General tax info..help!

Patrick O'Donnell on

Can someone give me a general idea of how the capital gains
and losses are computed at the end of the year? Are the
total gains and losses split evenly between each club
member? Do we file all of our club taxes on a seperate
return or do we just "integrate" it into our personal taxes?
Also, since this is a partnership, what is able to be
written off on personal tax returns as "business expenses"
if any? Any advice from a veteran club would be super
appreciated..Thanks..PTI Investment Group

John W Ranby on

Patrick O'Donnell wrote:
> Can someone give me a general idea of how the capital gains and losses are computed at the end of the year?

The short-term capital gains and losses (held one year or
less) are netted together separately from the long-term
capital gains and losses (held more than one year) which are
netted together also. The totals are reported on the IRS
Form 1065 for the whole partnership and the portion
attributed to each partner is reflected on the K-1 prepared
for each partner.

> Are the
total gains and losses split evenly between each club
> member?

The gains, losses, and expenses are allocated in accordance
with the terms of your partnership agreement. Normally, the
agreement provides that the short and long term gains or
losses are allocated to a partner based on the percentage of
ownership that partner has in the partnership.

>Do we file all of our club taxes on a seperate
return or do we just "integrate" it into our personal
taxes?

Both. The partnership files a form 1065, which is an
informational return that reflects the consolidated figures
for the partnership and also contains a K-1 form for each
partner. The partnership does not pay any tax itself. The
figures on the K-1 are integrated into the personal tax
return of each partner.

> Also, since this is a partnership, what is able to be
> written off on personal tax returns as "business expenses"
> if any?

The permissible business expenses of the partnership will be
allocated to the partners through the K-1 form and the
partner can include his/her share on the personal tax return
subject to standard versus itemized deduction and the 2%
rule.

Any advice from a veteran club would be super
> appreciated..Thanks..PTI Investment Group

If you have entered your security buy-sell transactions and
expenses in bivio correctly throughout the year, the tax
software will prepare the 1065 and K-1s for you.

Jack Ranby

iras1 on

Everything is divided in accordance with the terms of your partnership agreement. The club files Form 1065 which contains a Schedule K-1 for each member detailing their share of the various reportable items of income and expense. Each member then incorporates the items on the K-1 into their personal income tax return.

You also have to prepare a state equivalent of the federal 1065 in many states.

None of the expenses of an investment club are written off as "business expenses" on a personal tax return as the partnership is not operating a business where it provides goods or services to outsiders. Some of the expenses can be written off as miscellaneous itemized deductions if you itemize and your total miscellaneous itemized deductions exceed 2% of your AGI.

Since you are using bivio, you can prepare your taxes directly within the program using the "taxes" tab.

Ira Smilovitz

In a message dated 03/19/09 01:44:50 Eastern Daylight Time, podonnell1@bivio.com writes:

Can someone give me a general idea of how the capital gains
and losses are computed at the end of the year? Are the
total gains and losses split evenly between each club
member? Do we file all of our club taxes on a seperate
return or do we just "integrate" it into our personal taxes?
Also, since this is a partnership, what is able to be
written off on personal tax returns as "business expenses"
if any? Any advice from a veteran club would be super
appreciated

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