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Dispersing stocks to members
Hello,  My club is comprised of retired teachers who have been together for 20 years.  Although not at the point of disbanding completely, we are considering dispersing stocks one at a time among all.  I guess that would be considered a partial withdrawal for each member.  

We now have 11 members but have stocks in 32 companies.   We thought that we would disperse one stock every 3 or 4 months a  year. 

  In the next couple of years we may disband and so we are preparing.  

Do you have any advice on whether this is a good idea and any pitfalls of which we should be aware.  

I have been reading about the tax implications but in each case it would be just a transfer of stock which would not involve any premature sales but some cash if there are fractional shares involved.  Thanks,  Liz
While I might not be an expert, I would think i would be very complicated to disburse shares of the stocks in your portfolio. I am not even sure how expensive it would be. I think it would be much simpler to wait until the club disbands, liquidate the portfolio and then do the payout. If the club is going to disband and you think the tax bill would be too great to liquidate the portfolio all at once, then liquidate over time. But if you are thinking that the partnership dissolution will occur in a couple of years, then I would get started right away.

Peter Dunkelberger

On Mon, Nov 13, 2017 at 2:27 PM, Liz Schambach via bivio.com <user*16341100001@bivio.com> wrote:
Hello, My club is comprised of retired teachers who have been together for 20 years. Although not at the point of disbanding completely, we are considering dispersing stocks one at a time among all. I guess that would be considered a partial withdrawal for each member.

We now have 11 members but have stocks in 32 companies. We thought that we would disperse one stock every 3 or 4 months a year.

In the next couple of years we may disband and so we are preparing.

Do you have any advice on whether this is a good idea and any pitfalls of which we should be aware.

I have been reading about the tax implications but in each case it would be just a transfer of stock which would not involve any premature sales but some cash if there are fractional shares involved. Thanks, Liz

What is it you are trying to accomplish by doing this?

Laurie Frederiksen
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I dispersed stocks to a departing member whose account was with a different broker. There was no charge to our club from TDAmeritrade and the member received J&J at $115 while club bought it at $59 saving a capital gain of $56 a share to club

However in reading Bivio help I believe the remaining members when the club disbands will be accessed the capital gains.
We have thought of dispersing AAPL with a cost of $14 to present members but also want to know how this would be taxed.
Our club is 20 yrs old and we have some huge paper gains

Cindy Gerke
Cole's River Investment Group.

On Nov 13, 2017 2:28 PM, "Liz Schambach via bivio.com" <user*16341100001@bivio.com> wrote:
Hello, My club is comprised of retired teachers who have been together for 20 years. Although not at the point of disbanding completely, we are considering dispersing stocks one at a time among all. I guess that would be considered a partial withdrawal for each member.

We now have 11 members but have stocks in 32 companies. We thought that we would disperse one stock every 3 or 4 months a year.

In the next couple of years we may disband and so we are preparing.

Do you have any advice on whether this is a good idea and any pitfalls of which we should be aware.

I have been reading about the tax implications but in each case it would be just a transfer of stock which would not involve any premature sales but some cash if there are fractional shares involved. Thanks, Liz

Just to clarify, you don't avoid any capital gains when you distribute stock shares to members.

In fact, if a member is not leaving the club and you give them shares, they may have to pay taxes on those gains earlier than they would have if you had left them in the club and sold them there.

Again, as we say over and over, it is usually not a good thing to distribute stocks to members if they are not leaving the club completely.

We have a lot of clubs with the problem of "big gains" this year. That is a nice problem to have. You don't get to avoid the tax man forever unless you die. If you've held stocks long term, the capital gains tax rate is very low.

Another way to prune down some of these gains gradually is to sell stocks in which you have a loss at the same time you sell some of the ones that have a gain. The losses will offset the gains.

As long as you haven't purchased or don't repurchase the shares you sell at a loss within 30 days of the sale, you can buy them back after waiting if you still want to own them for some reason.

Laurie Frederiksen
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www.bivio.com

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