Since we're on the subject of accounting for Bivio expenses, I have a question (actually a clarification).  I paid the fee using my credit card, and was going to simply divide the amount paid by 11 (the number of members in our club), and have each member reimburse me with cash.  I would then record that amount for each of the members as an expense.  After reading Ira Smilovitz's response to John, it sounds like I shouldn't (or at least don't have to) do this.  If I enter the amount as an extra "payment" by me, I will get fair value in the form of extra units of our club's shares?  Is this correct?  It sounds a heck of a lot easier than me trying to collect an extra few dollars and some chump change from each of the members.  

Thanks,
William Katona

Ira Smilovitz wrote:
>John,
>
>After a series of "conversations" with Rip West (whose
>opinion I value highly), I have now convinced that my
>earlier advice was in error and the expense for the bivio
>annual fee should be properly expensed in December.
>
>Let me explain. My position was based on the concept that
>"money" had to be involved in order for the expense to be
>"currently" deductible by a cash basis taxpayer (the club).
>Since the club was not giving you "money" to reimburse you
>for charging the bivio fee, it didn't have a current
>deduction. The deduction would be recognized at the date
>when money did change hands.
>
>Rip reminded me that as long as the debt (for the annual
>fee) is paid with "value", the debt becomes a current
>expense. The club can pay its debts in units. It's simply a
>form of bartering. John Baxa buys an annual subscription to
>bivio for $59 and gives it to his club. The club, in turn,
>gives John Baxa $59 worth of units in the club. Value is
>exchanged and the expense is recognized by the club. There
>is no need to wait for John to contribute additional cash
>(or offset a potential payment by the amount owed him).
>
>Thank you, Rip for keeping me on my toes.
>
>Ira Smilovitz
>
>John R Baxa wrote:
>>Thank you for the responses.
>>
>>Due to member availability problems, our club did not have a
>>formal meeting in December.  We did have an online email
>>vote (approved) for the trial set-up of bivio and the
>>subscription.
>>
>>I set up the member payment and expense similar to Ira's
>>guidelines.  I did notice there is a "bivio subscription"
>>entry under "service charges and fees" in the deductible
>>expenses caregory.  I chose the "accounting and tax
>>services" entry instead.  However, I would think these
>>should be all the same (??).
>>
>>--JB
>>
>>IraS1@aol.com wrote:
>>>I disagree with the response given below and argue that the expense is most likely correctly posted in January. The determining factor is whether or not the expense occurred before or after the December meeting.
>>>
>>>The respondent is correct in his (her?) statement that a credit card charge is equivalent to a cash payment. However, in this case, the credit card does not belong to the club. Since the club is a cash basis taxpayer, the club can only deduct the expense in the month in which *it* pays (or incurs) the expense. If the expense can be presented to the club at its December meeting it can be deducted then. If not, the expense must wait until January. BTW, when John pays his credit card company is irrelevant to the matter.
>>>
>>>Since the club doesn't appear to have a checking account, the correct way to record the transaction (in December or January) is as follows (assumes John would normally contribute $100 to club and bivio cost was $59):
>>>
>>>- John gives club a check for $41.
>>>
>>>- Record a payment of $100 from John Baxa to club to purchase units. (This gives John the full number of units we would be entitled to with his monthly contribution.)
>>>
>>>- Record an deductible expense of $59 for "accounting and tax services" and note in the comment field "reimbursement to John Baxa for charge on personal credit card."
>>>
>>>This will balance the cash account with the broker's statement.
>>>
>>>Ira Smilovitz
>>>
>>>In a message dated 12/25/02 5:47:33 PM Eastern Standard Time, hayward101@bivio.com writes:
>>>
>>>Someone correct me if they have a different idea, but for
>>>tax purposes credit card is equivalent to a cash payment so
>>>it should be expensed in December.