club_cafe: Re: Clean Club Shutdown Not!

club_cafe: Re: Clean Club Shutdown...Not!

iras1 on

It's highly unlikely that the IRS will bother the club for $22 in interest if that's the only 2006 income reported to it via 1099 series documents. If you're still in contact with the members of your club, I would suggest having a check issued to you and then you can divide the money among the ex-members. Strictly speaking you should use each member's final percentage(before withdrawal) but it may be just as easy to divide it equally. Of course, you might also want to suggest to your ex-club mates that you keep the entire amount as partial payment for all that you've done as treasurer. <g>

If your members want to be strictly legit in their personal taxes, they should make a note in their personal tax files to report their share of the $22 as interest income on their 2006 tax return even though they won't be receiving a K-1 to remind them. They can still list the club as the "payer" of the interest.

Ira Smilovitz

In a message dated 1/4/2006 1:27:28 P.M. Eastern Standard Time, investbotadmin@bivio.com writes:

About $22...

IraS1@aol.com wrote:
> Strict interpretation of the tax code would indicate that you have to file
> 2006. However, if the amount is small enough, there are ways to work around
> this. How much money is involved?
>
> Ira Smilovitz
>
> In a message dated 1/4/2006 1:10:41 P.M. Eastern Standard Time,
> investbotadmin@bivio.com writes:
> Our club
>   shut down as of 12/31/2005. As the club manager, I
> did everything possible
>   to close it out cleanly so that
> there would be no tax work to do for tax
>   year 2006. All
> stocks were sold and all members cashed out with a
>   valuation
> date of 11/30/05, and the club's brokerage account was
> zeroed
>   out by mid-December.
>
> Now, the brokerage has posted an interest payment
>   to the
> account as of 01/03/06. The club currently has no members -
> that
>   is, nobody owns any shares. So,
>
> 1) Who gets the money?
>
> 2) Does
>   this mean I need to file a 2006 tax return for the
> club in 2007?
>   (Just what I worked so hard to
> avoid...)
>
> Thanks.

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