Communications
club_cafe
HelpRegister
Partial Versus Full Stock Withdrawals

I'll continue the discussion of stock withdrawals here.

As Jack mentioned, transferring stock in partial withdrawals is not recommended. The tax rules are different than they are for transfers in full withdrawals where such transfers can provide positive tax benefits.

However, all stock transfers are complex and have many moving parts. They are not something to rush into and should never be done without first filling in the withdrawal form in bivio.

That will produce a report which will show how much cash a member is also owed and the exact lots and cost basis of the lots the member will receive. That information is what should be used to tell the broker exactly what to transfer.

Do not use other information and then try and fill out a withdrawal report.

These links take you to oldie but goodie posts which discuss stock withdrawals and their impact both on the withdrawing member and on the club for the two different types of withdrawals:

Partial Withdrawals

Full Withdrawals

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

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

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

The explanation of the various partial withdrawal options
and their effects linked in this message from Laurie is very
clear and helpful.

One situation that appears not to be addressed there or
elsewhere is if the partially withdrawing member uses a
brokerage's donor advised charitable account. Could the
member take a partial withdrawal in appreciated stock
(observing all of the caveats about his/her cost basis in
the club), and without selling it first, simply transfer the
stock to his/her brokerage's donor advised charitable
account like any other stock he/she might own? Under this
scenario, would the member's cost basis in the withdrawn
stock then become irrelevant for income tax purposes?
Yes, this could be advantageous. Once the shares are transferred to the partially withdrawing member, they are treated the same as any other appreciated stock that member might own in her personal account. Contribution of the shares to a donor advised fund would enjoy the usual benefits. Of course, with the passage of TCJA, donor advised funds have lost some of their appeal because it's harder to get the double benefit (capital gains avoidance AND charitable deduction). That is, the combination of SALT cap and higher standard deduction mean that fewer taxpayers see a tax benefit from charitable contributions.

Ira Smilovitz, EA

On Sun, Nov 17, 2019 at 6:31 PM Linda TerHaar via bivio.com <user*19612700001@bivio.com> wrote:
The explanation of the various partial withdrawal options
and their effects linked in this message from Laurie is very
clear and helpful.

One situation that appears not to be addressed there or
elsewhere is if the partially withdrawing member uses a
brokerage's donor advised charitable account. Could the
member take a partial withdrawal in appreciated stock
(observing all of the caveats about his/her cost basis in
the club), and without selling it first, simply transfer the
stock to his/her brokerage's donor advised charitable
account like any other stock he/she might own? Under this
scenario, would the member's cost basis in the withdrawn
stock then become irrelevant for income tax purposes?