they said. It would be worth paying someone to make sure it was done correctly and fairly.
Does Bivio do this for you (for a fee) or would a tax person do this for us (for a fee) Fear of doing it wrong! We have a lot of capital gains and member are all elderly and worried about the taxes.