Question for ya(s):
When we formed our club (10/01), we all paid a $60.00 fee to
cover expenses for software purchases, memberships,
materials etc.....this fee did not purchase any units.
We have approx. $700.00 worth of that money left. How can
we go about utilizing that money to purchase shares of
stock?? (Apparantly $60.00 was too much, hey we area new
club and trying to learn). I ask this because I am not sure
how it would be allocated or recorded.

If my question doesn't make any sense please let me know.

Thank you,

Jay
LA MIGRA

Jay Visconti writes:
> Question for ya(s):
> When we formed our club (10/01), we all paid a $60.00 fee to
> cover expenses for software purchases, memberships,
> materials etc.....this fee did not purchase any units.
> We have approx. $700.00 worth of that money left. How can
> we go about utilizing that money to purchase shares of
> stock??

In general, any money contributed to the club via payments, fees, or
income can be spent anyway the club likes. There may be limitations
in your bylaws or partnership agreement.

We do not recommend using "fees" to contribute money to the club. It
is confusing, and the monetary "side effects" are typically
inconsequential in comparison to payments. You might want to consider
simplifying your partnership agreement and/or your bylaws to allow
anybody to contribute any amount, any time. With bivio, your club can
be treated just like a no-load mutual fund. Some clubs are
backloaded, i.e., they charge a fee for withdrawals. That's the only
case where we consider a fee to be reasonable.

Cheers,
Rob

So what your saying is that we can purchase shares of stock with the "fee"
money even though that money didn't buy any units for our members?? Is that
correct?? And in return, we can buy misc. expenses with our Membership
money even when that buys units??

-Jay

-----Original Message-----
From: club_cafe-owner@bivio.com [mailto:club_cafe-owner@bivio.com]On
Behalf Of Rob Nagler
Sent: Friday, April 19, 2002 12:55 PM
To: The Club Cafe
Subject: Re: club_cafe: Cash Account vs. Purchase Shares Account


Jay Visconti writes:
> Question for ya(s):
> When we formed our club (10/01), we all paid a $60.00 fee to
> cover expenses for software purchases, memberships,
> materials etc.....this fee did not purchase any units.
> We have approx. $700.00 worth of that money left. How can
> we go about utilizing that money to purchase shares of
> stock??

In general, any money contributed to the club via payments, fees, or
income can be spent anyway the club likes. There may be limitations
in your bylaws or partnership agreement.

We do not recommend using "fees" to contribute money to the club. It
is confusing, and the monetary "side effects" are typically
inconsequential in comparison to payments. You might want to consider
simplifying your partnership agreement and/or your bylaws to allow
anybody to contribute any amount, any time. With bivio, your club can
be treated just like a no-load mutual fund. Some clubs are
backloaded, i.e., they charge a fee for withdrawals. That's the only
case where we consider a fee to be reasonable.

Cheers,
Rob

Jay writes:
> So what your saying is that we can purchase shares of stock with the "fee"
> money even though that money didn't buy any units for our members?? Is that
> correct?? And in return, we can buy misc. expenses with our Membership
> money even when that buys units??

Yes, assuming this is allowed by your partnership agreement and
bylaws. Usually, there are no restrictions to the way the club can
use its money.

A common misconception is that a club's funds can somehow be
separated. Consider a company which accepts outside investments.
They can sell shares in the company. That money can be used for
whatever the Board of Directors/management chooses. If the company
also sells things, that money can be used for anything as well.
The only distinction is that capital contributed is not income whereas
money received for sales is.

Unfortunately, Club Accounting has a rather complicated history due to
its paper-based origins. The reason to charge a fee is that you want
to distribute the cost of an expense evenly. In bivio, you do this by
selecting equally allocated on the expense form. This is a somewhat
complex calculation, which is difficult perform by hand. As I said
before, with bivio, you really don't need to enter fees. Everything
can be a payment. This makes the accounting simpler and easier to
follow.

I hope this exploration helps.

Cheers,
Rob

Not quite. What I believe Rob was trying to say was that in
general, clubs should not use fees. Period. Anything that is
truly related to club operations should be funded with
contributions which buy units and expenses which are chaged
against units.

Software purchases, NAIC memberships, accounting and
brokerage maintenance fees are all deductible expenses. They
should be paid for by the club directly (either proportional
or equal allocation) and not through the use of a "side"
fund.

So, in your case, the $60 fees should have been recorded as
payments and units issued for them. As the money was spent,
the value of a unit should have been reduced to account for
the expenses for the software, memberships, materials, etc.

This way, at year end, your 1065 and K-1s accurately reflect
the tax-deductible expenses allocated to each member.

Ira Smilovitz

Jay wrote:
> So what your saying is that we can purchase shares of stock with the "fee"
> money even though that money didn't buy any units for our members?? Is that
> correct?? And in return, we can buy misc. expenses with our Membership
> money even when that buys units??
>
> -Jay
>
> -----Original Message-----
> From: club_cafe-owner@bivio.com [mailto:club_cafe-owner@bivio.com]On
> Behalf Of Rob Nagler
> Sent: Friday, April 19, 2002 12:55 PM
> To: The Club Cafe
> Subject: Re: club_cafe: Cash Account vs. Purchase Shares Account
>
>
> Jay Visconti writes:
> > Question for ya(s):
> > When we formed our club (10/01), we all paid a $60.00 fee to
> > cover expenses for software purchases, memberships,
> > materials etc.....this fee did not purchase any units.
> > We have approx. $700.00 worth of that money left. How can
> > we go about utilizing that money to purchase shares of
> > stock??
>
> In general, any money contributed to the club via payments, fees, or
> income can be spent anyway the club likes. There may be limitations
> in your bylaws or partnership agreement.
>
> We do not recommend using "fees" to contribute money to the club. It
> is confusing, and the monetary "side effects" are typically
> inconsequential in comparison to payments. You might want to consider
> simplifying your partnership agreement and/or your bylaws to allow
> anybody to contribute any amount, any time. With bivio, your club can
> be treated just like a no-load mutual fund. Some clubs are
> backloaded, i.e., they charge a fee for withdrawals. That's the only
> case where we consider a fee to be reasonable.
>
> Cheers,
> Rob

Is there anyway that I can go back and re-input those fees as member
contributions without messing up the 2001 tax year??? And without having to
file amended 1065 and K-1's???
They were deposited in Oct. 2001.

-Jay
LA MIGRA

-----Original Message-----
From: club_cafe-owner@bivio.com [mailto:club_cafe-owner@bivio.com]On
Behalf Of Ira Smilovitz
Sent: Thursday, April 25, 2002 11:11 AM
To: club_cafe@bivio.com
Subject: club_cafe: RE: Cash Account vs. Purchase Shares Account


Not quite. What I believe Rob was trying to say was that in
general, clubs should not use fees. Period. Anything that is
truly related to club operations should be funded with
contributions which buy units and expenses which are chaged
against units.

Software purchases, NAIC memberships, accounting and
brokerage maintenance fees are all deductible expenses. They
should be paid for by the club directly (either proportional
or equal allocation) and not through the use of a "side"
fund.

So, in your case, the $60 fees should have been recorded as
payments and units issued for them. As the money was spent,
the value of a unit should have been reduced to account for
the expenses for the software, memberships, materials, etc.

This way, at year end, your 1065 and K-1s accurately reflect
the tax-deductible expenses allocated to each member.

Ira Smilovitz

Jay wrote:
> So what your saying is that we can purchase shares of stock with the "fee"
> money even though that money didn't buy any units for our members?? Is
that
> correct?? And in return, we can buy misc. expenses with our Membership
> money even when that buys units??
>
> -Jay
>
> -----Original Message-----
> From: club_cafe-owner@bivio.com [mailto:club_cafe-owner@bivio.com]On
> Behalf Of Rob Nagler
> Sent: Friday, April 19, 2002 12:55 PM
> To: The Club Cafe
> Subject: Re: club_cafe: Cash Account vs. Purchase Shares Account
>
>
> Jay Visconti writes:
> > Question for ya(s):
> > When we formed our club (10/01), we all paid a $60.00 fee to
> > cover expenses for software purchases, memberships,
> > materials etc.....this fee did not purchase any units.
> > We have approx. $700.00 worth of that money left. How can
> > we go about utilizing that money to purchase shares of
> > stock??
>
> In general, any money contributed to the club via payments, fees, or
> income can be spent anyway the club likes. There may be limitations
> in your bylaws or partnership agreement.
>
> We do not recommend using "fees" to contribute money to the club. It
> is confusing, and the monetary "side effects" are typically
> inconsequential in comparison to payments. You might want to consider
> simplifying your partnership agreement and/or your bylaws to allow
> anybody to contribute any amount, any time. With bivio, your club can
> be treated just like a no-load mutual fund. Some clubs are
> backloaded, i.e., they charge a fee for withdrawals. That's the only
> case where we consider a fee to be reasonable.
>
> Cheers,
> Rob