Greetings. Our club wants to consider non stock investment
opportunities abroad. We want to invest in small start-ups
outside the US and wanted to hear from other clubs incase
they have done the same or considering it as a possibility.

Questions
1. Our biggest concern is when we withdraw funds from out
club (we will get taxed on our capital gain at our personal
tax levels). Is there a way around this to show that money
we are withdrawing from our brokerage account is for another
investment, and therefore still at risk? Taxes do not have
to paid for at risk investments under current laws, I
believe.

2. In order to investment as a club in non stock/bond
portfolios, does we have to consider state or federal laws?
Like register as an LLP in a state.

3. Are there laws to consider for us to invest outside the
United States? Do we have to register in the country we plan
to invest or can the money just be shown as an investment.

Thanks,
Prashant

Without commenting on the wisdom of your decision to make non-stock
investments, abroad, I will try to answer your questions.

> 1. Our biggest concern is when we withdraw funds from out
> club (we will get taxed on our capital gain at our personal
> tax levels). Is there a way around this to show that money
> we are withdrawing from our brokerage account is for another
> investment, and therefore still at risk? Taxes do not have
> to paid for at risk investments under current laws, I
> believe.

I think you're confused here. Taking money out of your brokerage account to
invest abroad is not withdrawing money from your club. No tax consequences
are involved at that point. The funds are still considered to be in your
club.

> 2. In order to investment as a club in non stock/bond
> portfolios, does we have to consider state or federal laws?
> Like register as an LLP in a state.

As long as you are in compliance with your partnership agreement, I don't
see a problem.

> 3. Are there laws to consider for us to invest outside the
> United States? Do we have to register in the country we plan
> to invest or can the money just be shown as an investment.

Now you have gone beyond whatever expertise I might have.

I will offer a comment. One thing that bivio is doing for you is to award
units to your members each time they invest at the current market value of
the club. It may be difficult to value these oversea's invenvestments
currently in order to continue to do this.

Rip West
Saint Paul, MN

Rips thanks for your saintly advice! Much appreciated.

Rip West wrote:
> Without commenting on the wisdom of your decision to make non-stock
> investments, abroad, I will try to answer your questions.
>
> > 1. Our biggest concern is when we withdraw funds from out
> > club (we will get taxed on our capital gain at our personal
> > tax levels). Is there a way around this to show that money
> > we are withdrawing from our brokerage account is for another
> > investment, and therefore still at risk? Taxes do not have
> > to paid for at risk investments under current laws, I
> > believe.
>
> I think you're confused here. Taking money out of your brokerage account to
> invest abroad is not withdrawing money from your club. No tax consequences
> are involved at that point. The funds are still considered to be in your
> club.
>
> > 2. In order to investment as a club in non stock/bond
> > portfolios, does we have to consider state or federal laws?
> > Like register as an LLP in a state.
>
> As long as you are in compliance with your partnership agreement, I don't
> see a problem.
>
> > 3. Are there laws to consider for us to invest outside the
> > United States? Do we have to register in the country we plan
> > to invest or can the money just be shown as an investment.
>
> Now you have gone beyond whatever expertise I might have.
>
> I will offer a comment. One thing that bivio is doing for you is to award
> units to your members each time they invest at the current market value of
> the club. It may be difficult to value these oversea's invenvestments
> currently in order to continue to do this.
>
> Rip West
> Saint Paul, MN

I had mailed earlier if Investment Club funds could be
invested in a start-up. After some deliberations we
realized Club funds can be used to invest outside the
brokerage account. This brings me to another question.

1. What is the accounting treatment in Bivio for funds taken
out of the brokerage account to invest in a start-up? When
we withdraw funds from the brokerage account should we do it
in proportion of the member contributions or should we
withdraw it in lumpsum for the purposes of the
start-up/investment and somehow manually note that in Bivio?
How do mark-to-market as our equity in the start-up goes up
and down as time progresses, and the impact on each members
contribution?


Rip West wrote:
> Without commenting on the wisdom of your decision to make non-stock
> investments, abroad, I will try to answer your questions.
>
> > 1. Our biggest concern is when we withdraw funds from out
> > club (we will get taxed on our capital gain at our personal
> > tax levels). Is there a way around this to show that money
> > we are withdrawing from our brokerage account is for another
> > investment, and therefore still at risk? Taxes do not have
> > to paid for at risk investments under current laws, I
> > believe.
>
> I think you're confused here. Taking money out of your brokerage account to
> invest abroad is not withdrawing money from your club. No tax consequences
> are involved at that point. The funds are still considered to be in your
> club.
>
> > 2. In order to investment as a club in non stock/bond
> > portfolios, does we have to consider state or federal laws?
> > Like register as an LLP in a state.
>
> As long as you are in compliance with your partnership agreement, I don't
> see a problem.
>
> > 3. Are there laws to consider for us to invest outside the
> > United States? Do we have to register in the country we plan
> > to invest or can the money just be shown as an investment.
>
> Now you have gone beyond whatever expertise I might have.
>
> I will offer a comment. One thing that bivio is doing for you is to award
> units to your members each time they invest at the current market value of
> the club. It may be difficult to value these oversea's invenvestments
> currently in order to continue to do this.
>
> Rip West
> Saint Paul, MN

> 1. What is the accounting treatment in Bivio for funds taken
> out of the brokerage account to invest in a start-up? When
> we withdraw funds from the brokerage account should we do it
> in proportion of the member contributions or should we
> withdraw it in lumpsum for the purposes of the
> start-up/investment and somehow manually note that in Bivio?

I believe that you still don't understand the mechanics of making this
investment, which makes me wonder about the advisability of doing so. At any
rate, again, taking the money out of the brokerage account does not trigger
any accounting or tax consequences for your members. As your start-up
investment increases or decreased in value, that will affect your members'
values, and bivio will account for these changes as soon as you enter a new
valuation with an increased or decreased value for the start-up.

All you need to in bivio is to enter the purchase of a new stock
[investment], and use your broker account as the cash account to do so. You
will need to show this as an unlisted investment and update its value
manually whenever you do a valuation statement.

> How do mark-to-market as our equity in the start-up goes up
> and down as time progresses, and the impact on each members
> contribution?

If you have a way to ascertain the value of this start-up, you will enter
such value anytime you enter a new valuation.

Rip West
Saint Paul, MN