Our club set up an account in BIVIO for expenses, called
petty cash. We have to much in it and want to refund it
back to the members.
Question 1: Are there any tax issues associated with this?
Question 2: If members want it put toward their account
could we do it?

Thank you in advance.

Eric From
Nationwide Investment Club

I'm assuming you mean you created an on-books cash account in bivio (that
happens to be named "petty cash") which appears on your club Valuation
Statement as part of the club assets. If not, then please explain further
what you mean by "petty cash".

Hopefully you recorded the funds members contributed to this on-books petty
cash account as "member payments", not as "fees". (Fees are intended to be
penalties, not money collected to pay club expenses.) If "fees" were used,
I suggest going back and changing how those funds were recorded (but not
prior to Jan 1, 2009).

In terms of refunding excess cash back to members, I'd suggest instead just
moving the excess into the club bank or broker account and using it to
invest in stocks.

It is possible to refund the excess cash to members using partial
withdrawals. To the extent that what each member receives is less than
their tax basis in the club, there should be no federal tax consequences.
Be sure to record the refunds as partial withdrawals, not as club expenses!

-Jim Thomas

----- Original Message -----
From: "Eric From" <ericfrom@bivio.com>
To: <club_cafe@bivio.com>
Sent: Wednesday, June 17, 2009 5:48 PM
Subject: club_cafe: Petty cash refund


> Our club set up an account in BIVIO for expenses, called
> petty cash. We have to much in it and want to refund it
> back to the members.
> Question 1: Are there any tax issues associated with this?
> Question 2: If members want it put toward their account
> could we do it?
>
> Thank you in advance.
>
> Eric From
> Nationwide Investment Club

Dear Eric,

Even though you are tracking this money in a separate account, it is still already part of your
club assets and already part of your member's accounts. If you want to remove this money from your
club and return it to your members you will have to process partial withdrawals. There would be no
current tax consequences to your members of doing this unless the amount they received was greater
than their current basis in the club.

Where does the money actually reside? If it is not currently in your brokerage account, you may
just want to deposit it back in your brokerage account. You would record this as a transfer from
petty cash to broker.

 Laurie Frederiksen
 bivio Inc.

Thank you for the input. The petty cash is in the same
account as investment money. The brokerage account and
petty cash are one in the same. In BIVIO we made a make
believe account for Petty cash. The only place it shows up
as petty cash is in Bivio. We have decided to use the
excess petty cash and transfer into each members account.



Laurie Frederiksen wrote:
> Dear Eric,
>
> Even though you are tracking this money in a separate account, it is still already part of your
> club assets and already part of your member's accounts. If you want to remove this money from your
> club and return it to your members you will have to process partial withdrawals. There would be no
> current tax consequences to your members of doing this unless the amount they received was greater
> than their current basis in the club.
>
> Where does the money actually reside? If it is not currently in your brokerage account, you may
> just want to deposit it back in your brokerage account. You would record this as a transfer from
> petty cash to broker.
>
> Laurie Frederiksen
> bivio Inc.

Hi Eric,

You're all set then. The money is already part of your members accounts. You just need to record a
transfer and you can track all the cash in your brokerage account.

 Laurie