closing the investment club’s books by iclubcentral inc. (see speaker notes for additional...

Closing the Closing the Investment Club’s Investment Club’s

BooksBooksby ICLUBcentral by ICLUBcentral

Inc.Inc.http://www.iclub.com

(See speaker notes for (See speaker notes for additional information.)additional information.)

Who Needs to File Taxes?Who Needs to File Taxes?

• All investment clubs must file a All investment clubs must file a federal tax return.federal tax return.– If you were in operation during any part of If you were in operation during any part of

the year, the year, you must file with the IRSyou must file with the IRS..– If your club disbands, If your club disbands, you must file with you must file with

the IRSthe IRS..– Even if your club has no gains, purchases, Even if your club has no gains, purchases,

sales, income, and/or expenses for the sales, income, and/or expenses for the year, year, you must file with the IRSyou must file with the IRS..

• Many states also require clubs to file.Many states also require clubs to file.

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When Should I Prepare Tax When Should I Prepare Tax Filings?Filings?

• Wait for all necessary data from bank & Wait for all necessary data from bank & broker.broker.

• Banks & brokers have until January 31 Banks & brokers have until January 31 to deliver year-end 1099 statements.to deliver year-end 1099 statements.– You may need to wait until February before You may need to wait until February before

closing books.closing books.– You must provide partners with Form 1065 You must provide partners with Form 1065

& Schedule K-1 by April 15.& Schedule K-1 by April 15.– You must complete and remit your tax You must complete and remit your tax

filings to IRS before April 15.filings to IRS before April 15.

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Prepare to Close Your BooksPrepare to Close Your Books

• Check your program allocation settings:Check your program allocation settings:– Should use “Time-based” allocations.Should use “Time-based” allocations.– Do not distribute units.Do not distribute units.

• Check your security settings:Check your security settings:– Mark all stocks as stocks, mutual funds as Mark all stocks as stocks, mutual funds as

mutual funds, REITs as REITs, etc.mutual funds, REITs as REITs, etc.

• Share year-end/tax process with Share year-end/tax process with members, so they know what to expect:members, so they know what to expect:– http://www.iclub.com/support/tax_season.a

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Close the BooksClose the Books

• Ensure all transactions up to and Ensure all transactions up to and including 12/31 are entered.including 12/31 are entered.– Do NOT enter withdrawals or other Do NOT enter withdrawals or other

transactions on 12/31.transactions on 12/31.

• Create a new valuation for 12/31.Create a new valuation for 12/31.– Do NOT use Valuation Statement from Do NOT use Valuation Statement from

December meeting to close books.December meeting to close books.

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Close the Books (continued)Close the Books (continued)

• Allocate income and expenses for Allocate income and expenses for 12/31.12/31.

• Print reports:Print reports:– Allocation of Income & Expenses Report Allocation of Income & Expenses Report

for January 1 to December 31.for January 1 to December 31.– Income & Expense Statement & Balance Income & Expense Statement & Balance

Sheet for same period.Sheet for same period.– Make sure all members have access to Make sure all members have access to

these reports.these reports.66

Audit the BooksAudit the Books

• Convene Audit Committee of club Convene Audit Committee of club members.members.

• Committee then meets to verify Committee then meets to verify entries in books from broker & bank entries in books from broker & bank statements.statements.

• Treasurer provides to committee:Treasurer provides to committee:• Complete Journal and other reports for year.Complete Journal and other reports for year.• All bank & brokerage statements.All bank & brokerage statements.• All 1099 forms received.All 1099 forms received.

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Treasurer-Provided Audit Treasurer-Provided Audit ReportsReports

• For the full year:For the full year:– Complete Journal/LedgerComplete Journal/Ledger– Cash JournalCash Journal– Cash Contributions ReportCash Contributions Report– Transactions SummaryTransactions Summary

• Put checkmark in box “Subtotal Tax. Distrib's”Put checkmark in box “Subtotal Tax. Distrib's”– Individual Investment HistoryIndividual Investment History

• For each stock owned during periodFor each stock owned during period– Individual Valuation Units LedgerIndividual Valuation Units Ledger

• For each memberFor each member– End-of-period Valuation StatementEnd-of-period Valuation Statement

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Other Required InformationOther Required Information

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

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Audit Committee TasksAudit Committee Tasks

• Check bank & broker balances to verify Check bank & broker balances to verify every entry matches club's books, every entry matches club's books, including dates.including dates.

• Verify that club's books show same Verify that club's books show same number of shares and dividends for each number of shares and dividends for each stock as broker and DRP statements.stock as broker and DRP statements.

• Cross-check check register, bank Cross-check check register, bank statement, and club books.statement, and club books.

• Verify beginning and ending balances for Verify beginning and ending balances for all accounts and Valuation Statement.all accounts and Valuation Statement.

• Complete Annual Verification Report.Complete Annual Verification Report.

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How Do I Prepare Tax How Do I Prepare Tax Forms?Forms?

• Use ICLUBcentral’s Use ICLUBcentral’s Club Tax Printer Club Tax Printer software!software!– Federal Club Tax Printer.Federal Club Tax Printer.– State Club Tax Printer (for 13 states, as State Club Tax Printer (for 13 states, as

of 2007).of 2007).

• Order online at www.iclub.com or by Order online at www.iclub.com or by calling 617-661-2582.calling 617-661-2582.

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Tax Printer SoftwareTax Printer Software

• For Club Accounting 3:For Club Accounting 3:– Available by download or on CD-ROM.Available by download or on CD-ROM.

• For Club Accounting Online at For Club Accounting Online at myiclub.commyiclub.com::– No CD or download necessary; click No CD or download necessary; click

Taxes tab on club web site.Taxes tab on club web site.

• Price: $89.99 ($59.99 for Price: $89.99 ($59.99 for StockCentral members).StockCentral members).

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When Is Tax Printer When Is Tax Printer Available?Available?

• IRS approves new forms each year.IRS approves new forms each year.• You can NOT use prior year software You can NOT use prior year software

for current year.for current year.– Final forms released by IRS as early as Final forms released by IRS as early as

November, as late as February.November, as late as February.– Initial release of ICLUBcentral software Initial release of ICLUBcentral software

typically uses DRAFT forms.typically uses DRAFT forms.– Programs are auto-updated when FINAL Programs are auto-updated when FINAL

forms are available.forms are available.1313

Using the Club Tax PrinterUsing the Club Tax Printer

• Open/Start Club Tax Printer software.Open/Start Club Tax Printer software.• Use Q&A format to print out:Use Q&A format to print out:

– Form 1065.Form 1065.– Schedule K-1.Schedule K-1.

• Send one Form 1065 to IRS via Send one Form 1065 to IRS via Registered Mail; keep one for club Registered Mail; keep one for club records.records.

• Print 3 copies of each Schedule K-1:Print 3 copies of each Schedule K-1:– Send one copy of each Schedule K-1 to IRS.Send one copy of each Schedule K-1 to IRS.– Keep one copy of each for club.Keep one copy of each for club.– Give third to appropriate partner.Give third to appropriate partner.

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Federal Tax InformationFederal Tax Information

• 1-800-TAX-FORM (1-800-829-3676).1-800-TAX-FORM (1-800-829-3676).• IRS Publications (www.irs.gov).IRS Publications (www.irs.gov).

– IRS Publication 541 (Partnerships). IRS Publication 541 (Partnerships). – IRS Publication 550 (Investment Income & IRS Publication 550 (Investment Income &

Expense).Expense).

• IRS instructions for Tax Forms .IRS instructions for Tax Forms .– Federal form 1065 (Partnership Tax Return).Federal form 1065 (Partnership Tax Return).– Form 1065 - Schedule D.Form 1065 - Schedule D.– Form 1065 - Schedule K.Form 1065 - Schedule K.– Form 1065 - Schedule K-1.Form 1065 - Schedule K-1.

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Filing with the IRSFiling with the IRS

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

each member.each member.– One copy of each to IRS.One copy of each to IRS.– One to each member.One to each member.– One of each for club records.One of each for club records.

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Where Do I File?Where Do I File?

Investment clubs do not send forms to same place as individuals.Investment clubs do not send forms to same place as individuals.• If your club is based in: If your club is based in: Alabama, Alaska, Arizona, Arkansas, Alabama, Alaska, Arizona, Arkansas,

California, Colorado, Florida, Georgia, Hawaii, Idaho, Iowa, California, Colorado, Florida, Georgia, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Utah, Washington, Oregon, South Dakota, Tennessee, Texas, Utah, Washington, Wyoming:Wyoming:– Send return to: Send return to: Internal Revenue Service; Ogden, UT 84201-0011Internal Revenue Service; Ogden, UT 84201-0011

• If your club is based in: If your club is based in: Connecticut, Delaware, District of Connecticut, Delaware, District of Columbia, Illinois, Indiana, Kentucky, Maine, Maryland, Columbia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, West Virginia, Wisconsin:Carolina, Vermont, Virginia, West Virginia, Wisconsin:– Send your return to: Send your return to: Internal Revenue Service; Cincinnati, OH Internal Revenue Service; Cincinnati, OH

45999-001145999-0011

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Where Do I Get Tax Help?Where Do I Get Tax Help?

• BI BI Investment Club Accounting Investment Club Accounting Handbook.Handbook.

• Local Chapter contacts.Local Chapter contacts.• Club Treasurers Discussion List:Club Treasurers Discussion List:

– http://lists.better-investing.orghttp://lists.better-investing.org• BI Wiki:BI Wiki:

– http://biwiki.editme.com/http://biwiki.editme.com/• StockCentral “Clubhouse” Forum:StockCentral “Clubhouse” Forum:

– http://www.stockcentral.com/http://www.stockcentral.com/2727

Where to Get Software HelpWhere to Get Software Help• Software Manuals:Software Manuals:

– http://www.iclub.com/support/downloads.asphttp://www.iclub.com/support/downloads.asp• ICLUBcentral Technical Support:ICLUBcentral Technical Support:

– http://www.iclub.com/supporthttp://www.iclub.com/support• Treasurers List:Treasurers List:

– http://lists.betterinvesting.orghttp://lists.betterinvesting.org• BI Wiki:BI Wiki:

– http://biwiki.editme.com/http://biwiki.editme.com/• Local Chapter contacts:Local Chapter contacts:

– http://www.betterinvesting.orghttp://www.betterinvesting.org• StockCentral “Clubhouse” Forum:StockCentral “Clubhouse” Forum:

– http://www.stockcentral.com/http://www.stockcentral.com/

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Technical SupportTechnical Support

• ICLUBcentral’s Technical Support ICLUBcentral’s Technical Support primarily handles product-related primarily handles product-related questions.questions.

• Must have:Must have:– A licensed Club Accounting product. A licensed Club Accounting product. – An active Club Accounting Maintenance An active Club Accounting Maintenance

Agreement.Agreement.

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Technical SupportTechnical Support

• Web-based SupportWeb-based Support– www.iclub.com/supportwww.iclub.com/support

• Telephone Support Telephone Support – 617-661-2582617-661-2582– 9:30 AM to 6:00 PM Eastern Time9:30 AM to 6:00 PM Eastern Time– Monday through FridayMonday through Friday

• Renew your Club Accounting Renew your Club Accounting Maintenance Subscription:Maintenance Subscription:– Call ICLUBcentral at 1-617-661-2582Call ICLUBcentral at 1-617-661-2582

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Thank You!Thank You!

Any Questions?Any Questions?