we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
David Karbulka on
Seems to be the only way to prevent the tax implications of a partial withdrawal.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
Marjean Daniels on
Bivio did a webinar during the pandemic on how to journal stocks rather than cash out when disbursing funds to members. We have done this in the past and it allows members to decide which assets they want to transfer. During the webinar, the presenter said that if a stock is a loss, then cash it out. If it is a gain, then journal it to members because they, then, control when the gain is realized. That allows the remaining club members to not incur a tax liability until they receive assets themselves. Unfortunately, when Ameritrade merged with Schwab, we assumed that we could journal like we did with Ameritrade but found out that Schwab won't allow us to do that so, consequently, we are in the process of moving our account over to Fidelity.
On Thursday, August 21, 2025 at 02:11:36 PM MDT, David Karbulka via bivio.com <user*26468500001@bivio.com> wrote:
Seems to be the only way to prevent the tax implications of a partial withdrawal.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
Linda Glein on
I'm in the middle of making estimates on a departing member who has a value of about $65,000.
If we sell our biggest gainers, we'll have a Realized Gain of $45,000.
I'll use our partner with the largest % holding as the worst case scenario.
He has 15% so he would get a Realized Gain of $6,750.
At a long-term capital gains tax of 15%, that's $1,012 in additional tax.
Of course we won't be selling our biggest gainers, we'll probably sell those with losses or modest gain. But even if we went with middle of the road for a Realized Gain of $20,000, at 15% * 15%, that's $450 estimated tax..
Is my logic sound? (Except for personal circumstances by which a person might pay 20%)
Club's
Realized Gain
(Loss)
Partner with
15% share,
$ of RG(L)
Tax at 15%
$ 65,000
$ 9,750
$ 1,462
45,000
6,750
1,012
30,000
4,500
675
20,000
3,000
450
10,000
1,500
225
So far, we've decided to sell rather than mess with opening accounts and transferring stocks.
We understand the benefits, but also recognize the hassle of a member having to open an account.
Some day, when we have fewer members with larger shares and our stocks have even greater gains, that might be the preferred option.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
Rebo Reeves on
We have had members take partial withdrawals, members pass away and others simply withdraw. In every case, we have the member or trustee or heir open an account (a trust account if the member is dead) and we transfer stocks to them that have gain that will be equal to the withdrawing member's total gain. The entire club should not have to accept the gain of the withdrawing member. This is a little more complicated,but much fairer to the other members of the club.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
Mary Bellaver on
I disagree that a member who makes a withdrawal of partial units was using the club as a savings account. The large amounts of the withdrawals tells me they were investing for a long time with the club, and they were realizing some of their investment for personal projects- the reason we all invest.
I'm in the middle of making estimates on a departing member who has a value of about $65,000.
If we sell our biggest gainers, we'll have a Realized Gain of $45,000.
I'll use our partner with the largest % holding as the worst case scenario.
He has 15% so he would get a Realized Gain of $6,750.
At a long-term capital gains tax of 15%, that's $1,012 in additional tax.
Of course we won't be selling our biggest gainers, we'll probably sell those with losses or modest gain. But even if we went with middle of the road for a Realized Gain of $20,000, at 15% * 15%, that's $450 estimated tax..
Is my logic sound? (Except for personal circumstances by which a person might pay 20%)
Club's
Realized Gain
(Loss)
Partner with
15% share,
$ of RG(L)
Tax at 15%
$ 65,000
$ 9,750
$ 1,462
45,000
6,750
1,012
30,000
4,500
675
20,000
3,000
450
10,000
1,500
225
So far, we've decided to sell rather than mess with opening accounts and transferring stocks.
We understand the benefits, but also recognize the hassle of a member having to open an account.
Some day, when we have fewer members with larger shares and our stocks have even greater gains, that might be the preferred option.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
Carole Jansen on
Not only can a cash withdrawal trigger a tax event for another member that puts them into a higher tax bracket, the additional income can affect what they will pay for Medicare in future years (IRMAA). Found this second part out the hard way and it cost me, the only one in the club on Medicare at the time, an extra $1200 for a future year. Our partnership agreement allowed members to vote on cash vs. stock for a departing member, or for a partial withdrawal. Stock transfers are not that difficult with Bivio's software features.
We have had members take partial withdrawals, members pass away and others simply withdraw. In every case, we have the member or trustee or heir open an account (a trust account if the member is dead) and we transfer stocks to them that have gain that will be equal to the withdrawing member's total gain. The entire club should not have to accept the gain of the withdrawing member. This is a little more complicated,but much fairer to the other members of the club.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
Richard Evans on
Those that did the partial withdrawals did not stocks they wanted cash
Sent from my iPhone
On Aug 21, 2025, at 5:28 PM, Carole Jansen via bivio.com <user*8441200001@bivio.com> wrote:
Not only can a cash withdrawal trigger a tax event for another member that puts them into a higher tax bracket, the additional income can affect what they will pay for Medicare in future years (IRMAA). Found this second part out the hard way and it cost me, the only one in the club on Medicare at the time, an extra $1200 for a future year. Our partnership agreement allowed members to vote on cash vs. stock for a departing member, or for a partial withdrawal. Stock transfers are not that difficult with Bivio's software features.
We have had members take partial withdrawals, members pass away and others simply withdraw. In every case, we have the member or trustee or heir open an account (a trust account if the member is dead) and we transfer stocks to them that have gain that will be equal to the withdrawing member's total gain. The entire club should not have to accept the gain of the withdrawing member. This is a little more complicated,but much fairer to the other members of the club.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
Carole Jansen on
They shouldn't be allowed to trigger tax events for other members by requiring cash. What does your partnership agreement say about who gets to decide how they are paid? They can get stock and sell it when it's theirs.
Not only can a cash withdrawal trigger a tax event for another member that puts them into a higher tax bracket, the additional income can affect what they will pay for Medicare in future years (IRMAA). Found this second part out the hard way and it cost me, the only one in the club on Medicare at the time, an extra $1200 for a future year. Our partnership agreement allowed members to vote on cash vs. stock for a departing member, or for a partial withdrawal. Stock transfers are not that difficult with Bivio's software features.
We have had members take partial withdrawals, members pass away and others simply withdraw. In every case, we have the member or trustee or heir open an account (a trust account if the member is dead) and we transfer stocks to them that have gain that will be equal to the withdrawing member's total gain. The entire club should not have to accept the gain of the withdrawing member. This is a little more complicated,but much fairer to the other members of the club.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
David Karbulka on
On a partial withdrawal, doesn't matter if you transfer stock or cash, it will trigger a gain for the club.
They shouldn't be allowed to trigger tax events for other members by requiring cash. What does your partnership agreement say about who gets to decide how they are paid? They can get stock and sell it when it's theirs.
Not only can a cash withdrawal trigger a tax event for another member that puts them into a higher tax bracket, the additional income can affect what they will pay for Medicare in future years (IRMAA). Found this second part out the hard way and it cost me, the only one in the club on Medicare at the time, an extra $1200 for a future year. Our partnership agreement allowed members to vote on cash vs. stock for a departing member, or for a partial withdrawal. Stock transfers are not that difficult with Bivio's software features.
We have had members take partial withdrawals, members pass away and others simply withdraw. In every case, we have the member or trustee or heir open an account (a trust account if the member is dead) and we transfer stocks to them that have gain that will be equal to the withdrawing member's total gain. The entire club should not have to accept the gain of the withdrawing member. This is a little more complicated,but much fairer to the other members of the club.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
Carole Jansen on
If it's a partnership, the club doesn't have a gain, it's the members that realize gains. Also, I do not believe that is true, there is a difference between transferring stock or selling stock and paying cash, otherwise, why are we having this discussion?
They shouldn't be allowed to trigger tax events for other members by requiring cash. What does your partnership agreement say about who gets to decide how they are paid? They can get stock and sell it when it's theirs.
Not only can a cash withdrawal trigger a tax event for another member that puts them into a higher tax bracket, the additional income can affect what they will pay for Medicare in future years (IRMAA). Found this second part out the hard way and it cost me, the only one in the club on Medicare at the time, an extra $1200 for a future year. Our partnership agreement allowed members to vote on cash vs. stock for a departing member, or for a partial withdrawal. Stock transfers are not that difficult with Bivio's software features.
We have had members take partial withdrawals, members pass away and others simply withdraw. In every case, we have the member or trustee or heir open an account (a trust account if the member is dead) and we transfer stocks to them that have gain that will be equal to the withdrawing member's total gain. The entire club should not have to accept the gain of the withdrawing member. This is a little more complicated,but much fairer to the other members of the club.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
Dan Cohn on
Being an old men's investment club and have to do this more often than we would like; we have decided to transfer their percentage ownership of each of our holdings so that get the capital gains and not us. We also gave them the date and price of the purchase to determine if short or long term gains.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
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Dan Cohn 404 862 5640
David Karbulka on
There is no discussion on a partial withdrawal. Transferring stock or selling stock and transferring cash ends up having the same result.
Only on a full withdrawal does the IRS grant the non-withdrawing members the the ability to defer gains
If it's a partnership, the club doesn't have a gain, it's the members that realize gains. Also, I do not believe that is true, there is a difference between transferring stock or selling stock and paying cash, otherwise, why are we having this discussion?
They shouldn't be allowed to trigger tax events for other members by requiring cash. What does your partnership agreement say about who gets to decide how they are paid? They can get stock and sell it when it's theirs.
Not only can a cash withdrawal trigger a tax event for another member that puts them into a higher tax bracket, the additional income can affect what they will pay for Medicare in future years (IRMAA). Found this second part out the hard way and it cost me, the only one in the club on Medicare at the time, an extra $1200 for a future year. Our partnership agreement allowed members to vote on cash vs. stock for a departing member, or for a partial withdrawal. Stock transfers are not that difficult with Bivio's software features.
We have had members take partial withdrawals, members pass away and others simply withdraw. In every case, we have the member or trustee or heir open an account (a trust account if the member is dead) and we transfer stocks to them that have gain that will be equal to the withdrawing member's total gain. The entire club should not have to accept the gain of the withdrawing member. This is a little more complicated,but much fairer to the other members of the club.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?
There is no discussion on a partial withdrawal. Transferring stock or selling stock and transferring cash ends up having the same result.
Only on a full withdrawal does the IRS grant the non-withdrawing members the the ability to defer gains
This is wrong. The difference between a partial and full withdrawal is that with a full withdrawal, the withdrawing member's adjusted basis in the shares received equals that member's tax basis in the club less any cash received. There is no difference in the effect on the other members of the club.
In a partial withdrawal, the withdrawing member assumes the club's cost basis in the shares received. Assuming the withdrawing member will sell the shares immediately, the member's capital gain from selling the shares could be more or less than the member's share of the capital gain had the club sold the shares and transferred cash. This current year impact on capital gains will be offset when this member makes a final full withdrawal. The total gain over the member's tenure in the club is invariant, only the timing of when it is recognized changes.
The effect of a partial withdrawal on the remaining members (that is, other than the member taking the partial withdrawal) is identical to the effect of a full withdrawal. The amount of their portions of the unrealized capital gains is locked into their current value and the capital gain will be recognized when they leave the club.
Looking at this from a different viewpoint. The choice of whether to use cash on hand, stock, or sell stock to raise cash has an impact on the current year capital gains for both the withdrawing member and the remaining members. However, once the decision of how to fund is made, the effect on the remaining members of the club is fixed and the same, regardless of whether the withdrawal is a full or partial withdrawal. For the withdrawing member, the timing of capital gains recognition can be accelerated or delayed, depending on the choices made by the club.
Ira Smilovitz
ira smilovitz on
Being an old men's investment club and have to do this more often than we would like; we have decided to transfer their percentage ownership of each of our holdings so that get the capital gains and not us. We also gave them the date and price of the purchase to determine if short or long term gains.
It's not clear if you are referring to a partial or full withdrawal. If a full withdrawal, the purchase price is irrelevant; their cost basis in the shares is shown in the withdrawal report. You have to make adjustments to the club cost basis in accordance with IRC §732. bivio software does this automatically.
Being an old men's investment club and have to do this more often than we would like; we have decided to transfer their percentage ownership of each of our holdings so that get the capital gains and not us. We also gave them the date and price of the purchase to determine if short or long term gains.
we had two members who have taken partial withdrawals. one $10,000., 0ne $20,000.we had to sell stock to pay them. a big capital gains for all our members. is there a softer way to handle their request, so that the entire members do not have to pay? the partial withdrawing 2 members were using the club as a savings account, and did great, now they have the money and the rest, as well as they, have capital gains to pay. are there any new rules that are out there? these amounts will put some members into a higher tax bracket. should we change our rules and not allow partial withdrawals?