No long-term gains for short-term members?
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No long-term gains for short-term members? Hi, We had a member last year who withdrew after 3 months. In looking at our club's Tax Allocation Report for the year, I see she's the only one who has no long-term capital gains. That column is $0.00 for her. I'm familiar with the long-term/short-term distinction for stock holdings, of course. But I never ran into it with regard to investment club membership before. Is this a general rule, that anyone who belongs to a club will have only short-term gains, if they belong to the club less than a year (or whatever the cutoff is for short vs. long)? Our club uses time-based allocation, if that matters. Thanks again. Mike Carroll Hi Mike,
I think your mixing two separate concepts here. I would assume that the reason that she shows no long-term capital gains is that she was not a member when those long-term capital gains were realized. If she shows short-term capital gains, she must have been a member when the club realized short-term gains. Her length of time in the club only affects the gain/loss
that she realizes on leaving the club. That is to say the gain/loss on her
disposal of her partnership interest. That won't appear on any allocation report
or k1. It will show on her withdrawal report. If she has been a member for one
year or less, her gain/loss on the disposal of her club interest will be
short-term.
Rip West Saint Paul, MN Rip, Ok, that was the alternative I had in mind, that this is NOT any kind of general rule, but just an accident of this particular case. A coincidence. Thanks for clarifying. Mike |
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