Reducing total value of investment club portfolio
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Reducing total value of investment club portfolio Our investment club has 20 members and started in 2000. We have all been faithfully contributing every month and now have a very large portfolio. We have all gotten older of course and want to reduce the value of the total portfolio. It seems like a better idea to sell stock now at a good price and take profits instead of waiting until we have to sell when a member resigns. We have 12 out of 20 members who have a significant member value and 8 members whose value is much lower because they joined later. We are thinking about having each of the 12 members take a partial withdrawal. Instead of transferring stock to them, we would sell stock and distribute cash in the withdrawal. We would not require the 8 members with less value to take a withdrawal. After the withdrawals take place, the member values will be more equitable, we would have a lower value of our portfolio and members who take withdrawals could choose how to invest the money for themselves. What have other clubs done when they are in this situation? Is there a reason not to transfer stock and then the withdrawals could be sold and taxed at the members individual discretion?
Otherwise even the members not taking withdrawals will incur taxes now. Sent from my iPhone > On Feb 7, 2025, at 10:49â¯AM, Linda Laughlin via bivio.com <user*25814400001@bivio.com> wrote: > > Our investment club has 20 members and started in 2000. We > have all been faithfully contributing every month and now > have a very large portfolio. We have all gotten older of > course and want to reduce the value of the total portfolio. > It seems like a better idea to sell stock now at a good > price and take profits instead of waiting until we have to > sell when a member resigns. > We have 12 out of 20 members who have a significant member > value and 8 members whose value is much lower because they > joined later. We are thinking about having each of the 12 > members take a partial withdrawal. Instead of transferring > stock to them, we would sell stock and distribute cash in > the withdrawal. We would not require the 8 members with > less value to take a withdrawal. After the withdrawals take > place, the member values will be more equitable, we would > have a lower value of our portfolio and members who take > withdrawals could choose how to invest the money for > themselves. > What have other clubs done when they are in this situation? Yes all members would have a tax liability but for the members with the smallest percentages in the club, the taxes would be small. Because all members own different percentages of each stock and not all members would be involved in the transfer of stock, it seems that it would be better to sell the stock in the club and transfer the cash for each withdrawal. > On Feb 7, 2025, at 10:53 AM, Tracy, Molly M via bivio.com <user*40992200001@bivio.com> wrote: > > Is there a reason not to transfer stock and then the withdrawals could be sold and taxed at the members individual discretion? > > Otherwise even the members not taking withdrawals will incur taxes now. > > Sent from my iPhone > >> On Feb 7, 2025, at 10:49â¯AM, Linda Laughlin via bivio.com <user*25814400001@bivio.com> wrote: >> >> Our investment club has 20 members and started in 2000. We >> have all been faithfully contributing every month and now >> have a very large portfolio. We have all gotten older of >> course and want to reduce the value of the total portfolio. >> It seems like a better idea to sell stock now at a good >> price and take profits instead of waiting until we have to >> sell when a member resigns. >> We have 12 out of 20 members who have a significant member >> value and 8 members whose value is much lower because they >> joined later. We are thinking about having each of the 12 >> members take a partial withdrawal. Instead of transferring >> stock to them, we would sell stock and distribute cash in >> the withdrawal. We would not require the 8 members with >> less value to take a withdrawal. After the withdrawals take >> place, the member values will be more equitable, we would >> have a lower value of our portfolio and members who take >> withdrawals could choose how to invest the money for >> themselves. >> What have other clubs done when they are in this situation? A transfer of stock will not affect the amount of stock owned by the members not receiving stock; however, cash withdrawals will trigger tax consequences for all members in the year of the cash withdrawals. If your organizational documents allow it, you should probably let the members decide how they want to receive their withdrawals. Additional taxes for older members will have more of a ripple effect beyond just the next tax bracket (I.e., increased Medicare payment) that they may not want. c.e Yes all members would have a tax liability but for the members with the smallest percentages in the club, the taxes would be small. Because all members own different percentages of each stock and not all members would be involved in the transfer of stock, it seems that it would be better to sell the stock in the club and transfer the cash for each withdrawal. In the help section there's a description of the various withdrawals methods and a pro and cons of each On Friday, February 7, 2025, 10:55 AM, Carole Jansen via bivio.com <user*8441200001@bivio.com> wrote:
Tracy, Using stock for a partial withdrawal transfers the club's basis in the shares to the member receiving the stock. This could either accelerate or delay recognition of gain for the member receiving the stock (assuming it is sold). Any capital gains recognized "now" will be offset when the member ultimately fully withdraws form the club. Ira Smilovitz Is there a reason not to transfer stock and then the withdrawals could be sold and taxed at the members individual discretion?
Thanks Ira. You always provide useful feedback
Sent from my iPhone
On Feb 7, 2025, at 4:25 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:
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