How to Split the Gains When a Club Comes Undone [6/12/2013]
We don’t like to see clubs disband, but this tax season I received several calls concerning tax issues related to a club’s dissolution. In this article I’ll use an example based on one of these clubs to illustrate the importance of tax planning when dissolving a club.
It’s Late Nights With BetterInvesting for Member in Italy [5/29/2013]
BetterInvesting’s online webinars draw enthusiastic members from all over, though none may “travel” as far as 31-year-old Raffaele De Gennaro, who stays up late into the night to participate from his home in Gragnano, Italy.
Bears, Bulls & Babes — Beguiled by Blue Chips [3/20/2013]
The Bears, Bulls & Babes Investment Club of Bethel Park, Pa. (near Pittsburgh) began not long after Dianne LeDonne invited a friend and neighbor Joanne Hathaway to a Merrill Lynch seminar during which they heard about clubs. After attending a meeting of a local club to learn more, they set out to find the most fabulous ladies to join them in forming a club of their own.
Show Me the Money: Tallying Up Unrealized Gains [3/13/2013]
Several questions have come to me recently concerning the unrealized gain and undistributed earnings line on the balance sheet report. This line is composed of two items: A) unrealized gain and B) undistributed earnings. I’ll start with B first.
Most Clubs Should Avoid the Urge to Merge [3/6/2013]
There is power and wisdom in working as part of a group. That’s the theory behind the investment club movement. And when clubs see their memberships decline, they occasionally view the possibility of a merger as an enticing solution to continuing their operations.
Chemist’s Found the Formula for Investing [2/6/2013]
Forty-two-year-old BetterInvesting member Lin Xu, of Lexington, Mass., began investing at the age of 37, when the company he worked for offered its employees stock options and restricted stock. “I did not know how to handle them,” he recalls. “When I should sell and when I should keep? It appeared to me that investment cannot be avoided in life, so I started to pay attention to it.”
Clubs Now Need to Navigate Changes to IRS Forms [1/30/2013]
This year changes were made to the federal partnership return forms. These involve how capital gains are reported. Form 8949 was added and changes to Schedule D were implemented. Both are involved with reporting capital gains.
20 Questions to Ask Before Your Club Buys a Stock [1/23/2013]
Did you ever play 20 Questions with friends or family when you were a child? This month, I have another way of playing the game that doesn’t involve guessing whether the answer is animal, vegetable or mineral.
In California, ‘Red Eyes’ Focus on Green [1/16/2013]
When the Beardstown Ladies’ book was covered by the Contra Costa Times, the newspaper our four founding members worked for, they said, “If the Beardstown Ladies can do this, we can do it!” Club meetings were held at the end of their shift — 2 a.m. — hence, the name Red Eye Investment Club. The club has since grown from four to nine members.
Do Spinoffs Have Your Head Spinning? No Problem [1/9/2013]
In my December article I covered the choices for the program setting for Include Earlier Ownership. In this article I’ll discuss the choices and consequences for the program setting Merger/Spinoff Return Basis.
Absence May Make the Club Grow Stronger [1/2/2013]
Monthly meetings are a hallmark of the investment club approach to building a portfolio. Meeting once a month not only assists clubs in meeting one of BetterInvesting’s core principles — that of investing regularly — it also serves to put the brakes on the use of more active investing strategies.
Even a Scrooge Loves a Charity Tax Write-Off [12/5/2012]
’Tis the season for giving — does your investment club have a philanthropic spirit? Many investment clubs make a point of donating cash or securities each year to worthy charitable organizations. Besides helping to do good, these clubs are gaining tax deductions and other potential benefits for their members. This year, why doesn’t your club consider helping out a favorite nonprofit organization with a donation?
Historical View of Compound Returns May Miss Red Flags [11/28/2012]
Both Club Accounting 3 and the online myICLUB.com have club settings that affect the way compound annual return for individual securities is calculated. The first setting is Include Earlier Ownership. This setting is found in both versions of the club accounting program. The second setting is Merger/Spinoff Return Basis. This setting is found only in the online version. I’ll discuss the consequences of these options, starting with Include Earlier Ownership in this article and Merger/Spinoff Return Basis next issue.
Member Says BetterInvesting’s as Good as an MBA [11/21/2012]
A few things you should know about BetterInvesting member Gayle Olson of Bloomington, Minn.
How to Tally the Cost Basis of Your Club’s Securities [8/8/2012]
I’ve covered items that affect the cost basis of members in an investment club. What about the cost basis of the securities in their portfolio? What transactions affect security cost basis? The answer to that depends on the security.
Dialing Down a Rambunctious Member [7/11/2012]
The film classic 12 Angry Men is a psychological drama about a jury charged with determining the fate of a young man accused of murder. In just two hours, a single dissenting juror slowly causes the rest of the jurors to reconsider their initial opinions — even, eventually, Juror No. 10, an angry, pushy man whose modus operandi in life seems to be to needle and cajole and rant until he gets his own way.
How to Give a Departing Member a Fair Share [7/4/2012]
Previously I’ve written in general about cost-basis assignment to stocks when they’re transferred to a member in a withdrawal. Some treasurers have asked for details of the process.
Those Taxing Dividend Issues [3/14/2012]
Gordon Gecko may be out of prison, but it’s still the case that “money never sleeps,” as the subtitle of the sequel to the classic film “Wall Street” proclaims. Individuals and clubs using automatic investing programs such as dividend reinvestment plans (DRIPs) or direct stock plans (DSPs) often like the wide-awake nature of these systems because they help keep their money always at work through the purchase of new shares with all dividends paid.
Zero-Sum Gain: Profit Is Reported on a Loss [3/7/2012]
I received a question regarding a large capital gain reported on the Schedule K-1 of a withdrawn club member. The member had a loss on his investment in the club. So why is there a capital gain reported?
Midsize Stocks [2/15/2012]
Analysts call a company in the midrange a “sweet spot in the market.” A midsize company has made it past the risky stages but is still poised for some major growth. We look at a few intriguing companies and some mid-cap mutual funds of interest.
The first major exchange-traded fund, the SPDR S&P 500 Fund (ticker: SPY), was launched in 1993. Today it has $95.4 billion in net assets, making it the single largest of the 1,377 U.S. ETFs tracked by Morningstar. The fund alone is almost 10 percent of the total ETF market. Exchange-traded funds are entering maturity and fund companies are considering new concepts to get investors excited again.
The Next Best Thing to Being There [2/1/2012]
“Showing up is 80 percent of life,” said filmmaker Woody Allen, and although the percentages may vary, having members show up at your investment club’s meeting is definitely key to the club’s success. That’s why most investment clubs require that each member maintains a minimum attendance level at meetings throughout the year. Miss too many meetings and you could be expelled from the club.
Understanding Compound Annual Return [1/25/2012]
The return figures on a valuation statement are often misunderstood. The accuracy of the calculations is the biggest question. The compound annual return (CAR) uses internal rate of return (IRR) calculations, which take into account not only the size but also the timing of investments. They also use all cash flows into and out of an investment, including partial sales, dividends and additions to the position.
Treasurers — Handle With TLC Around Tax Time [1/4/2012]
This time of year usually sees a higher volume of support calls regarding club accounting issues. Calls from stressed treasurers on the brink of leaving their position or even the club also increase about now. Many times clubs disband when the treasurer leaves. So this article is dedicated to the care and feeding of the club treasurer and is directed more at the other members of investment clubs.
Four Keys to a Successful Investment Club [12/8/2011]
It’s a sad fact that not every investment club that is formed will be successful. But that doesn’t mean success is outside your grasp.
Keeping Temptation at Bay [11/9/2011]
In the news recently was an article about multiple California campaign and nonprofit organizations becoming the victims of alleged embezzlement by a shared treasurer. A common theme was the treasurer being “trusted implicitly” and having sole access to the accounts.
Who Has the Biggest Slice? [11/2/2011]
Anyone who grew up with a sibling knows all too well two of the primary causes of intrafamilial arguments: “He won’t stay on his side!,” commonly arising from automobile backseat territory disputes, and “Her piece is bigger than mine!,” caused by the minute differences in size resulting from the slicing of cake, pie, pizza and the like.
Don’t Complicate Matters [10/5/2011]
As Steve Martin, Meryl Streep and Alec Baldwin discovered in their 2009 film “It’s Complicated,” some people seem to have a natural-born proclivity to make things harder than they have to be. The title of the film is also a selection in the Relationship Status section of user profiles on Facebook, indicating that there are a whole lot of people who just can’t keep things simple.
Stocks Under Surveillance [9/7/2011]
Each month, investment clubs across the country review thousands of stocks as candidates for their portfolios. Most of those stocks will be eliminated by these clubs because they don’t meet minimum criteria of management quality — they’re simply not “good” stocks.
How to Keep Fees Fair for Club Members [8/3/2011]
Rob, from the Blue Shirt Investment Club in Saratoga Springs, N.Y., writes: “In our club we have one partner leaving and a new partner entering. When we amend our partnership agreement with the county, we are required to pay a filing fee of $25. It is our intent to charge this fee to the incoming and outgoing members, and prorate it appropriately. However, when it’s time to pay the fee and show it as an expense, myICLUB.com wants to charge it to all members either by equal dollar amounts or by percentage ownership of the group.”
In the Footsteps of Giant SSGs [7/6/2011]
In Steven Spielberg’s science fiction thriller “Minority Report,” Tom Cruise operated a computer display that filled an entire wall, using hand gestures to navigate and interact with the device. Although most of us would see a full-wall computer display as being a tad over the top, some of us could see the benefit of replacing the two (or three) widescreen flat-panel monitors on our desks with even more video firepower.
6 Pros and Cons of Go-Anywhere Funds [4/20/2011]
Investors’ love affair with the Morningstar-style box has left go-anywhere funds out in the cold. But it’s precisely because they don’t fit into a single category that these funds are so appealing: In crazy markets, the go-anywhere freedom possessed by these managers enables them to stay nimble and frequently beat the pants off their competition.
Club Tax Returns: 10 Things You Gotta Know [1/12/2011]
For many investment clubs (and particularly for treasurers or financial partners), preparing the club’s tax filings is a stressful task. But it doesn’t need to be! ICLUBcentral and BetterInvesting provide all the tools and assistance you need to generate accurate investment club tax returns for the Internal Revenue Service and state agencies.
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