I live in Canada. Our modified partnership information has
to be sent to Revenue Canada by March 31 so I hope someone
will answer this quickly.

One member left the Club at the end of August. His
percentage ownership at that time, determined by the Unit
Value System, was 7.5663% and he was paid that % of the
portfolio value at that time--$1500.00

We have now done our income tax for 2003. Based on the dues
paid to end of August, $1000.00, his ownership was 6% of the
Club. Do we take our capital gains, plus interest and share
dividends, to the end of August ($2400.00) and apply 6% to
them and give him that figure as his capital gain for income
tax purposes or do we take the portfolio value
payment($1500) minus the dues paid (1000.00), minus his
share of dividends (5.00) and give him a $495.00 capital
gain?

Thanks.

There's a lot we would have to know before we can offer any help. You
say you have done your income tax for 2003. Is that Canadian income tax
or US? I know nothing about Candian partnership taxes, so I'll tell you
how it works for US. If you are using bivio for accounting, it will
figure everything for you if you just enter a withdrawal for hime as of
the end of August.

What should happen is this. The club realizes no taxable gain or loss on
a member's withdrawing. The member should have a k-1 for all
income/losses realized through the date of his departure. Those
gains/losses get added/deducted from his tax basis, and he realizes a
gain/loss on disposal of his partnership interest to the extent the
proceeds received are different from his tax basis.

Rip