I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
I'm very with you on this one Laurie. I've always thought these investment vehicles made sense in retirement accounts where there are no tax issues, but never in a taxable account.
Stu Weissman
From: Laurie Frederiksen <laurie@bivio.biz> To: The Club Cafe <club_cafe@bivio.com> Sent: Monday, March 31, 2014 1:37 PM Subject: [club_cafe] Stay Away from MLP's In Your Investment Clubs
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
Unfortunately, even in tax deferred accounts, you can't count on not having to handle tax issues from investments in MLP's. The issues are explained here:
On Mon, Mar 31, 2014 at 1:41 PM, Stuart Weissman <stuw6@yahoo.com> wrote:
I'm very with you on this one Laurie. I've always thought these investment vehicles made sense in retirement accounts where there are no tax issues, but never in a taxable account.
Stu Weissman
From: Laurie Frederiksen <laurie@bivio.biz> To: The Club Cafe <club_cafe@bivio.com> Sent: Monday, March 31, 2014 1:37 PM Subject: [club_cafe] Stay Away from MLP's In Your Investment Clubs
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
Wow. Thanks. I think I mixed up my REITs with my MLPs. I I very much appreciate the clarification and explanation. I hope the returns are really lofty to offset the confusion. These MLPs reek of financial alchemy to me.
From: Laurie Frederiksen <laurie@bivio.biz> To: The Club Cafe <club_cafe@bivio.com> Sent: Monday, March 31, 2014 2:48 PM Subject: Re: [club_cafe] Stay Away from MLP's In Your Investment Clubs
Dear Stu,
Unfortunately, even in tax deferred accounts, you can't count on not having to handle tax issues from investments in MLP's. The issues are explained here:
On Mon, Mar 31, 2014 at 1:41 PM, Stuart Weissman <stuw6@yahoo.com> wrote:
I'm very with you on this one Laurie. I've always thought these investment vehicles made sense in retirement accounts where there are no tax issues, but never in a taxable account.
Stu Weissman
From: Laurie Frederiksen <laurie@bivio.biz> To: The Club Cafe <club_cafe@bivio.com> Sent: Monday, March 31, 2014 1:37 PM Subject: [club_cafe] Stay Away from MLP's In Your Investment Clubs
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
I am pretty confused. I thought investing in an investment club is investing in a partnership.
Dave Rowekamp
Roundtable Investment Club
Winona, Minnesota
Sent from my iPhone
On Mar 31, 2014, at 11:41, Stuart Weissman <stuw6@yahoo.com> wrote:
I'm very with you on this one Laurie. I've always thought these investment vehicles made sense in retirement accounts where there are no tax issues, but never in a taxable account.
Stu Weissman
From: Laurie Frederiksen <laurie@bivio.biz> To: The Club Cafe <club_cafe@bivio.com> Sent: Monday, March 31, 2014 1:37 PM Subject: [club_cafe] Stay Away from MLP's In Your Investment Clubs
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
There is a big difference between investing in an investment partnership and investing in a Publicly Traded Partnership. The general rule is that if you are a partner in a partnership you are considered to be personally responsible for your share of the partnership's economic activity, wherever it occurs. Therefore, you must pay taxes to any jurisdiction that levies a tax on activity within its borders, regardless of where your tax home is. Investment club activities, to the extent that they only recognize income from investment in stocks, bonds and other intangible investments, are taxed to the resident state of each partner.
The bigger problem occurs when a partnership invests in another partnership. Then the "middle" partnership (the investment club) is disregarded, and it's as if each of the investment club members made a direct investment in the PTP. However, the PTP doesn't know that, doesn't allocate the various tax-relevant items to each of the investment club members, and there isn't an easy way for the club to adjust its cost basis in the PTP because some of the relevant elections are made by the individual partners, not the investment club entity.
Hope this helps explain the issue.
Ira Smilovitz
On Mon, Mar 31, 2014 at 3:13 PM, Dave & Betsy Rowekamp <rowefam@hbci.com> wrote:
I am pretty confused. I thought investing in an investment club is investing in a partnership.
Dave Rowekamp
Roundtable Investment Club
Winona, Minnesota
Sent from my iPhone
On Mar 31, 2014, at 11:41, Stuart Weissman <stuw6@yahoo.com> wrote:
I'm very with you on this one Laurie. I've always thought these investment vehicles made sense in retirement accounts where there are no tax issues, but never in a taxable account.
Stu Weissman
From: Laurie Frederiksen <laurie@bivio.biz> To: The Club Cafe <club_cafe@bivio.com> Sent: Monday, March 31, 2014 1:37 PM Subject: [club_cafe] Stay Away from MLP's In Your Investment Clubs
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
I'll play devil's advocate for just
a minute. While I agree that Publicly Traded Partnerships are not
reasonable for an investment club partnership and that
the focus of Better Investing is on the club, there are scenarios where Publicly
Traded Partnerships may provide the cash flow an individual investor wants and
is comfortable with the tax issues. Should the general public invest in these Publicly Traded Partnerships? No,
just a few souls.
When an organization sponsors an
event, that sponsorship rarely has the necessary caveats for the uninformed. Without
building bureaucracies that would turn sponsorship announcements into 30 pages
of caveats only read by the plaintiffs’ bar, this is what we get.Who wants more bureaucracy?
Mark Eckman
On Mon, Mar 31, 2014 at 12:37 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
Laurie, Thank you for noticing the program and out another admonition about MLPs. I clicked on your "Before You Invest" link and one of my (personal account) EFTs is there (VNQ). I did not consider that to be an MLP. I looked for my other one (ROOF), but the "More ETFs" link is broken. Thanks again.
Roy Chastain
"Benign neglect, bordering on sloth, remains the hallmark of our [my] investment process." --Warren Buffett
From: Stuart Weissman <stuw6@yahoo.com> To: "club_cafe@bivio.com" <club_cafe@bivio.com> Sent:
Monday, March 31, 2014 12:05 PM Subject: Re: [club_cafe] Stay Away from MLP's In Your Investment Clubs
Wow. Thanks. I think I mixed up my REITs with my MLPs. I I very much appreciate the clarification and explanation. I hope the returns are really lofty to offset the confusion. These MLPs reek of financial alchemy to me.
From: Laurie Frederiksen <laurie@bivio.biz> To: The Club Cafe <club_cafe@bivio.com> Sent: Monday, March 31, 2014 2:48 PM Subject: Re: [club_cafe] Stay Away from MLP's In Your Investment Clubs
Dear Stu,
Unfortunately, even in tax deferred accounts, you can't count on not having to handle tax issues from investments in MLP's. The issues are explained here:
On Mon, Mar 31, 2014 at 1:41 PM, Stuart Weissman<stuw6@yahoo.com> wrote:
I'm very with you on this one Laurie. I've always thought these investment vehicles made sense in retirement accounts where there are no tax issues, but never in a taxable account.
Stu Weissman
From: Laurie Frederiksen <laurie@bivio.biz> To: The Club Cafe <club_cafe@bivio.com> Sent: Monday, March 31, 2014 1:37 PM Subject: [club_cafe] Stay Away from MLP's In Your Investment Clubs
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
"Benign neglect, bordering on sloth, remains the hallmark of our [my] investment process." --Warren Buffett
From: Roy Chastain <e4roy@yahoo.com> To: "club_cafe@bivio.com" <club_cafe@bivio.com> Sent: Monday, March 31, 2014 4:17 PM Subject: Re: [club_cafe] Stay Away from MLP's In Your Investment Clubs
Laurie, Thank you for noticing the program and out another admonition about MLPs. I clicked on your "Before You Invest" link and one of my (personal account) EFTs is there (VNQ). I did not consider that to be an MLP. I looked for my other one (ROOF), but the "More ETFs" link is broken. Thanks again.
Roy
Chastain
"Benign neglect, bordering on sloth, remains the hallmark of our [my] investment process." --Warren Buffett
From: Stuart Weissman <stuw6@yahoo.com> To: "club_cafe@bivio.com" <club_cafe@bivio.com> Sent:
Monday, March 31, 2014 12:05 PM Subject: Re: [club_cafe] Stay Away from MLP's In Your Investment Clubs
Wow. Thanks. I think I mixed up my REITs with my MLPs. I I very much appreciate the clarification and explanation. I hope the returns are really lofty to offset the confusion. These MLPs reek of
financial alchemy to me.
From: Laurie Frederiksen <laurie@bivio.biz> To: The Club Cafe <club_cafe@bivio.com> Sent: Monday, March 31, 2014 2:48 PM Subject: Re: [club_cafe] Stay Away from MLP's In Your Investment Clubs
Dear Stu,
Unfortunately, even in tax deferred accounts, you can't count on not having to handle tax issues from investments in MLP's. The issues are explained here:
On Mon, Mar 31, 2014 at 1:41 PM, Stuart Weissman<stuw6@yahoo.com> wrote:
I'm very with you on this one Laurie. I've always thought these investment vehicles made sense in retirement accounts where there are no tax issues, but never in a taxable account.
Stu Weissman
From: Laurie Frederiksen <laurie@bivio.biz> To: The Club Cafe <club_cafe@bivio.com> Sent: Monday, March 31, 2014 1:37 PM Subject: [club_cafe] Stay Away from MLP's In Your Investment Clubs
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
Thank you for pointing out the broken link. It is fixed now.
VNQ is not an MLP. It is a REIT ETF and comes along with the same issues other REIT's have. As noted on their website:
"The Vanguard REIT Index Fund pays quarterly distributions consisting of
dividend income, return of capital, and capital gains. However, the tax
characteristics of these distributions cannot be determined until after
the end of the year since the REITs in which the fund invests do not
designate the composition (i.e., dividend income, return of capital, and
capital gains) of their payments until the new calendar year."
As many clubs this year can tell you, the reclassification of "dividends" once your 1099 is received creates a lot of work and hassle when it's time to prepare your investment club taxes.
But at least the entries can be made correctly.
Entries for MLP's cannot.
Laurie Frederiksen Invest with your friends! www.bivio.com
On Mon, Mar 31, 2014 at 12:37 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
The word Partners or LLC in the name is a good tipoff also.
You can usually find information on the Investor relations pages for the investment. Look for what type of distributions they pay. If there is "tax information" that shows they've been broken down into different components in the past, that's a tipoff.
If they mention K-1's you should run.
Laurie Frederiksen Invest with your friends! www.bivio.com
On Mon, Mar 31, 2014 at 12:37 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.
The word Partners or LLC in the name is a good tipoff also.
You can usually find information on the Investor relations pages for the investment. Look for what type of distributions they pay. If there is "tax information" that shows they've been broken down into different components in the past, that's a tipoff.
If they mention K-1's you should run.
Laurie Frederiksen Invest with your friends! www.bivio.com
On Mon, Mar 31, 2014 at 12:37 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
I'm sorry but I do not understand how an organization that is supposed to be supporting investment clubs and educating individual investors would be putting on a conference like this:
We have had club after club this year have tax and accounting issues because they have unknowingly invested in partnerships.
This seems to happen no matter what we do to get the word out to stay away from them in investment clubs.
They bring along very complicated accounting and tax reporting issues which will cost you the services of an outside tax professional to handle correctly for a club. Even in your personal investments, depending on the size of your investment, you may not earn enough from them to justify the extra tax preparation cost.
At a minimum, make sure you take the time to heed the warning "Consult Your Tax Advisor" prior to getting into issues because you have invested in one.