Dividend Received After All Members Withdrawn
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Dividend Received After All Members Withdrawn I thought I waited long enough, but we received a dividend for a stock sold on 2/24/11, with an ex-dividend date of 2/24/11 (Novartis). I have already processed the withdrawal for the members, since our club is disbanding, so our Bivio account now shows a balance at the broker, with no members. How do I handle that. My best guess is to delete the withdrawals, redo them, and send each member a check for the difference. Is that correct? And, should we have received the dividend for a stock sold on the ex-dividend date? Howard Fabry, Univestors, LLC Hi Howard, Our friends at the SEC have a very nice writeup describing what an ex-dividend date is. You can read it here: http://www.sec.gov/answers/dividen.htm If you're a buyer on the ex-dividend date, you don't get it. If you're a seller, you do. It is up to you how you'd like to distribute this amount to your members. You can delete one or all of the full withdrawals you entered and reenter them as partial withdrawal payments on the date you originally distributed funds. Then, you can enter full withdrawals to distribute the final amounts to everyone. -- Laurie Frederiksen Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio About those payouts on dividends after the fact...
In my club, we've never had a dividend big enough that would cause us to go back and redistribute after we've paid someone off. If the member shows up on the books again because of it, we either change the dividend received date, or we make a journal entry to correct the dollar or two it creates.
If your club allows sufficient time between the acceptance of a resignation and the payout date, you'll never have that problem. Ours is 45 days (max). That will allow for the capture of a rogue dividend.
Lynn O.
Our partnership agreement does not deal with dividends after a withdrawl. I would assume that if a member withdrawls from the club then the member doesn't receive the dividend he would of received if he remained in the club. Do we need to put something in our PA? IF so, can we put that the member forgos any dividends?
John Rice
ABODI Investment Club
From: Lynn Ostrem <garbagecop@gmail.com> To: club_cafe@bivio.com Sent: Mon, April 11, 2011 8:11:38 AM Subject: Re: [club_cafe] Dividend Received After All Members Withdrawn About those payouts on dividends after the fact...
In my club, we've never had a dividend big enough that would cause us to go back and redistribute after we've paid someone off. If the member shows up on the books again because of it, we either change the dividend received date, or we make a journal entry to correct the dollar or two it creates.
If your club allows sufficient time between the acceptance of a resignation and the payout date, you'll never have that problem. Ours is 45 days (max). That will allow for the capture of a rogue dividend.
Lynn O.
Investment clubs operate on a cash, not accrual basis, so any dividends received after the valuation date used to calculate the value of the withdrawing member, would not be included in the withdrawing member's payout. You could include a provision in your agreement clarifying this point if you want to. The question that started this post was for the situation where the club disbanded so there was technically no members on the date the dividend was received. The textbook answer would be to redo all the withdrawals using a valuation date after the dividend was received. The practical answer would be to look at how much money are we talking about. Our club has never had one dividend that resulted in more than $5.00 bucks attributed to any single member and with various ownership percentages, it could be only pennies for some members. If it were me in this situation, I would canvass my former partners and suggest that they let me undo only one or two withdrawals, and perform the final withdrawal for them after the dividend was received. Jack Ranby, Treasurer Grants Partners Investment Club |
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