Division of shares, profits, and loss in an investment club
Rip and I, the Trez_Talk guys, were recently asked...

 I have about ten friends and we are interested in starting an investment club.  I have dabbled in funds for quite some time now and my group wants me to be the president of the club.  I want to know how are the shares divided.  I understand the investment portion but lets say a member is leaving, what is his entitlements?  what portion of the gain or loss in the investment club he receives.  Please help!!!
Congratulations of the formation of your new investment club.   Investment clubs are a great way to share investment ideas and to learn more about investing with your friends, family, co-workers, and colleagues.
An investment club, commonly established as a partnership, is often set up much like a mutual fund.   In other words, when a member makes a monthly  investment into the club, that investment buys that member newly issued shares (units) of the club at the current unit value.     The unit value is calculated each month by dividing the total value of the club assets by the number of units outstanding.   Much like the NAV of a mutual fund.
Each year REALIZED gains, losses, interest, dividends, expenses, etc. are allocated to the club's members in proportion to the value of their accounts in the club.  Those taxable allocations are reported on the partnership tax return filed by the club with the IRS and to each member of the club on the K-1 issued to them by the club.    For more information on the method of allocation, please see...   
When a member leaves the club their units are liquidated by the club. The value of those units is based upon the current unit value at the time of withdrawal.   The withdrawing member's gain or loss, realized upon withdrawal, will be the difference between the value paid to the withdrawing member and their adjusted cost basis in the club.   The adjusted cost basis is equal to the amount they've paid into the club as adjusted each year and at the time of withdrawal for their share of any taxable allocations.
Much success and profits with your new club!   Thanks for using bivio!
Jerry Dressel
St.Louis, Missouri