Could someone make that explanation a bit clearer to me.
example: if a member pays $20 for a Better investing book
and the financial partner sends the check, is this box
checked or not? the rest of the club does not intend to
help her buy it.



another example: financial partner writes check for 17
members' dues plus club dues. If this box check or not?
our bylaws do not address this subject.

still cleaning up the history.........deannie

Dear Deannie,

If you check this box, the expense is allocated to each member
in an equal dollar amount. It is called "Per Partnership Exception"
because your club partnership agreement must specify that you
all agree expenses can be allocated this way. Otherwise, the
IRS assumes expenses are allocated based on percent ownership, the
same way your club income is allocated.

An expense that only applies to one member should not even
be run through your club accounting. The individual member
should just pay the expense directly and save the
receipts to claim an individual deduction on their income
taxes.

Laurie Frederiksen

Laurie,

we decided it was important for every member to read BI
magazine, and when we left it up to the membership, they
didn't all get it done. IT was an extra $25 they didn't
seem to wnt to budget for. So we voted to pay for all
magazines thru our club funds. we call it a deductible
(educational) expense. IF i check the box it comes out
even.......we all pay $25 plus 1/17th for the club's
membership for the subscription. when we had a new member
join later we ordered her a subscription and we paid for it
from same club account. checked that box , same result.
when i don't check the box , many of us pay more than the
going rate for the magazine. somehow that doesn't seem
right to us.

so, yes, we essentially give up one month's investment
income (not quite, some members contribute $50 per month,
but we keep in mind the educational value of reading a
financial magazine regularly.


Does this make sense, or is it fuzzy math? I wonder if
anyone else does this?

Deannie

Laurie Frederiksen wrote:
> Dear Deannie,
>
> If you check this box, the expense is allocated to each member
> in an equal dollar amount. It is called "Per Partnership Exception"
> because your club partnership agreement must specify that you
> all agree expenses can be allocated this way. Otherwise, the
> IRS assumes expenses are allocated based on percent ownership, the
> same way your club income is allocated.
>
> An expense that only applies to one member should not even
> be run through your club accounting. The individual member
> should just pay the expense directly and save the
> receipts to claim an individual deduction on their income
> taxes.
>
> Laurie Frederiksen

Hi Deannie,

It's perfectly fine to do things the way you are. You have
decided that your entire club will pay for individual memberships
for all your members. That is certainly something
you can choose to do. It's also fine to allocate the same
amount of that expense to each member. Just
make sure that it is noted in your partnership agreement that
you will be doing so.

It's up to your club to decide whether you think
allocating "equally" or allocating by percent of
ownership is "fair". People make equally valid
arguments either way.

Laurie Frederiksen

Rip,

You are ssaying a partnership is a partnership. i'll take
this to the club for discussion. It is an interesting point
that we disburse according to units but tend to spend
according to number of members.

Do you have any advice for my daughter who is experiencing
her 3rd St.Paul winter? when do you get used to it?

Rip West wrote:
> Deannie,
>  
> Yes, other clubs elect to pay for the bi membership for all its members.
> However, when you do that, you still have to decide whether to allocate the
> expense equally or by members' units. You say that it doesn't seem right that
> some of your members pay more than the others for this. There are clubs that
> agree with you. However, it can also be argued that you are doing this because
> you think it is beneficial to the club for all the members to be reading BI
> literature. If that is true, and the club benefits, the members owning more
> units will benefit more than the members holding less units. Therefore it is not
> unfair that those members with more units bear a greater share of the cost.
> There really is no right or wrong answer. I happen to believe that the equal
> allocation is used far too much, and the expenses should be allocated by unit
> ownership, as the income items are.
>  
> Rip West
> Saint Paul, MN
>  

Thanks, Lynn. I have copied and pasted and sent this.



Lynn Ostrem wrote:
> Do you have any advice for my daughter who is experiencingher 3rd St.Paul winter?  when do you get used to it?
> Hey Deannie, I live here, too!  Here's the serious answer.
>  
> a) Broomball
> b) Ice skating
> c) Downhill skiing
> d) Snowmobiling
> e) Snowshoeing/cross country skiing
> f) Ice fishing
>  
> Believe me, when you participte in winter activities, you look forward to the season...and you never want it to end!
>  
> About 9 years ago, my husband and I traded in our boat and snowmobiles for an RV.  Winter's been a tough cross to bear ever since.  Brrrr!  Tell your daughter that Highland Hills and Afton have some seriously cute ski instructors! <G>  It's good exercise, to boot.
>
>  
> Lynn Ostremgarbagecop@gmail.com
> Crow River Investment Club
> www.bivio.com/crowriverJoin me at InvestEd 2010August 6-8, Baltimore, MDwww.investor-education2010.org