Do any clubs deal with members from various states. A group
of us are trying to start a club, and we are in various
states - 3 in Virginia, 1 in Pennsylvania, and 1 in
Maryland. Any thoughts about how to handle such a unique,
and difficult, situation? Thanks

Stewart....

I'm in an on-line club with partners from two countries and five states.
The biggest issue is dealing with the various state reporting requirements.
While taxes are not an issue, many states require partnerships to file an
annual information ("tax") return similar to the IRS K-1. The way we handle
is it to have partners responsible for their own state returns and to assume
any tax/penalty liability associated with their filings.

John Munn
Cross Country Investment Club



> Do any clubs deal with members from various states... Any thoughts about
how to handle such a unique,
and difficult, situation?

If I understand you correctly, your club *may* be exposing
itself to serious risks. As you posted, many states require
that resident partnerships file a return similar to the
Federal 1065 Partnership return and the associated K-1s for
each partner regardless of where the partner lives. Some
states, NY is one of them, require a filing if any partner
is a NY resident, even if the partnership itself is not a NY
partnership. The penalties for failure to file can be steep
even though there is no tax imposed directly on the
partnership. Your partners should be aware that there is the
possibility that they may have to file a non-resident state
income tax return in the partnership state as well as their
own home state resident return.

Ira Smilovitz

John R. Munn wrote:
> Stewart....
>
> I'm in an on-line club with partners from two countries and five states.
> The biggest issue is dealing with the various state reporting requirements.
> While taxes are not an issue, many states require partnerships to file an
> annual information ("tax") return similar to the IRS K-1. The way we handle
> is it to have partners responsible for their own state returns and to assume
> any tax/penalty liability associated with their filings.
>
> John Munn
> Cross Country Investment Club
>
>
>
> > Do any clubs deal with members from various states... Any thoughts about
> how to handle such a unique,
> and difficult, situation?

Thanks for the reply Ira.

Our partnership was established in Nevada. We file a partnership return to
NYS because some of us are NY residents. Luckily, Nevada is not a state
requiring us to file a tax return, but your point is well taken. Maybe some
day the tax rules will catch up with interstate operations and we'll have an
easier job of meeting filing requirements.

Your point is well taken that states have their own requirements that
partners must be aware of.

John Munn