Proper deduction of fees to a withdrawing member?
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Proper deduction of fees to a withdrawing member? Member joined in February. In addition to investment payments, she paid pro-rated local club dues of $22. Now she's moved away, withdrawing from club. The withdrawal report shows "member's basis before withdrawal" of her $160 investments PLUS the $22 fees (which were treated on entry as fee, not payment). Her current income allocation is -$13.97. Shouldn't the basis be $160, exclusive of the $22 fees? I deleted her withdrawal transaction pending response here. > Shouldn't the basis be $160, exclusive of the $22 fees? No, her basis should be all the money that she paid in. The fact that she received no units for the $22 has no bearing. Presumably, her share of the fees went for club expenses, and her basis will be reduced by her prorata share of those expenses. Rip West Ok, an affiliated question. Her withdrawal report shows a modest Short Term Capital Loss, yet we sold nothing between the time of her joining and the time of her withdrawal. How can that be? Rip West wrote: > > Shouldn't the basis be $160, exclusive of the $22 fees? > > No, her basis should be all the money that she paid in. The fact that she > received no units for the $22 has no bearing. Presumably, her share of the > fees went for club expenses, and her basis will be reduced by her prorata > share of those expenses. > > Rip West The capital gain/loss shown on the withdrawal report has nothing to do with club actions. It is the difference between the amount she received from her withdrawal and her cost basis in the club. The short term loss means that the investment in the club lost some value during her period of membership.
Ira Smilovitz
In a message dated 09/13/08 16:50:44 Eastern Daylight Time, cic@bivio.com writes:
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