Tax Treatment of transfer of stock from personal account to an Investment Club
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Tax Treatment of transfer of stock from personal account to an Investment Club Hello, I transferred some of my personal stock to an investment club that I am part of. I did not realize it then, but is there a tax treatment that I need to worry about at the end of the year? All the stocks that I transferred had appreciated from the time I bought them to moving them to the investment club. Thanks, Prashant Yes, there will be tax consequences that the software can
not handle. You can transfer securities to a partnership, with no tax
consequence at the time of transfer. The club's basis in the securities becomes
what your basis was. So, if you accounted for the transfer by giving the stock a
basis of its fair market value at the time of transfer that was wrong. If you
have the stock a value of your basis in the stock, that is correct for a minute,
but you are being shortchanged because you should be awarded units on the basis
of fair market value.
The big problem arises when the stock is sold at a gain.
The correct tax treatment is to allocate the gain between you and the club. As I
said, no club accounting software is able to do this. I would suggest backing
out the transfer.
Rip West Saint Paul, MN |
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