Using the NAIC Accounting Software, when entering fees of
10.00 each from all members (not equal shares), how does the
fees gets recorded? ( I understand it does not buy any
units)

Is there a separate account for fees or does it get recorder
to the individual member account in proportion to their
share of the partnership?

In NAIC v. 1.04, fees do not buy units but are income to the partnership and
are ultimately distributed as income among partners according to their
equity interest.




----- Original Message -----
From: "Ben Ugale" <scaicben@bivio.com>
To: <club_cafe@bivio.com>
Sent: Wednesday, October 17, 2001 5:33 PM
Subject: club_cafe: Recording FEES


> Using the NAIC Accounting Software, when entering fees of
> 10.00 each from all members (not equal shares), how does the
> fees gets recorded? ( I understand it does not buy any
> units)
>
> Is there a separate account for fees or does it get recorder
> to the individual member account in proportion to their
> share of the partnership?
>

John:

I just joined the cluband I just want to understand it more
clearly.

Our Club has been contributing 5.00 each extra for future
expenses and being recorded as fees. So, if those fees
that are being accumulated and are recorded as income among
the members according to their equity interest, and if I own
only 5 percent equity interest, my account only gets 5
percent out of the 5.00 I contributed as a fee?

I appreciate your explanation.

scaicben

John R. Munn wrote:
> In NAIC v. 1.04, fees do not buy units but are income to the partnership and
> are ultimately distributed as income among partners according to their
> equity interest.
>
>
>
>
> ----- Original Message -----
> From: "Ben Ugale" <scaicben@bivio.com>
> To: <club_cafe@bivio.com>
> Sent: Wednesday, October 17, 2001 5:33 PM
> Subject: club_cafe: Recording FEES
>
>
> > Using the NAIC Accounting Software, when entering fees of
> > 10.00 each from all members (not equal shares), how does the
> > fees gets recorded? ( I understand it does not buy any
> > units)
> >
> > Is there a separate account for fees or does it get recorder
> > to the individual member account in proportion to their
> > share of the partnership?
> >

John,

<<
In NAIC v. 1.04, fees do not buy units but are income to the partnership
and are ultimately distributed as income among partners according to
their equity interest.
>>

That's not quite right. In both bivio and NCA, fees are added to the
basis of the partner contributing the fee, but they do not, as you say,
buy fees. They are not income to the partnership, but a contribution to
capital.


Rip West
Saint Paul, MN

Rip West wrote:
 >
> That's not quite right. In both bivio and NCA, fees are added to the
> basis of the partner contributing the fee, but they do not, as you say,
> buy fees. They are not income to the partnership, but a contribution to
> capital.
>
>
> Rip West
> Saint Paul, MN


Rip West:

I just input 50.00 dollars as fees for just one member and
it distributed the 50.00 among the members according to
their equity interest, 20%, 5% etc. It did not go to the
contributing member's capital account.

Ben Ugale, CA

Ben,

<<
I just input 50.00 dollars as fees for just one member and it
distributed the 50.00 among the members according to their equity
interest, 20%, 5% etc. It did not go to the contributing member's
capital account.
>>

We have to define our terms here. When I say 'Capital Account', I am
talking about the member's tax basis in the partnership. The payment of
the $100 fee will increase the member's tax basis, as you can see by
looking at the members' status report on the day before and the day of
the fee deposit. When you say it distributed the $50 among the members,
I believe you mean it increased those member's worth by that much, which
is correct. Since fees don't buy units, the club unit value goes up when
fees are deposited [more assets divided by the same number of units]. So
the contributing member's capital account [tax basis] was credited for
the fee, and each member's value was increased.

Income was not increased by the fees.

Rip West
Saint Paul, MN

Rip West wrote:

> We have to define our terms here. When I say 'Capital Account', I am
> talking about the member's tax basis in the partnership. The payment of
> the $100 fee will increase the member's tax basis, as you can see by
> looking at the members' status report on the day before and the day of
> the fee deposit. When you say it distributed the $50 among the members,
> I believe you mean it increased those member's worth by that much, which
> is correct. Since fees don't buy units, the club unit value goes up when
> fees are deposited [more assets divided by the same number of units]. So
> the contributing member's capital account [tax basis] was credited for
> the fee, and each member's value was increased.
>
> Income was not increased by the fees.
>
> Rip West
> Saint Paul, MN


Rip West:

I understand what you are saying about the Capital Account
and the fees does not increases the income but rather the
fees increases the Capital Acoount or Tax Basis for the
individual member. Please don't think that I am questioning
you, I just want to understand the accounting process of the
NAIC or Bivio. I just want to have some clarification to
understand more because I think our Club does not understand
how the NAIC Accounting works.

Let's say my equity share to the Partnership is 20 pecent
and I contributed 50.00 recorded as a fee. Will my 50.00
fee contribution increases my Capital Account or Tax Basis
by 50.00 or just 20 percent? Let's say that no other fees
were contributed by the other members.

Ben,

<<
Please don't think that I am questioning you, I just want to understand
the accounting process of the NAIC or Bivio.
>>

No problem. Let's keep at it until we are both sure we are on the same
page (or until we have put everyone else to sleep <g>)

<<
Let's say my equity share to the Partnership is 20 pecent and I
contributed 50.00 recorded as a fee. Will my 50.00 fee contribution
increases my Capital Account or Tax Basis by 50.00 or just 20 percent?
Let's say that no other fees were contributed by the other members.
>>

When you contribute your $50, designated as a fee, your Tax Basis in the
partnership is increased by $50. The value of your partnership interest
will have increased by $10 [20% of $50]. Your partners get the other
80%, although their tax basis does not change.

I think you are correct in that many clubs do not understand the
ramifications of fees. They were originally used to try to spread the
economic burden of certain expenses equally between partners. That works
if the expenses that are supposed to be paid out of fees equal the fees
assessed. If the fees assessed are more than the expenses, the rich get
rich and the poor get poorer.

With bivio, there really is not a need to assess fees for expenses. You
can allocate expenses equally among the partners, without using fee
assessments.

You might be interested in an article that I wrote some time ago on the
subject.......

Payments vs Fees
http://www.bivio.com/trez_talk/mail-msg?t=518700003

Rip West
Saint Paul, MN

Rip West:

> You might be interested in an article that I wrote some time ago on the
> subject.......
>
> Payments vs Fees
> http://www.bivio.com/trez_talk/mail-msg?t=518700003
>
> Rip West
> Saint Paul, MN


Many thanks for your explanation. I also printe out the
Article you have written. That explain everything I really
wanted to know too.

Our club members have been paying 5.00 extra every month
collected as fees for expenses but the 5.00 far exceeds our
expenses.

Since I am minority share holder, I have been contributing
money to the members that holds the most shares.

I suspected that from the beginning but I did not question
it since I was a new member. But since I became Vice
President after a few months and then President in just a
month, I have to really understand how everything works.

Again, many thanks. This site has been very helpful.

Ben Ugale
Riverside, AC

Ben... I always defer to Rip West and Jerry Dressel in these types of
issues! I am thankful for their participation and I thank Rip for
clarifying the issue. Is it a correct assessment to view a the transaction
as:

1. Total assets of the partnership went up through the cash contribution
which was a capital contribution by one partner.

2. Unit value went up as a result of the new equity contributed.

3. The value of the equity contributed raises the cash value of all
partner's capital accounts in proportion to their equity interest because of
the increased unit value

?


Thanks Rip!

John

----- Original Message -----
From: "Rip West" <rip@montrose.net>
To: "The Club Cafe" <club_cafe@bivio.com>
Sent: Wednesday, October 17, 2001 11:06 PM
Subject: Re: club_cafe: Re: Recording FEES


> Ben,
>
> <<
> I just input 50.00 dollars as fees for just one member and it
> distributed the 50.00 among the members according to their equity
> interest, 20%, 5% etc. It did not go to the contributing member's
> capital account.
> >>
>
> We have to define our terms here. When I say 'Capital Account', I am
> talking about the member's tax basis in the partnership. The payment of
> the $100 fee will increase the member's tax basis, as you can see by
> looking at the members' status report on the day before and the day of
> the fee deposit. When you say it distributed the $50 among the members,
> I believe you mean it increased those member's worth by that much, which
> is correct. Since fees don't buy units, the club unit value goes up when
> fees are deposited [more assets divided by the same number of units]. So
> the contributing member's capital account [tax basis] was credited for
> the fee, and each member's value was increased.
>
> Income was not increased by the fees.
>
> Rip West
> Saint Paul, MN
>
>
>