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Closing the Investment Club’s Books

Closing the Investment Club’s Books. by ICLUBcentral Inc. http://www.iclub.com (See speaker notes for additional information.). Who Needs to File Taxes?. All investment clubs must file a federal tax return. If you were in operation during any part of the year, you must file with the IRS .

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Closing the Investment Club’s Books

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  1. Closing the Investment Club’s Books by ICLUBcentral Inc. http://www.iclub.com (See speaker notes for additional information.)

  2. Who Needs to File Taxes? • All investment clubs must file a federal tax return. • If you were in operation during any part of the year, you must file with the IRS. • If your club disbands, you must file with the IRS. • Even if your club has no gains, purchases, sales, income, and/or expenses for the year, you must file with the IRS. • Many states also require clubs to file.

  3. When Should I Prepare Tax Filings? • Wait for all necessary data from bank & broker. • Banks & brokers have until January 31 to deliver year-end 1099 statements. • You may need to wait until February before closing books. • You must provide partners with Form 1065 & Schedule K-1 by April 15. • You must complete and remit your tax filings to IRS before April 15.

  4. Prepare to Close Your Books • Check your program allocation settings: • Should use “Time-based” allocations. • Do not distribute units. • Check your security settings: • Mark all stocks as stocks, mutual funds as mutual funds, REITs as REITs, etc. • Share year-end/tax process with members, so they know what to expect: • http://www.iclub.com/support/tax_season.asp

  5. Close the Books • Ensure all transactions up to and including 12/31 are entered. • Do NOT enter withdrawals or other transactions on 12/31. • Create a new valuation for 12/31. • Do NOT use Valuation Statement from December meeting to close books.

  6. Close the Books (continued) • Allocate income and expenses for 12/31. • Print reports: • Allocation of Income & Expenses Report for January 1 to December 31. • Income & Expense Statement & Balance Sheet for same period. • Make sure all members have access to these reports.

  7. Audit the Books • Convene Audit Committee of club members. • Committee then meets to verify entries in books from broker & bank statements. • Treasurer provides to committee: • Complete Journal and other reports for year. • All bank & brokerage statements. • All 1099 forms received.

  8. Treasurer-Provided Audit Reports • For the full year: • Complete Journal/Ledger • Cash Journal • Cash Contributions Report • Transactions Summary • Put checkmark in box “Subtotal Tax. Distrib's” • Individual Investment History • For each stock owned during period • Individual Valuation Units Ledger • For each member • End-of-period Valuation Statement

  9. Other Required Information • All broker statements • All trade confirmations. • All bank statements. • All deposit slips, if available. • All cancelled checks. • All Dividend Reinvestment Plan statements. • All 1099-DIV and 1099-INT statements. • All stock certificates in possession of club.

  10. Audit Committee Tasks • Check bank & broker balances to verify every entry matches club's books, including dates. • Verify that club's books show same number of shares and dividends for each stock as broker and DRP statements. • Cross-check check register, bank statement, and club books. • Verify beginning and ending balances for all accounts and Valuation Statement. • Complete Annual Verification Report.

  11. How Do I Prepare Tax Forms? • Use ICLUBcentral’s Club Tax Printer software! • Federal Club Tax Printer. • State Club Tax Printer (for 13 states, as of 2007). • Order online at www.iclub.com or by calling 617-661-2582.

  12. Tax Printer Software • For Club Accounting 3: • Available by download or on CD-ROM. • For Club Accounting Online at myiclub.com: • No CD or download necessary; click Taxes tab on club web site. • Price: $89.99 ($59.99 for StockCentral members).

  13. When Is Tax Printer Available? • IRS approves new forms each year. • You can NOT use prior year software for current year. • Final forms released by IRS as early as November, as late as February. • Initial release of ICLUBcentral software typically uses DRAFT forms. • Programs are auto-updated when FINAL forms are available.

  14. Using the Club Tax Printer • Open/Start Club Tax Printer software. • Use Q&A format to print out: • Form 1065. • Schedule K-1. • Send one Form 1065 to IRS via Registered Mail; keep one for club records. • Print 3 copies of each Schedule K-1: • Send one copy of each Schedule K-1 to IRS. • Keep one copy of each for club. • Give third to appropriate partner.

  15. Federal Tax Information • 1-800-TAX-FORM (1-800-829-3676). • IRS Publications (www.irs.gov). • IRS Publication 541 (Partnerships). • IRS Publication 550 (Investment Income & Expense). • IRS instructions for Tax Forms . • Federal form 1065 (Partnership Tax Return). • Form 1065 - Schedule D. • Form 1065 - Schedule K. • Form 1065 - Schedule K-1.

  16. Filing with the IRS • Use Form 1065 / Schedule K-1. • Obtain latest version for tax year. • Verify all member SSN’s & Club Tax I.D. • Keep a duplicate for club records. • Prepare 3 copies of Schedule K-1 for each member. • One copy of each to IRS. • One to each member. • One of each for club records.

  17. Where Do I File? Investment clubs do not send forms to same place as individuals. • If your club is based in: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Utah, Washington, Wyoming: • Send return to: Internal Revenue Service; Ogden, UT 84201-0011 • If your club is based in: Connecticut, Delaware, District of Columbia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, West Virginia, Wisconsin: • Send your return to: Internal Revenue Service; Cincinnati, OH 45999-0011

  18. Where Do I Get Tax Help? • BI Investment Club Accounting Handbook. • Local Chapter contacts. • Club Treasurers Discussion List: • http://lists.better-investing.org • BI Wiki: • http://biwiki.editme.com/ • StockCentral “Clubhouse” Forum: • http://www.stockcentral.com/

  19. Where to Get Software Help • Software Manuals: • http://www.iclub.com/support/downloads.asp • ICLUBcentral Technical Support: • http://www.iclub.com/support • Treasurers List: • http://lists.betterinvesting.org • BI Wiki: • http://biwiki.editme.com/ • Local Chapter contacts: • http://www.betterinvesting.org • StockCentral “Clubhouse” Forum: • http://www.stockcentral.com/

  20. Technical Support • ICLUBcentral’s Technical Support primarily handles product-related questions. • Must have: • A licensed Club Accounting product. • An active Club Accounting Maintenance Agreement.

  21. Technical Support • Web-based Support • www.iclub.com/support • Telephone Support • 617-661-2582 • 9:30 AM to 6:00 PM Eastern Time • Monday through Friday • Renew your Club Accounting Maintenance Subscription: • Call ICLUBcentral at 1-617-661-2582

  22. Thank You! Any Questions?

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