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Issues with REIT's
Hi All,

Some of you ask why we discourage you from holding REIT's in your club. It's because we encourage you to keep your club record keeping as simple as possible.

Here is a good example of the type of complications you're up against if you hold a REIT.

Some of you hold Annaly (NLY) which is a REIT. If you go to their website now, you will find a link to something labeled:

2013 Dividend Tax Information

If you look at this, you will see that each distribution received during the year needs to be broken into two and sometimes 3 parts. Most of each one is considered ordinary dividends (taxed at ordinary income tax rates), only a small part of one of them is classified as Qualified dividends (taxed at more attractive long term capital gains rates) and a small part is considered Capital gains.

This means some editing on your part to make 3 entries for each single dividend that was entered during the year. Otherwise your tax returns will not report your club income correctly. It's not hard, but you need to do it and you need to do it correctly. And it is work that comes with a REIT that doesn't come with most regular corporate common stock investments.

You also need to make sure that you have identified this investment in bivio as one that pays "Not 100% Qualified" dividends. You can adjust this using the "Info" link you'll find next to its name on the Accounting>Investments page.

You won't find this breakdown earlier in the year and you need to wait until its available to be able to make the adjustments.

Just another heads up for those who have invested in or are considering investing in REIT's.


Laurie Frederiksen
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www.bivio.com

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SFLIC has HCP in our portfolio and I agree with the accounting time it takes.  This was owned by our club long before I got involved, but looking at the numerous entries every month and annually confirms your report.  It can be handled but it does take more time and there is more room for error.  Bob Anderson, Treasurer, SFLIC
On Jan 28, 2014, at 10:17 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:

Hi All,

Some of you ask why we discourage you from holding REIT's in your club.  It's because we encourage you to keep your club record keeping as simple as possible.

Here is a good example of the type of complications you're up against if you hold a REIT.

Some of you hold Annaly (NLY) which is a REIT.  If you go to their website now, you will find a link to something labeled:

2013 Dividend Tax Information

If you look at this, you will see that each distribution received during the year needs to be broken into two and sometimes 3 parts. Most of each one is considered ordinary dividends (taxed at ordinary income tax rates),  only a small part of one of them is classified as Qualified dividends (taxed at more attractive long term capital gains rates) and a small part is considered Capital gains.

This means some editing on your part to make 3 entries for each single dividend that was entered during the year.   Otherwise your tax returns will not report your club income correctly.  It's not hard, but you need to do it and you need to do it correctly.  And it is work that comes with a REIT that doesn't come with most regular corporate common stock investments.

You also need to make sure that you have identified this investment in bivio as one that pays "Not 100% Qualified" dividends.  You can adjust this using the "Info" link you'll find next to its name on the Accounting>Investments page.

You won't find this breakdown earlier in the year and you need to wait until its available to be able to make the adjustments.

Just another heads up for those who have invested in or are considering investing in REIT's.


Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend!  www.facebook.com/bivio
Follow us on twitter!  www.twitter.com/bivio
Follow Us on Google+


Click here to
Subscribe to the Club Cafe email list.  Click here to  Unsubscribe