Good afternoon -

Can anyone recommend where I can get more information
regarding time-based accounting? I have read info on the
following link -
http://www.bivio.com/hp/tax-allocation-methods.html - but I
am trying to figure out the accounting treatment for certain
scenarios:

(1) Let's say a new member joins in January and invests.
The club member then resigns in July. Excess cash is used
to redeem the partner - nothing is sold. Then a capital
gain is realized later in the year. Under time-based
accounting, since that member was not current as of the
record date, they are not liable for taxes. My point is
this seems to penalize the remaining members because they
are saddled with absorbing that person gains.

(2) Let's say a new member joins in January and invests. In
January a long-term capital gain is realized because it was
purchased over one year ago. The member is responsible for
their portion of the taxes, but is it LT or ST?

Any thoughts on the above or recommended reading would be
appreciated.

Regards, Mike B.

Mike, your clubs value from January to July changed by more than the gain in
that one stock you sold after the member resigned. They aren't absorbing
anything they shouldn't. He was liable for gain on the value of his
investment in the club between Jan. to July.

As to the second situation, the LT or ST is determined by how long the club
held the stock, not how long the member was in the club.

Gene

Thanks for the reply. And Bivio's time-based accounting
will reflect this?

Gene Rooks wrote:
> Mike, your clubs value from January to July changed by more than the gain in
> that one stock you sold after the member resigned. They aren't absorbing
> anything they shouldn't. He was liable for gain on the value of his
> investment in the club between Jan. to July.
>
> As to the second situation, the LT or ST is determined by how long the club
> held the stock, not how long the member was in the club.
>
> Gene

I'm not a regular user of bivio, have just tested it a little. My club does
their accounting with CAO. But, I would say yes, if you select time based,
bivio will allocate it appropriately. Gene