club_cafe: NJ Partnership Fee

iras1 on

Ray,

First, it would help if you had your facts correct. The NJ Partnership Filing Fee was established in 2002, so this is not a new problem. The fee is $150 per partner (not $150 total) and applies to all partnerships with more than 2 partners where the quarterly average net asset value or average cost basis exceeds $60,000 (not $30,000). There are several solutions to this problem:

1) Write to your state assemblypeople and state senator. There are a number of bills under consideration which will change the exemption to one of $25,000/$35,000/$50,000 PER PARTNER (not per partnership). These bills are currently trapped in the Assembly Appropriations Committee.

2) Have members take partial withdrawals to keep the club under the current threshold.

3) Split the club into two clubs. There are some tricky tax considerations involved it setting up the new club, so it's probably best to do this using cash and not securities.

4) Relocate the club to a different state. (This may only make sense if you already have a non-New Jersey partner.)

5) Dissolve the club.

Ira Smilovitz

In a message dated 12/24/03 10:53:03 AM Eastern Standard Time, raypm@bivio.com writes:

A $150 fee is being imposed on clubs with a valuation over
$30,000 causing many clubs to close.
Question;
1 - Any solutions to this problem

Ray Marchand

John R. Munn on

Rhetorical questions... or, why I want to vote with my feet and move to
Belize.

With respet to Ira's reply, below, I wonder if a partnership can exist
outside a state's jurisdiction. For example, an on-line club... can it
create its partnership in Guam or Puerto Rico? With an on-line club,
where is it presumed to do its business? What happens if a partnership
is filed in one state but the partner's from that state no longer reside
tehre and there are no current partners in that state? Also, state
rules are a mess. Some states, NY for one, require financial disclosure
of the NY partners but also some data for all other partners. NJ's
fee... is it applicable to non-resident partners? What if the same
partnership relocated and refiled its partnership agreement in NY?
Would the same rules apply with respect to NJ? State rules are a mess!

John

Ira wrote with respect to avoiding the New Jersey fee:

>
>4) Relocate the club to a different state. (This may only make sense if you
>already have a non-New Jersey partner.)
>
>
>

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