Transcript 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.
– 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.
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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.
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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
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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.
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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.
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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.
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Treasurer-Provided Audit Reports
• For the full year:
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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
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Other Required Information
•
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•
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•
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All
All
All
All
All
All
All
All
broker statements
trade confirmations.
bank statements.
deposit slips, if available.
cancelled checks.
Dividend Reinvestment Plan statements.
1099-DIV and 1099-INT statements.
stock certificates in possession of club.
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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.
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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.
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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).
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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.
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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.
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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 .
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Federal form 1065 (Partnership Tax Return).
Form 1065 - Schedule D.
Form 1065 - Schedule K.
Form 1065 - Schedule K-1.
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Filing with the IRS
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•
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•
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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.
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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 459990011
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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/
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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/
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Technical Support
• ICLUBcentral’s Technical Support
primarily handles product-related
questions.
• Must have:
– A licensed Club Accounting product.
– An active Club Accounting Maintenance
Agreement.
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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
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Thank You!
Any Questions?