I'm our club's treasurer. Don't do it. We've had an investment like that since 2008 and I have no shortage of hassle to deal with the small amounts related to it. You often won't get your K-1 until March which will delay you getting your K-1's out. It means you have to do a lot of the tax returns manually.

Barbara

> On Jun 8, 2020, at 2:09 PM, Shane Thompson via bivio.com <user*25346100001@bivio.com> wrote:
>
> Hello,
>
> Historically our investment club has only invested in assets
> that are housed in accounts than can be linked to Bivio.
>
> We are considering a SEC registered investment where our
> club would be provided with a K1 which relates to that
> particular security (and can not be linked to Bivio).
>
> We don't want to file an additional LLC to hold the second
> investment.
>
> Is there way to manually record the transaction in Bivio
> (and hold it at cost) and roll the securitie's K1 into the
> overall Bivio club K1?
>
> Thanks in advance.

I have been preparing taxes for 35 years. Reporting partnership income and deductions from a K-1 can be simple or grueling, depending on the type of partnership. MLP's, oil & gas, investment partnerships can all be quite complicated, as well as many others. Reporting the items in Bivio can be challenging because they do not have categories for all the items that need to be entered. Many items affect a partners capital account, and Bivio would not be able to reflect that properly. Bivio is an excellent program for normal types of investments. It cannot handle certain state adjustments. I am not sure if it handles investments that are taxed at 25 or 28%. The program has many limitations. Since K-1 reporting doesn't happen until the following year, but the partnership may throw off distributions during the year, you have no way of knowing how to report those distributions in Bivio till the following year. If people join or withdraw from the club, you will not have a proper NAV to use for contributions and withdrawals.

If you have an outside accountant prepare a tax return, it can be very expensive if you have many members. Unless everyone contributes the same amount every month on the same day, and has the same amount invested, preparing a tax return can be difficult. As treasurer for our club, I prepared the tax return using a professional software program. I had to start with the return Bivio prepared, and make some alterations for certain items. Our club is large so it took probably 50 - 100 hours to prepare. If I had to start entering K-1 items in Bivio and then making adjustments, it would have been a nightmare.

If you do not prepare taxes on a regular basis, you will not be able to handle the adjustments needed when dealing with a K-1. REITS can also cause problems, but they can be handled by making adjustments once the income is properly reported. Again, this means waiting until late March to get the information, knowing how to make the entries, and if you had a member withdraw, it can change the amount they were due.

None of these investments should be bought by an investment club.

Linda Wiltse

I'm not sure I did it the correct way so this is not meant to be guidance for you. Bivio recommends hiring an accountant.