Partnership Agreements- The treasurers' perspective (Formation)
I'm the treasurer of a new club and we are in the process of writing our partnership agreement.   Specifically, as treasurer, what issues should I be most concerned with?
Even though the IRS allows your club a great deal of latitude in creating its partnership agreement (see IRS Publication #541 - Partnerships), I recommend that every club create a formal written document.     Before you start it is helpful to review the partnership agreements of other clubs.    A good example is the Partnership Agreement of the Mutual Investment Club of Detroit , just one of several partnership agreements available on the NAIC web site.    You'll notice that many of the items in this agreement are very simple and straight forward.  
Let's begin by looking at a few specific items that you, as treasurer, will be particularly interested in....
First, many partnership agreements start by defining the state in which the partnership (investment club) is formed.   At first glance this may not appear to be a very important issue.   It is, however, because this will determine under which state's partnership laws the club will operate and the type of state partnership tax return, if any, that the club must file.    
IRS Publication also states "if a partnership agreement or any modification is silent on any matter, the provisions of local law are treated as part of the agreement".
Generally, club's form in the state in which most or all of its members reside.   Online clubs or clubs who have members widely dispersed may want to check the partnership laws and tax return filing requirements in several states to determine which state is the most club friendly.     NAIC Regional Chapters are often a good source of information about local partnership laws and state filing requirements.
Tomorrow we'll look at the provisions in a partnership agreement pertaining to member contributions and capital accounts.
As always, feel free to send you questions, comments, and suggestions to Trez_Talk.
St.Louis, Missouri