Members buying partial withdrawal from member
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Members buying partial withdrawal from member Can members buy partial shares from a member who is just requesting partial withdrawal ? What sounds like a simple solution is a really really really BAD idea. Why? Taxes. My guess is you want to do this because you don't want to sell any of your stocks and / or you don't want your bank balance to go below some level your club desires. If a remaining partner wants to buy more shares in your club (and they are not greater than what your Partnership Agreement allows) then have the remaining partner can just add more money. But please don't just swap shares from the retiring partner to a remaining partner. You are commingling the cost basis and hence the taxes of two different partners (the retiring and remaining). Good luck getting that resolved to the satisfaction of the IRS. You also must hate your treasurer. As a treasurer of two clubs I would resign as treasurer and propose that the remaining partner (the one that wants to buy the retiring partner's value) become the treasurer. Don't make up stuff. You will end up making the life of your treasurer complicated and miserable. Here is a suggestion. Review the withdrawal procedures as outlined in bivio. Bivio has all of it up on the YouTube channel -- just search under "bivio youtube" -- and you will find it. I believe that anytime a partner leaves the club is a perfect time for the next club business meeting to have a dedicated education segment on how to conduct a withdrawal. Search inside the club cafe for the procedures for withdrawing. Sorry for being blunt but I get tired of seeing well intentioned clubs that don't understand the club accounting concepts and then complicate things because they never bothered to follow directions. Don't mess with taxes and Uncle Sam. Kevin Gillogly A Treasurer for two clubs Yes, I am a glutton for punishment On Thu, Jul 11, 2024 at 12:15â¯PM pooh1346@aol.com via bivio.com <user*26152700001@bivio.com> wrote:
Withdrawals and member contributions are independent events. Members don't "buy" units from other members. Transferring shares as part of a partial withdrawal is often a bad idea because it can have a negative impact on the timing of capital gains taxes for the member receiving the shares as part of a partial withdrawal. (Note that this is NOT the case when dealing with a full withdrawal. The IRS rules are tricky.) If the club doesn't have enough cash on hand to fund the withdrawal or doesn't have any losing stocks it wants to sell, other members can contribute additional cash and purchase additional units at the current NAV. This can be more or less than what is needed to fund the withdrawal. If you enter the new contributions "first", you can see when you have enough cash to complete the withdrawal. (By "first", I don't mean that it should be a separate day, just that the order of entering the transactions into your bivio files should be cash in before cash out._ Ira Smilovitz On Thu, Jul 11, 2024 at 12:15â¯PM pooh1346@aol.com via bivio.com <user*26152700001@bivio.com> wrote:
Thank you since I am the treasurer I hear you loud and clean Lynn
On Thursday, July 11, 2024 at 12:45:17 PM EDT, Kevin Gillogly via bivio.com <user*9886100001@bivio.com> wrote:
What sounds like a simple solution is a really really really BAD idea. Why? Taxes. My guess is you want to do this because you don't want to sell any of your stocks and / or you don't want your bank balance to go below some level your club desires. If a remaining partner wants to buy more shares in your club (and they are not greater than what your Partnership Agreement allows) then have the remaining partner can just add more money. But please don't just swap shares from the retiring partner to a remaining partner. You are commingling the cost basis and hence the taxes of two different partners (the retiring and remaining). Good luck getting that resolved to the satisfaction of the IRS. You also must hate your treasurer. As a treasurer of two clubs I would resign as treasurer and propose that the remaining partner (the one that wants to buy the retiring partner's value) become the treasurer. Don't make up stuff. You will end up making the life of your treasurer complicated and miserable. Here is a suggestion. Review the withdrawal procedures as outlined in bivio. Bivio has all of it up on the YouTube channel -- just search under "bivio youtube" -- and you will find it. I believe that anytime a partner leaves the club is a perfect time for the next club business meeting to have a dedicated education segment on how to conduct a withdrawal. Search inside the club cafe for the procedures for withdrawing. Sorry for being blunt but I get tired of seeing well intentioned clubs that don't understand the club accounting concepts and then complicate things because they never bothered to follow directions. Don't mess with taxes and Uncle Sam. Kevin Gillogly A Treasurer for two clubs Yes, I am a glutton for punishment
Thank you Ira. I appreciate your advice and we will certainly take it Lynn
On Thursday, July 11, 2024 at 01:35:13 PM EDT, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:
Withdrawals and member contributions are independent events. Members don't "buy" units from other members. Transferring shares as part of a partial withdrawal is often a bad idea because it can have a negative impact on the timing of capital gains taxes for the member receiving the shares as part of a partial withdrawal. (Note that this is NOT the case when dealing with a full withdrawal. The IRS rules are tricky.) If the club doesn't have enough cash on hand to fund the withdrawal or doesn't have any losing stocks it wants to sell, other members can contribute additional cash and purchase additional units at the current NAV. This can be more or less than what is needed to fund the withdrawal. If you enter the new contributions "first", you can see when you have enough cash to complete the withdrawal. (By "first", I don't mean that it should be a separate day, just that the order of entering the transactions into your bivio files should be cash in before cash out._ Ira Smilovitz
On Thursday, July 11, 2024 at 01:35:49 PM EDT, pooh1346@aol.com <pooh1346@aol.com> wrote:
Thank you since I am the treasurer I hear you loud and clear Lynn
On Thursday, July 11, 2024 at 12:45:17 PM EDT, Kevin Gillogly via bivio.com <user*9886100001@bivio.com> wrote:
What sounds like a simple solution is a really really really BAD idea. Why? Taxes. My guess is you want to do this because you don't want to sell any of your stocks and / or you don't want your bank balance to go below some level your club desires. If a remaining partner wants to buy more shares in your club (and they are not greater than what your Partnership Agreement allows) then have the remaining partner can just add more money. But please don't just swap shares from the retiring partner to a remaining partner. You are commingling the cost basis and hence the taxes of two different partners (the retiring and remaining). Good luck getting that resolved to the satisfaction of the IRS. You also must hate your treasurer. As a treasurer of two clubs I would resign as treasurer and propose that the remaining partner (the one that wants to buy the retiring partner's value) become the treasurer. Don't make up stuff. You will end up making the life of your treasurer complicated and miserable. Here is a suggestion. Review the withdrawal procedures as outlined in bivio. Bivio has all of it up on the YouTube channel -- just search under "bivio youtube" -- and you will find it. I believe that anytime a partner leaves the club is a perfect time for the next club business meeting to have a dedicated education segment on how to conduct a withdrawal. Search inside the club cafe for the procedures for withdrawing. Sorry for being blunt but I get tired of seeing well intentioned clubs that don't understand the club accounting concepts and then complicate things because they never bothered to follow directions. Don't mess with taxes and Uncle Sam. Kevin Gillogly A Treasurer for two clubs Yes, I am a glutton for punishment
Thanks, Kevin, from one Treasurer to another! I don't handle 2 clubs, but I am the TFL of one club, so far for 20 years, and counting. This plan is a nightmare and illustrates an issue some people have trouble understanding, even long-term club members. Partners in a partnership (if that is your chosen legal club structure) do not own shares or partial shares of any particular stock ......they own a percentage of the partnership, which owns the stock. Carole Jansen Treasurer for Life (apparently) Wise Investment Club
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