club_cafe: Back to withdrawals!

iras1 on

Lynn,

The easiest explanation I can think of is that someone entered an "old" (pre 10/3) transaction during the period between your experiment and the final calculation. This would have changed the total asset value of the club and, in turn, the unit value. The withdrawing partner's total value would also be greater.

As a side note, you should transfer the blocks with the lowest cost basis, not the highest. The objective is to defer as much capital gains as possible. In fact, in an extreme case, if you transfer the highest cost blocks, you could be transferring stocks at a loss. This is highly disadvantageous to the club.

Ira Smilovitz

In a message dated 10/24/03 9:33:19 AM Eastern Daylight Time, lynn@bivio.com writes:

OK, I spent the better part of last week trying to
understand the process of withdrawing a member in stock. So
far, so good!

I ran the member's withdrawal, up to the very end, then
cancelled. (I wanted to explain it to the treasurer and let
him handle the actual transaction.) When I ran the
withdrawal, I came up with $57.31 in cash remaining.

I gave instructions to the treasurer to use 10/10/03 as the
valuation and valuation transfer date, and to choose the
lots with the highest cost basis. When he ran it last
night, he came up with $62.89. So he cancelled the
transaction and contacted me.

I went back this morning to see what he had done wrong, and
I got the same thing he did. What would cause the member's
value to increase from one week to another if we are using
the same valuation date for the buyout? What am I missing??

Garbagecop on

> As a side note, you should transfer the blocks with the lowest

> cost basis, not the highest.

Sorry Ira, a mental slip on my part! We did use the lowest cost basis. We've tried to replicate my original figure using different dates and everything, and have chalked it up to a mystery! <G> Thanks to you and Rip for all your help.

Lynn

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