Closing the Investment Club's Books at Year-End

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    22-Nov-2014

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The handout to accompany Doug Gerlach's presentation on "Closing the Investment Club's Books" presented by ICLUBcentral Inc. and myICLUB.com. For more information or to view the archived webinar, please go to www.iclub.com and visit the Learning tab.

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<ul><li> 1. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc, Closing the Investment Clubs Books by Doug Gerlach gerlach@iclub.com ICLUBcentral Inc. http://www.iclub.com End of Year Procedures Series of steps to: Ensure accuracy of clubs books. Catch any errors before they compound and become difficult to resolve. Provide members with information about club performance and results. Get ready to generate tax returns. 2 1 </li> <li> 2. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc,Let Members Know What to Expect Make sure members know what to expect at year-end: year- http://www.iclub.com/support/tax_season.asp FINAL vs. DRAFT forms November: Pre-order your Tax Printers. Pre- What to do: Clear purchase with club and purchase Tax Printers. Tell club members to expect tax forms in February. December: Be patient. What to do: Put together audit committee and review books. Tell club members to expect tax forms in February. January: Audit your books. What to do: Check iclub.com for the status of tax forms. Tell club members to expect tax forms in February. February: Run your taxes (Congress &amp; IRS willing). What to do: Complete tax forms for club members. 3 Review Software Settings Check your program allocation settings: Club Accounting 3: Tools &gt; Settings. 3: myICLUB.com: Accounting &gt; Utilities &gt; myICLUB.com: Allocation settings. Recommended settings: Should use Time-based allocations. Time- Set to not distribute units. 4 2 </li> <li> 3. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc, Set Stocks/Funds Properly Check Security settings: Club Accounting 3: Securities &gt; [Double-click on 3: [Double- Security name to edit] edit] myICLUB.com: Accounting &gt; Securities &gt; Update myICLUB.com: Security Settings Ensure Type is correct: Stocks: common stocks Mutual funds: mutual funds REITs: REITs Limited Partnerships &amp; other: Other/Other Publicly Traded CDs, Bonds: Fixed Cash Investment (CA3 only) 5 Securities to Avoid in Clubs Some securities pose particular problems for clubs &amp; should be sold before year-end year- to eliminate problems in future years: Gold/Commodity ETFs Real Estate Investment Trusts (REITs) Publicly Traded Partnerships (PTPs) Master Limited Partnerships (MLPs) 6 3 </li> <li> 4. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc, Club Donations 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). 7 Finalize Club Data in Books Ensure all transactions up to &amp; 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 12/30. 8 4 </li> <li> 5. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc,Watch for Problem Transactions Dividends from stocks must be entered as Security Transactions (not Cash Transactions). Ex-Dividend dates must be included in order to Ex- determine if dividend qualifies for lower tax treatment. Member Fees are only used for penalty situations. Such as late fees or bounced check fees. All other monies contributed by members should be recorded as Member Payments. Payments. 9 Handling Fund Distributions Mutual funds &amp; ETFs report breakdown of quarterly distributions only at year-end year- Distributions can be made up of: Dividends Short- Short-term gains Long- Long-term gains Return of capital Interest From year-end report, determine breakdown and re- year- re- enter quarterly distributions to reflect all components. For instance, enter 25% of each component at each quarterly distribution transaction. 10 5 </li> <li> 6. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc, Create Year-End Valuation Year- Create new Valuation Statement for 12/31. If market is closed on 12/31, use security prices from last day market was open. Do NOT use Valuation Statement from December meeting. 11 Allocate Income &amp; Expenses Allocate income and expenses for 12/31. Club Accounting 3: Tools &gt; Allocate income 3: and expenses myICLUB.com: Accounting &gt; Utilities &gt; myICLUB.com: Allocate income and expenses Done only once annually at year-end. year- If own REITs or Mutual Funds, enter the qualified amount (from 1099) when you Allocate Income and Expenses. 12 6 </li> <li> 7. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc, Reconcile Club Data Verify club books against bank/brokerage statements. Check that totals on Capital Gains Reports, Allocation Report, Valuation Statement, &amp; Transaction Summary match financial institution statements. 13 Financial Institution Documents Year-end statements in January. Year- Tax documents mid-February, mid- 1099-B - Proceeds from Broker and Barter 1099- Exchange Transactions 1099-DIV - Dividends and Distributions 1099- 1099-INT - Interest Income 1099- 1099-MISC - Miscellaneous Income 1099- 1099-OID - Original Issue Discount 1099- Schedule K-1 (Form 1065) - Partners Share of K- Income, Credits, Deductions, etc. 14 7 </li> <li> 8. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc,Generate Reports for Members Make sure members have access to: Valuation Statement for 12/31. Allocation of Income &amp; Expenses for 1/1 to 12/31. Income &amp; Expense Statement &amp; Balance Sheet. Optionally: Portfolio Diversification Complete Journal for year 15 Audit the Books Convene Audit Committee of club members. Treasurer is not member, but should be available for questions. Download Audit Checklist from StockCentral Learning Library http://www.stockcentral.com/learn/learninglibrary.aspx 17 8 </li> <li> 9. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc, Treasurer- Treasurer-Provided Reports For the full year: Complete Journal/Ledger Cash Journal Cash Contributions Report Transactions Summary Put checkmark in box Subtotal Tax. Distribs Distribs Individual Investment History For each stock owned during period Individual Valuation Units Ledger For each member End-of-Year Valuation Statement End-of- 18 Other Treasurer Provided Documents All broker statements All trade confirmations. All bank statements. All deposit slips, if available. All cancelled checks. All Dividend Reinvestment Plan statements. All 1099- 1099-DIV and 1099-INT statements. 1099- All stock certificates in possession of club. 19 9 </li> <li> 10. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc, Audit Committee Tasks Committee meets &amp; verifies entries in books from broker &amp; bank statements. Check bank &amp; broker balances to verify entries matches clubs books, including dates. Verify clubs books show same number of shares and dividends for each stock as broker &amp; DRP statements. Cross-check check register, bank statement, &amp; Cross- club books. Verify beginning and ending balances for all accounts and Valuation Statement. Sign Annual Verification Report. 20ICLUBcentral Technical Support Web-based Support Web- www.iclub.com/support Telephone Support 877-33-ICLUB 877-33- 9:30 AM to 6:00 PM Eastern Time Monday through Friday Renew your Club Accounting Maintenance or myiclub.com subscription: Call ICLUBcentral at 1-877-33-ICLUB 1-877-33- Visit www.iclub.com/store/ 21 10 </li> <li> 11. Closing the Investment Club Books By Doug Gerlach, ICLUBcentral Inc,For More Information ICLUBcentral Inc. www.iclub.com Write me: gerlach@iclub.com 23 11 </li> </ul>