We have no cash! This is the first time we will need to sell
stock to pay a withdrawing member. Best Advice? Also, what
happens with any tax situation for the sale of stock?
Who pays for that/how is it handled? Any suggestions would
be helpful...

Susan, the best way is to transfer some of your appreciated stock to the
member leaving. They would need a broker account of their own, preferably
the one the club does business with. This defers the club's gain on that
stock until the other members leave, and gives her a new basis in the stock,
she won't show gain on it until she sells it.

Next choice, sell a stock that has lost money, or is not doing well at all.
That would give your members some loss to deduct on their taxes next year.

Another option, if you have some members who would like to put more cash in
the club at this time, let them do so to buy new units for themselves, and
you will have cash to pay out this member.

Or, you can combine these, like sell some poor stock, collect more cash from
members, or transfer part of an appreciated stock.

Gene Rooks, Orlando

Another comment in case, despite the other options Gene
described, your club decides to sell appreciated stock to
raise cash to fund the withdrawal. Sell the stock *before*
the valuation date used to establish the value of the
withdrawal (so the withdrawing member will be allocated
their fair share of the capital gain).

-Jim Thomas