Making the Investment Club Treasurer's Job Easy...

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1 Making the Investment Club Treasurer's Job Easy... by Doug Gerlach President, ICLUBcentral Inc. December } Use Questions box in GoToWebinar applet to type questions. 2 Copyright ICLUBcentral Inc., December 2014 Page 1

December 2014 1 } Use Questions box in GoToWebinar

2 } Go to } Log in with BetterInvesting user name } Click Club Treasurers Workshop } Scroll to bottom of page 3 } Ensure accuracy of club s books. Catch errors before they compound & become difficult to resolve. } Provide members with details about club performance & results. } Get ready to generate tax returns. 4 Copyright ICLUBcentral Inc., December 2014 Page 2

3 } Make sure members know what to expect at year-end: } Understand FINAL vs. DRAFT tax forms. } December Clear with club to purchase Tax Printers. Put together audit committee. Tell club members to expect tax forms in late February. } January Audit books. Check ICLUB.com for status of tax forms. Tell club members to expect tax forms in late February. } February/March Generate tax returns (Congress & IRS willing). 5 } Make sure allocation settings are correct: myiclub.com: Accounting > Utilities > Allocation settings. Club Accounting 3: Tools > Settings. } Recommended settings: DO use Time-based allocation. DO NOT distribute units. myiclub: Select first year for which you will not distribute units. New clubs, select first year of operation. 6 Copyright ICLUBcentral Inc., December 2014 Page 3

Tell club members to expect tax forms in late February. } February/March Generate tax returns (Congress & IRS willing). 5 } Make sure allocation settings are correct: myiclub.

4 7 } Check Security settings: myiclub.com: Accounting > Securities > Update Security Settings Club Accounting 3: Securities > [Double-click on Security to edit] } Ensure Type is correct: Security Type Stocks Mutual Funds REITs Limited Partnerships & other CDs, Bonds Set in Program As: Common Stocks Mutual Funds REITs Other/Other Publicly Traded Fixed Cash Investment (CA3 only) 8 Copyright ICLUBcentral Inc., December 2014 Page 4

Security to edit] } Ensure Type is correct: Security Type Stocks Mutual Funds REITs Limited Partnerships &

5 9 } Some securities pose particular problems for clubs & should be sold before year-end to eliminate problems in future years: Gold/Commodity ETFs Real Estate Investment Trusts (REITs) Publicly Traded Partnerships (PTPs) Master Limited Partnerships (MLPs) 10 Copyright ICLUBcentral Inc., December 2014 Page 5

Real Estate Investment Trusts (REITs) Publicly Traded Partnerships (PTPs)

} Consider making donations to eligible charities. } Club can donate securities or cash. ICLUBcentral software is only software that supports donations of securities.

6 } Consider making donations to eligible charities. } Club can donate securities or cash. ICLUBcentral software is only software that supports donations of securities. } Charitable deduction passes through to members. } For donations of securities, cost basis is stepped up to present value (thus can avoid capital gains) Copyright ICLUBcentral Inc., December 2014 Page 6

} Charitable deduction passes through to members.

7 } Ensure all transactions up to & including 12/31 are entered. } WARNING: Do NOT enter withdrawals or other transactions on 12/31. Move any 12/31 transactions to 12/30. Move any mutual fund distributions paid in next year but taxable in prior year to 12/ } Dividends from stocks MUST be entered as Security Transactions (not Cash). } Ex-Dividend dates MUST be included to determine proper tax treatment. Use myiclub Securities Dividend Report to check. } Member Fees SHOULD be used only for penalties. Such as late fees or bounced check fees. All other monies contributed by members should be recorded as Member Payments. 14 Copyright ICLUBcentral Inc., December 2014 Page 7

} Ex-Dividend dates MUST be included to determine proper tax treatment. Use myiclub Securities Dividend Report to check. } Member Fees SHOULD be used only for penalties.

8 } Dividend report 15 Questions? 16 Copyright ICLUBcentral Inc., December 2014 Page 8

9 } Create new Securities Valuation & Valuation Statement for 12/31. } If market closed on 12/31, use security prices from last day market was open. } Do NOT use Valuation Statement from December meeting. } Do NOT enter any transactions on 12/31 move to 12/30 instead. 18 Copyright ICLUBcentral Inc., December 2014 Page 9

} Do NOT use Valuation Statement from December meeting.

10 } Allocate income & expenses for 12/31. Club Accounting 3: Tools > Allocate income & expenses myiclub.com: Accounting > Utilities > Allocate income & expenses } MUST be done once each year. } If own REITs or Mutual Funds, enter the qualified amount (from 1099) when you Allocate Income & Expenses Copyright ICLUBcentral Inc., December 2014 Page 10

com: Accounting > Utilities > Allocate income & expenses } MUST be done once each year.

11 } Mutual funds & ETFs report breakdown of quarterly distributions only at year-end. } Distributions can include: Dividends Short-term gains Long-term gains Return of capital Interest } Allocation function will ask for portion of dividend that is qualifying (if any) and Unrecaptured Section 1250 gains Copyright ICLUBcentral Inc., December 2014 Page 11

Interest } Allocation function will ask for portion of dividend that is qualifying (if

12 } Verify books agree with bank/brokerage statements. Brokers now required to report tax basis of stocks bought after 1/2011 when sold. } Check totals match statements on: Capital Gains Reports. Allocation Report. Valuation Statement. Transaction Summary. 23 } Question: If the Club Treasurer discovers an error that took place in a prior year, how does one go about correcting it & reporting it? 24 Copyright ICLUBcentral Inc., December 2014 Page 12

} Check totals match statements on: Capital Gains Reports. Allocation Report. Valuation Statement.

13 } Question: If the Club Treasurer discovers an error that took place in a prior year, how does one go about correcting it & reporting it? } Answer: Correct in books. If significant, may need to re-file returns. Contact ICLUBcentral for help. 25 } Watch for year-end statements in January. } Tax documents arrive by February 15: 1099-DIV - Dividends & Distributions 1099-INT - Interest Income 1099-MISC - Miscellaneous Income 1099-OID - Original Issue Discount Schedule K-1 (Form 1065) - Partner's Share of Income, Credits, Deductions, etc. } Info must match what you report to IRS! 26 Copyright ICLUBcentral Inc., December 2014 Page 13

} Tax documents arrive by February 15: 1099-DIV - Dividends & Distributions 1099-INT - Interest Income 1099-MISC - Miscellaneous Income 1099-OID - Original

14 } Make sure members have access to: Valuation Statement for 12/31. Allocation of Income & Expenses for 1/1 to 12/31. } Optionally: Income & Expense Statement & Balance Sheet. Portfolio Diversification Reports. Complete Journal for year Copyright ICLUBcentral Inc., December 2014 Page 14

} Optionally: Income & Expense Statement & Balance Sheet.

15 Questions? 29 Copyright ICLUBcentral Inc., December 2014 Page 15

16 } Convene Audit Committee of members. Treasurer should be available for questions but is NOT member of committee. } Use Audit Checklist from ICLUBcentral. Download from ICLUB.com Club Hub (in Learning tab). 31 } 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-Year Valuation Statement 32 Copyright ICLUBcentral Inc., December 2014 Page 16

31 } For the full year: Complete Journal/Ledger Cash Journal Cash Contributions Report Transactions Summary Put checkmark in box Subtotal

17 } 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 & 1099-INT statements. } All stock certificates in possession of club. 33 } Committee meets & verifies entries in books from broker & bank statements. } Check bank & broker balances to verify entries matches books, including dates. } Verify books show same number of shares & dividends for each stock as statements. } Cross-check check register, bank statement, & books. } Verify beginning & ending balances for all accounts & Valuation Statement. } Sign Annual Verification Report. 34 Copyright ICLUBcentral Inc., December 2014 Page 17

} Check bank & broker balances to verify entries matches books, including dates. } Verify books show same number of shares & dividends for each stock as statements.

18 } Web-based Support } Telephone Support ICLUB 9:30 AM to 6:00 PM Eastern Time Monday through Friday } Renew your Club Accounting Maintenance or myiclub.com subscription: Call ICLUBcentral at ICLUB Visit 35 } Use Questions box in GoToWebinar applet to type questions. 36 Copyright ICLUBcentral Inc., December 2014 Page 18

Friday } Renew your Club Accounting Maintenance or myiclub.

19 More Questions? Copyright ICLUBcentral Inc., December 2014 Page 19

myiclub.com www.myiclub.com ICLUBcentral Inc. www.iclub.com Write me: gerlach@iclub.

20 myiclub.com ICLUBcentral Inc. Write me: 39 Copyright ICLUBcentral Inc., December 2014 Page 20

Investment Club Accounting Concepts

Investment Club Accounting Concepts Puget Sound Chapter BetterInvesting Updated June 17, 2011 Jim Thomas Many thanks to Ira Smilovitz and Rip West for reviewing this document and providing much helpful