Dissolving a club
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Dissolving a club A user wrote...
Unfortunately, we have reached a point in our club where there
is little or no interest or time in involvement by members. We have
decided to dissolve the club. We were thinking the best way would be to
sell all the stock and cash out all members. Is there any special
paperwork, tax forms etc. that we need to be concerned
about?
I'm sorry to hear that your club will be dissolving. Right now,
especially during this bear market, is when the foundation can be laid for a
very profitable future.
Assuming that your club has been profitable and the withdrawing members
will realize a capital gain upon withdrawal, you may find that the best
way to dissolve the club is to sell the stocks that have lost money, transfer
stock that has appreciated to one or more members, and pay the balance of the
member withdrawals with the resulting cash. The reason for this
approach is that those that receive the appreciated stock may be able to
postpone the realization of any gain associated with the club until such time as
they decide to sell the stock that is issued to them as payment of their
withdrawal.
As far as paperwork is required, simply enter a withdrawal into
bivio for each member and pay them accordingly. The
club should then file a final partnership tax return. On that Form
1065 and each individual member's K-1 there is a place to mark "Final"
indicating that each person receiving such a K-1 is no longer a partner in this
club and that the club has dissolved.
Thanks for using bivio!
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