Bivio entries

John H Ellison on

We are a club of 20 members and have a NAV of $185,000. Our
members decided we wanted to use some of the funds to pay
for a dinner for the members and their guests. We are
talking
about a $750.00 expenditure to allow us to share in a social
event, part of our mission
statement. The question: is there any way to enter the
transaction in bivio excluding the three
members who are unable to attend?

ira smilovitz on

Starting from the top... the cost of the dinner is a non-deductible expense if paid from club funds, regardless of what your mission statement states. If you enter it as a non-deductible club expense, your only choices are to enter it "normally", in which case each member's value in the club will be reduced by his ownership percentage times the total expense, or "per partnership exception", in which case each member will have his value reduced by 1/20 times the total expense, since you have 20 members. There is no simple way to allocate an expense to only certain members of the club.

There is a complicated way to accomplish what you want. Once you determine how much of the cost to allocate to each attending member, enter a partial withdrawal for that amount. Partial withdrawals reduce both the current value and tax basis by the same amount, the same effect as a non-deductible expense. What you are actually doing is having each of the attending members remove some money from the club and then having them use their personal funds (now that the money has been withdrawn from the club) to pay for the dinner. Note that if you do it this way, the attending members' K-1s will show a distribution in box 19A and not a non-deductible expense in box 18C.

Ira Smilovitz

On Sun, Sep 14, 2014 at 4:47 PM, John H Ellison <ellisonjack8@gmail.com> wrote:

We are a club of 20 members and have a NAV of $185,000. Our
members decided we wanted to use some of the funds to pay
for a dinner for the members and their guests. We are
talking
about a $750.00 expenditure to allow us to share in a social
event, part of our mission
statement. The question: is there any way to enter the
transaction in bivio excluding the three
members who are unable to attend?

Mark Eckman on

John,

Ira has given you the best possible response. But as you review the steps and see the complexity, do you really want to put your treasurer through that process on a regular basis? Since the cost comes out of members pockets any way you look at it, the amount of work does not seem warranted. Just have each member pay the bill.

Mark Eckman

On Sun, Sep 14, 2014 at 6:47 PM, ira smilovitz <ira.smilovitz@gmail.com> wrote:

Starting from the top... the cost of the dinner is a non-deductible expense if paid from club funds, regardless of what your mission statement states. If you enter it as a non-deductible club expense, your only choices are to enter it "normally", in which case each member's value in the club will be reduced by his ownership percentage times the total expense, or "per partnership exception", in which case each member will have his value reduced by 1/20 times the total expense, since you have 20 members. There is no simple way to allocate an expense to only certain members of the club.

There is a complicated way to accomplish what you want. Once you determine how much of the cost to allocate to each attending member, enter a partial withdrawal for that amount. Partial withdrawals reduce both the current value and tax basis by the same amount, the same effect as a non-deductible expense. What you are actually doing is having each of the attending members remove some money from the club and then having them use their personal funds (now that the money has been withdrawn from the club) to pay for the dinner. Note that if you do it this way, the attending members' K-1s will show a distribution in box 19A and not a non-deductible expense in box 18C.

Ira Smilovitz

On Sun, Sep 14, 2014 at 4:47 PM, John H Ellison <ellisonjack8@gmail.com> wrote:
We are a club of 20 members and have a NAV of $185,000. Our
members decided we wanted to use some of the funds to pay
for a dinner for the members and their guests. We are
talking
about a $750.00 expenditure to allow us to share in a social
event, part of our mission
statement. The question: is there any way to enter the
transaction in bivio excluding the three
members who are unable to attend?

Laurie Frederiksen on

Mark, Ira and Linda are all correct that this type of transaction causes extra complications for the treasurer and even potential tax consequences for the members withdrawing money to pay for the expense. It is not a club expense, it is an individual expense. As they have said, it is highly recommended that you not pay individual expenses through club accounts.

If you do use the method Ira described of entering partial withdrawals to cover the expense, you should enter them as having been paid from a suspense account. Then, when you write the club check to reimburse yourself for the expense, enter it as a Transfer From your brokerage or bank account To the suspense account to zero it out.

Note that there will be no expense entries made.

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

John Ellison on

Laurie,

I am having a difficult time understanding why a check cannot be written from the cash in the club's treasury and a credit applied to each members account. I know it is not deductible for IRS purposes but why can't a transaction be easily entered through Bivio as say an unidentified expense to the club.

Jack

On Sep 15, 2014, at 5:48 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:

Mark, Ira and Linda are all correct that this type of transaction causes extra complications for the treasurer and even potential tax consequences for the members withdrawing money to pay for the expense. It is not a club expense, it is an individual expense. As they have said, it is highly recommended that you not pay individual expenses through club accounts.

If you do use the method Ira described of entering partial withdrawals to cover the expense, you should enter them as having been paid from a suspense account. Then, when you write the club check to reimburse yourself for the expense, enter it as a Transfer From your brokerage or bank account To the suspense account to zero it out.

Note that there will be no expense entries made.

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

Laurie Frederiksen on

Hi Jack,

You can make entries to account for this, we have described how you need to make them. You can write a check from the clubs account; you enter it as a transfer from that account to a suspense account. You deduct the amount from each members account affected by entering a partial withdrawal for them, paid through that suspense account.

Your club partnership accounting is designed to account for the partnership. Expenses that apply to some members but not others are not partnership expenses. They are individual expenses. That is why the only way to record using club money to pay for them is the way we have described.

On Mon, Sep 15, 2014 at 3:00 PM, John Ellison <ellisonjack8@gmail.com> wrote:

Laurie,
I am having a difficult time understanding why a check cannot be written from the cash in the club's treasury and a credit applied to each members account. I know it is not deductible for IRS purposes but why can't a transaction be easily entered through Bivio as say an unidentified expense to the club.

Jack

On Sep 15, 2014, at 5:48 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:

Mark, Ira and Linda are all correct that this type of transaction causes extra complications for the treasurer and even potential tax consequences for the members withdrawing money to pay for the expense. It is not a club expense, it is an individual expense. As they have said, it is highly recommended that you not pay individual expenses through club accounts.

If you do use the method Ira described of entering partial withdrawals to cover the expense, you should enter them as having been paid from a suspense account. Then, when you write the club check to reimburse yourself for the expense, enter it as a Transfer From your brokerage or bank account To the suspense account to zero it out.

Note that there will be no expense entries made.

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

John Ellison on

Laurie,

Hate to dense on this, but if am understanding your latest post, if we don't try to treat each member differently but treat each member the same we would not have to go through the exercise of a withdrawal.

Jack

On Sep 15, 2014, at 12:18 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:

Hi Jack,

You can make entries to account for this, we have described how you need to make them. You can write a check from the clubs account; you enter it as a transfer from that account to a suspense account. You deduct the amount from each members account affected by entering a partial withdrawal for them, paid through that suspense account.

Your club partnership accounting is designed to account for the partnership. Expenses that apply to some members but not others are not partnership expenses. They are individual expenses. That is why the only way to record using club money to pay for them is the way we have described.

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

On Mon, Sep 15, 2014 at 3:00 PM, John Ellison <ellisonjack8@gmail.com> wrote:
Laurie,
I am having a difficult time understanding why a check cannot be written from the cash in the club's treasury and a credit applied to each members account. I know it is not deductible for IRS purposes but why can't a transaction be easily entered through Bivio as say an unidentified expense to the club.

Jack

On Sep 15, 2014, at 5:48 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:

Mark, Ira and Linda are all correct that this type of transaction causes extra complications for the treasurer and even potential tax consequences for the members withdrawing money to pay for the expense. It is not a club expense, it is an individual expense. As they have said, it is highly recommended that you not pay individual expenses through club accounts.

If you do use the method Ira described of entering partial withdrawals to cover the expense, you should enter them as having been paid from a suspense account. Then, when you write the club check to reimburse yourself for the expense, enter it as a Transfer From your brokerage or bank account To the suspense account to zero it out.

Note that there will be no expense entries made.

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

Laurie Frederiksen on

No problem Jack. You are correct. If you are going to allocate some of the total cost to every member in the club, you don't have to go through the steps I listed. This would mean you would allocate it either in an equal dollar amount to each person in the club or it would be divided up based on their ownership share.

Then, you could just enter it as a non-deductible expense.

That is not what you said you wanted to do. You indicated that you wanted the expense charged to certain members but not to others.

Mark Eckman on

Jack - Regardless of "what you can do" I would suggest the question is "what you should do." The purpose of the club is not social, (yes we all enjoy some socialization with club members, but I get that at work, too,) and I doubt you have a provision in the partnership agreement for social activities. When auditing your club, I would ask what was the business purpose of the event to ensure it was recorded properly as non-deductible and to prove that club funds were not improperly used. Maybe I'm a cranky old CPA but why would you want the payment for any activities not directly related to investing to appear in the club books?

Mark Eckman

John Ellison on

Laurie,

Sorry for the confusion. I was interested in if a separate allocation could be posted. You have answered my question. Thanks for the assistance in this matter.

Jack

On Sep 15, 2014, at 12:44 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:

No problem Jack. You are correct. If you are going to allocate some of the total cost to every member in the club, you don't have to go through the steps I listed. This would mean you would allocate it either in an equal dollar amount to each person in the club or it would be divided up based on their ownership share.

Then, you could just enter it as a non-deductible expense.

That is not what you said you wanted to do. You indicated that you wanted the expense charged to certain members but not to others.

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

John Ellison on

Mark,
Appreciate your comments, but when the average age of the membership in your club is 80+ socialization is a huge part of your club purpose. We have unanimously agreed to return some of the club's treasury to the members by providing social events at no current outlay to the members in the form of an additional check. May sound strange but it will work for us.

Jack

> On Sep 15, 2014, at 12:59 PM, Mark Eckman <mark2459@gmail.com> wrote:
>
> Jack - Regardless of "what you can do" I would suggest the question is "what you should do." The purpose of the club is not social, (yes we all enjoy some socialization with club members, but I get that at work, too,) and I doubt you have a provision in the partnership agreement for social activities. When auditing your club, I would ask what was the business purpose of the event to ensure it was recorded properly as non-deductible and to prove that club funds were not improperly used. Maybe I'm a cranky old CPA but why would you want the payment for any activities not directly related to investing to appear in the club books?
>
> Mark Eckman

Mail