In your club, how are you managing members who are active (with funds), but not exactly participating in meetings, decisions, etc. We are a large club (50+ members) and want to understand what you follow. Just so that you know, our investment decisions are responsibility of an Investment committee (limited, voted members) so making decisions isn't an issue.
Thank you
Ash Aragam
Bob Mann on
HI Ash,
in my club, we allow them to continue participating. It's their choice whether to be more or less active but they have that option. Their monthly investments have no impact on the rest of us other than one more person to share any club expenses. If they also stop contributing money monthly, then we'll give them 6 months to restart before we vote them out (with notice) and perform a complete withdrawal.
regards,
Bob
Lunch Money Investment Club
> On 02/07/2026 7:14 PM EST Ashwini Aragam via bivio.com <user*42222700001@bivio.com> wrote:
>
>
> Hello All,
>
> In your club, how are you managing members who are active (with funds), but not exactly participating in meetings, decisions, etc. We are a large club (50+ members) and want to understand what you follow. Just so that you know, our investment decisions are responsibility of an Investment committee (limited, voted members) so making decisions isn't an issue.
>
> Thank you
> Ash Aragam
Dan Cohn on
Bob,
When a member leaves the club how do you do the withdrawal of their funds that are invested?
in my club, we allow them to continue participating. It's their choice whether to be more or less active but they have that option. Their monthly investments have no impact on the rest of us other than one more person to share any club expenses. If they also stop contributing money monthly, then we'll give them 6 months to restart before we vote them out (with notice) and perform a complete withdrawal.
regards,
Bob
Lunch Money Investment Club
> On 02/07/2026 7:14 PM EST Ashwini Aragam via bivio.com <user*42222700001@bivio.com> wrote:
>
>
> Hello All,
>
> In your club, how are you managing members who are active (with funds), but not exactly participating in meetings, decisions, etc. We are a large club (50+ members) and want to understand what you follow. Just so that you know, our investment decisions are responsibility of an Investment committee (limited, voted members) so making decisions isn't an issue.
>
> Thank you
> Ash Aragam
--
Dan Cohn 404 862 5640
Robert Shaw on
I couldn't find this on the BI website so i googled
"Does IRS require investment club members to participate"
The short answer is: YES
Bob Shaw
VP SE Michigan chapter
What do you mean when you require that all members actively participate in management and
investment decisions?
All members must participate in club investment decisions. Per IRS regulations, there are no passive
members who rely on others to make investment decisions. Members who infrequently attend meetings, do
not vote regarding decisions to buy or sell stock or generally rely on others to research and make club
investment decisions are not considered active participants. Nor are members with illnesses that
impair their ability to make investment decisions. Clubs with these types of members are not eligible to
participate in the Visit-A-Club program.
On Feb 7, 2026, at 7:14 PM, Ashwini Aragam via bivio.com <user*42222700001@bivio.com> wrote:
Hello All,
In your club, how are you managing members who are active (with funds), but not exactly participating in meetings, decisions, etc. We are a large club (50+ members) and want to understand what you follow. Just so that you know, our investment decisions are responsibility of an Investment committee (limited, voted members) so making decisions isn't an issue.
Thank you Ash Aragam
Ash Aragam on
That is evident, but what do you fit those who don't after signing the agreement of the question.
Ash Aragam
On Feb 7, 2026, at 8:19 PM, Robert Shaw via bivio.com <user*27509400001@bivio.com> wrote:
I couldn't find this on the BI website so i googled
"Does IRS require investment club members to participate"
The short answer is: YES
Bob Shaw
VP SE Michigan chapter
What do you mean when you require that all members actively participate in management and
investment decisions?
All members must participate in club investment decisions. Per IRS regulations, there are no passive
members who rely on others to make investment decisions. Members who infrequently attend meetings, do
not vote regarding decisions to buy or sell stock or generally rely on others to research and make club
investment decisions are not considered active participants. Nor are members with illnesses that
impair their ability to make investment decisions. Clubs with these types of members are not eligible to
participate in the Visit-A-Club program.
On Feb 7, 2026, at 7:14 PM, Ashwini Aragam via bivio.com <user*42222700001@bivio.com> wrote:
Hello All,
In your club, how are you managing members who are active (with funds), but not exactly participating in meetings, decisions, etc. We are a large club (50+ members) and want to understand what you follow. Just so that you know, our investment decisions are responsibility of an Investment committee (limited, voted members) so making decisions isn't an issue.
Thank you Ash Aragam
Robert Shaw on
If your bylaws are properly constructed you can ask them to properly participate or leave.
I think a proper motion / discussion / properly recorded in the minutes / and an affirmative vote by the membership
would be sufficient.
If you do run afoul of the IRS, and I do not know how likely that is, I expect it will effect the entire club membership.
I am not a lawyer.
But I think following the rules, even you don't know exactly why, is better than not following the rules and getting caught.
Bob
On Feb 7, 2026, at 8:23 PM, Ash Aragam via bivio.com <user*42222700001@bivio.com> wrote:
That is evident, but what do you fit those who don't after signing the agreement of the question.
Ash Aragam
On Feb 7, 2026, at 8:19 PM, Robert Shaw via bivio.com <user*27509400001@bivio.com> wrote:
I couldn't find this on the BI website so i googled
"Does IRS require investment club members to participate"
The short answer is: YES
Bob Shaw
VP SE Michigan chapter
What do you mean when you require that all members actively participate in management and
investment decisions?
All members must participate in club investment decisions. Per IRS regulations, there are no passive
members who rely on others to make investment decisions. Members who infrequently attend meetings, do
not vote regarding decisions to buy or sell stock or generally rely on others to research and make club
investment decisions are not considered active participants. Nor are members with illnesses that
impair their ability to make investment decisions. Clubs with these types of members are not eligible to
participate in the Visit-A-Club program.
On Feb 7, 2026, at 7:14 PM, Ashwini Aragam via bivio.com <user*42222700001@bivio.com> wrote:
Hello All,
In your club, how are you managing members who are active (with funds), but not exactly participating in meetings, decisions, etc. We are a large club (50+ members) and want to understand what you follow. Just so that you know, our investment decisions are responsibility of an Investment committee (limited, voted members) so making decisions isn't an issue.
Thank you Ash Aragam
ira smilovitz on
"Per IRS regulations, there are no passive members who rely on others to make investment decisions."
I disagree with BI's assessment. The IRS couldn't care less whether a general partner actively participates in the partnership's decisions. What it does care about is the partner's right to participate. If a partner has no right to participate, that partner is a limited partner. The partnership must then be established as a limited partnership with one or more general partners and as many limited partners as desired. General partnerships usually do not have to register with their state (though some states are exceptions). Limited partnerships must register with the state where they are located. The tax treatment of limited partners differs from that of general partners. The main reason for the BI position is that isolating decision-making from the membership as a whole moves you closer to a structure resembling a security. Such a structure could be subject to state and or SEC regulation. (Note: State securities regulation is tougher than the SEC in this regard.)
In your club, how are you managing members who are active (with funds), but not exactly participating in meetings, decisions, etc. We are a large club (50+ members) and want to understand what you follow. Just so that you know, our investment decisions are responsibility of an Investment committee (limited, voted members) so making decisions isn't an issue.
Thank you Ash Aragam
Ash Aragam on
This begs the question - how is participation evaluated by the IRS? Do they look at anything in particular upon an audit? Does sending messages to members and their input (say thumbs up to WhatsApp posts) count as participation?
On Feb 7, 2026, at 10:54 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:
"Per IRS regulations, there are no passive members who rely on others to make investment decisions."
I disagree with BI's assessment. The IRS couldn't care less whether a general partner actively participates in the partnership's decisions. What it does care about is the partner's right to participate. If a partner has no right to participate, that partner is a limited partner. The partnership must then be established as a limited partnership with one or more general partners and as many limited partners as desired. General partnerships usually do not have to register with their state (though some states are exceptions). Limited partnerships must register with the state where they are located. The tax treatment of limited partners differs from that of general partners. The main reason for the BI position is that isolating decision-making from the membership as a whole moves you closer to a structure resembling a security. Such a structure could be subject to state and or SEC regulation. (Note: State securities regulation is tougher than the SEC in this regard.)
In your club, how are you managing members who are active (with funds), but not exactly participating in meetings, decisions, etc. We are a large club (50+ members) and want to understand what you follow. Just so that you know, our investment decisions are responsibility of an Investment committee (limited, voted members) so making decisions isn't an issue.
Thank you Ash Aragam
polymerguy on
We looked at this a few years back and decided it was about the club not being licensed/registered as a broker and the risk of being defined as one if you have passive members. Links back to the Securities Exchange Act of 1934. I would defer to someone with legal acumen to comment on legal requirement of this - we simply decided active participation was part of our club requirement and wrote this our charter.
Jimmy Dickerson TLP Investment Club
From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of ira smilovitz via bivio.com Sent: Saturday, February 07, 2026 10:54 PM To: club_cafe@bivio.com Subject: Re: [club_cafe] Inactive participation
"Per IRS regulations, there are no passive members who rely on others to make investment decisions."
I disagree with BI's assessment. The IRS couldn't care less whether a general partner actively participates in the partnership's decisions. What it does care about is the partner's right to participate. If a partner has no right to participate, that partner is a limited partner. The partnership must then be established as a limited partnership with one or more general partners and as many limited partners as desired. General partnerships usually do not have to register with their state (though some states are exceptions). Limited partnerships must register with the state where they are located. The tax treatment of limited partners differs from that of general partners. The main reason for the BI position is that isolating decision-making from the membership as a whole moves you closer to a structure resembling a security. Such a structure could be subject to state and or SEC regulation. (Note: State securities regulation is tougher than the SEC in this regard.)
In your club, how are you managing members who are active (with funds), but not exactly participating in meetings, decisions, etc. We are a large club (50+ members) and want to understand what you follow. Just so that you know, our investment decisions are responsibility of an Investment committee (limited, voted members) so making decisions isn't an issue.
Thank you Ash Aragam
ira smilovitz on
Jimmy,
Thanks for providing the reference to the Securities Act. Clubs should also look to their home state's "Blue Sky" securities regulations. For instance, in NJ if you need to register if you have more than 10 NJ resident investors in any 12 month period.
We looked at this a few years back and decided it was about the club not being licensed/registered as a broker and the risk of being defined as one if you have passive members. Links back to the Securities Exchange Act of 1934. I would defer to someone with legal acumen to comment on legal requirement of this - we simply decided active participation was part of our club requirement and wrote this our charter.
"Per IRS regulations, there are no passive members who rely on others to make investment decisions."
I disagree with BI's assessment. The IRS couldn't care less whether a general partner actively participates in the partnership's decisions. What it does care about is the partner's right to participate. If a partner has no right to participate, that partner is a limited partner. The partnership must then be established as a limited partnership with one or more general partners and as many limited partners as desired. General partnerships usually do not have to register with their state (though some states are exceptions). Limited partnerships must register with the state where they are located. The tax treatment of limited partners differs from that of general partners. The main reason for the BI position is that isolating decision-making from the membership as a whole moves you closer to a structure resembling a security. Such a structure could be subject to state and or SEC regulation. (Note: State securities regulation is tougher than the SEC in this regard.)
In your club, how are you managing members who are active (with funds), but not exactly participating in meetings, decisions, etc. We are a large club (50+ members) and want to understand what you follow. Just so that you know, our investment decisions are responsibility of an Investment committee (limited, voted members) so making decisions isn't an issue.