First time for a partial withdrawal request.

Is there a best way to do this?We are thinking of selling
some stocks and then paying the member, charging them
commission fees.

Will this make a difference to our tax situation? Is there
a better way to do this?

Jane

Jane,

Partial withdrawals can be difficult. With total withdrawals it is
advantageous to pay the member by transferring appreciated stocks to
him/her. This does not work well with partials. So, you are left with
the alternative of selling stocks. If you have losers, it might be worth
while to sell those. Otherwise, all the members, including the partial
withdrawer, will be reporting a share of the capital gains from the sale
of stock. I think your idea of charging the member with the commission
expense is good. Some might recommend that the member also be charged an
additional fee because the other members will have to report taxable
income when the stock is sold. I don't agree with this, because those
members would have to report that income sometime, just not at present.
In other words, they are not incurring any tax that they wouldn't be
incurring down the line.

Rip West
Saint Paul, MN