I'm going over our clubs 1065 form (generated from Bivio) now.

Pages 4 and 5 are totally blank. We are a brand new club, and we made a whopping .34 cents this year!

Is it incorrect that the .34 cents is not reported on the 1065? Or is it too small to generate an entry? I cannot compare it to a 1099 because, since we made less than $10, our broker was not required to send us one.

Our club is meeting to go over taxes tomorrow, so if anyone can give me an answer today it would be much appreciated.

Thanks!

Ellen

Ellen Shershow Pena Photography

www.ellenswebsite.com

415.690.0278

Ellen Shershow wrote:

Hello again,I realized one reason for the blank forms I talked about in my previous message, is that, when I took the Bivio tax interview (and I took it twice to be sure) it seem to be skipping the step about qualifying dividends and and ex-dividend dates.Again, is this because our club made less than $10? Or is there a hiccup in the system?Thanks!Ellen

Ellen:

The answer to your question depends on additional facts. You
say your club commenced operations in 2009 and you earned
$0.34. However, you don't mention what your start-up
expenses were; at a minimum you paid for your bivio
subscription. Did you also paid dues to Better
Investing--for the club only or also for the members? You
may have also had costs for photo copies. You also don't
mention whether the $0.34 earnings were gross or net, came
from the interest on your cash position at your brokers and
did your club purchase any securities during the year (I
assume you did not sell any or else you would have had
capital gains or losses).

Assuming your only income was $0.34 in interest from your
broker, then bivio software would round that down to zero in
line 5 of page 4. The deductable expenses, e.g. bivio
subscription, Better Investing dues, photocopy costs, etc.,
should be reflected in line 13d of page 4. If you had any
non-deductable expenses, e.g. social event food & drink,
should be reflected in line 18c of page 4.

If your club incurred any of the above expenses and you have
not entered them in bivio, that would explain why they are
not being included in the 1065.

Even a new club should have entries on page 5. Your
beginning cash would be zero, but your end of year cash
should agree with your broker's statement. If you have not
purchased any securities, line 8 on page 5 should be blank.
However, Line 21, page 5 should reflect zero at beginning of
year, but have a figure for the end of year based on the
amount that your members have contributed during the year
(less your loss caused by start-up expenses-I believe). The
schedule M-1 and M-2 should have figures even if you haven't
purchased any securities and only have a loss from
operations because of the start-up expenses.

If your 1065 is totally blank on page 5, there is something
amiss. I would recommend you contact bivio support on Monday
so they can review your data. Your start-up expenses should
result in reduction of your partner's capital accounts.

Jack Ranby, Treasurer
Grants Partners Investment Club

Hi Ellen,

Carole is correct.  That is why there are no entries on page 5, schedules L, M1 and M2.

The .34 was rounded to 0 on your Schedule K.  That’s why you don’t see it.

You really ought to record your expense in your records because it is a deductible expense of the club.

You can even do this without it affecting the cash in your brokerage or bank accounts!  Here’s how:

Create an additional account on the Accounting>Accounts page.

Call it Reimbursements

Record your expense as having been paid from that account.

That removes the $99 from your club assets.  In essence,  everyone “chips in” to pay it. 

Next,  record a payment for yourself and show that it was received into the Reimbursement account.

In effect,   your club has used the $99 they “chipped in” to reimburse you with $99 of units in the club for the expense.

If you do this,  everyone will be allocated part of the expense on their K-1’s.  It really is a club expense so Jack is right that

everyone should share in the deduction.

   Laurie Frederiksen

Hi Ellen,

Carole is correct.  That is why there are no entries on page 5, schedules L, M1 and M2.

The .34 was rounded to 0 on your Schedule K.  That's why you don't see it.

You really ought to record your expense in your records because it is a deductible expense of the club.

You can even do this without it affecting the cash in your brokerage or bank accounts!  Here's how:

Create an additional account on the Accounting>Accounts page.

Call it Reimbursements

Record your expense as having been paid from that account.

That removes the $99 from your club assets.  In essence,  everyone "chips in" to pay it. 

Next,  record a payment for yourself and show that it was received into the Reimbursement account.

In effect,   your club has used the $99 they "chipped in" to reimburse you with $99 of units in the club for the expense.

If you do this,  everyone will be allocated part of the expense on their K-1's.  It really is a club expense so Jack is right that

everyone should share in the deduction.

   Laurie Frederiksen