The handout to accompany Doug Gerlach's presentation on "Closing the Investment Club's Books" presented by ICLUBcentral Inc. and myICLUB.com. For more information or to view the archived webinar, please go to www.iclub.com and visit the Learning tab.

1. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
Closing the Investment
Club’s Books
by Doug Gerlach
gerlach@iclub.com
ICLUBcentral Inc.
http://www.iclub.com
End of Year Procedures
• Series of steps to:
– Ensure accuracy of club’s books.
• Catch any errors before they compound and
become difficult to resolve.
– Provide members with information about
club performance and results.
– Get ready to generate tax returns.
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2. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
Let Members Know What to Expect
• Make sure members know what to expect at year-end:
year-
– http://www.iclub.com/support/tax_season.asp
• FINAL vs. DRAFT forms
• November: Pre-order your Tax Printers.
Pre-
– What to do: Clear purchase with club and purchase Tax
Printers. Tell club members to expect tax forms in February.
• December: Be patient.
– What to do: Put together audit committee and review books.
Tell club members to expect tax forms in February.
• January: Audit your books.
– What to do: Check iclub.com for the status of tax forms. Tell
club members to expect tax forms in February.
• February: Run your taxes (Congress & IRS willing).
– What to do: Complete tax forms for club members.
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Review Software Settings
• Check your program allocation settings:
– Club Accounting 3: Tools > Settings.
3:
– myICLUB.com: Accounting > Utilities >
myICLUB.com:
Allocation settings.
• Recommended settings:
– Should use “Time-based” allocations.
“Time-
– Set to not distribute units.
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3. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
Set Stocks/Funds Properly
• Check Security settings:
– Club Accounting 3: Securities > [Double-click on
3: [Double-
Security name to edit]
edit]
– myICLUB.com: Accounting > Securities > Update
myICLUB.com:
Security Settings
• Ensure “Type” is correct:
– Stocks: “common stocks”
– Mutual funds: “mutual funds”
– REITs: “REITs”
– Limited Partnerships & other: “Other/Other
Publicly Traded”
– CDs, Bonds: Fixed Cash Investment (CA3 only)
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Securities to Avoid in Clubs
• Some securities pose particular problems
for clubs & should be sold before year-end
year-
to eliminate problems in future years:
– Gold/Commodity ETFs
– Real Estate Investment Trusts (REITs)
– Publicly Traded Partnerships (PTPs)
– Master Limited Partnerships (MLPs)
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4. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
Club Donations
• Consider making donations to eligible
charities.
• Club can donate securities or cash.
– ICLUBcentral software is only software that
supports donations of securities.
• Charitable deduction passes through to
members.
• For donations of securities, cost basis is
stepped up to present value (thus can avoid
capital gains).
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Finalize Club Data in Books
• Ensure all transactions up to & including
12/31 are entered.
• WARNING:
– Do NOT enter withdrawals or other
transactions on 12/31.
– Move any 12/31 transactions to 12/30.
– Move any mutual fund distributions paid in
next year but taxable in prior year to 12/30.
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5. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
Watch for Problem Transactions
• Dividends from stocks must be entered as
“Security Transactions” (not Cash
Transactions).
– Ex-Dividend dates must be included in order to
Ex-
determine if dividend qualifies for lower tax
treatment.
• Member “Fees” are only used for penalty
situations.
– Such as late fees or bounced check fees.
– All other monies contributed by members should
be recorded as Member Payments.
Payments.
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Handling Fund Distributions
• Mutual funds & ETFs report breakdown of quarterly
distributions only at year-end
year-
• Distributions can be made up of:
– Dividends
– Short-
Short-term gains
– Long-
Long-term gains
– Return of capital
– Interest
• From year-end report, determine breakdown and re-
year- re-
enter quarterly distributions to reflect all
components.
– For instance, enter 25% of each component at each
quarterly distribution transaction.
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6. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
Create Year-End Valuation
Year-
• Create new Valuation Statement for
12/31.
– If market is closed on 12/31, use security
prices from last day market was open.
• Do NOT use Valuation Statement from
December meeting.
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Allocate Income & Expenses
• Allocate income and expenses for 12/31.
– Club Accounting 3: Tools > Allocate income
3:
and expenses
– myICLUB.com: Accounting > Utilities >
myICLUB.com:
Allocate income and expenses
• Done only once annually at year-end.
year-
• If own REITs or Mutual Funds, enter the
qualified amount (from 1099) when you
Allocate Income and Expenses.
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7. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
Reconcile Club Data
• Verify club books against bank/brokerage
statements.
• Check that totals on Capital Gains
Reports, Allocation Report, Valuation
Statement, & Transaction Summary
match financial institution statements.
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Financial Institution Documents
• Year-end statements – in January.
Year-
• Tax documents – mid-February,
mid-
– 1099-B - Proceeds from Broker and Barter
1099-
Exchange Transactions
– 1099-DIV - Dividends and Distributions
1099-
– 1099-INT - Interest Income
1099-
– 1099-MISC - Miscellaneous Income
1099-
– 1099-OID - Original Issue Discount
1099-
– Schedule K-1 (Form 1065) - Partner's Share of
K-
Income, Credits, Deductions, etc.
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8. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
Generate Reports for Members
• Make sure members have access to:
– Valuation Statement for 12/31.
– Allocation of Income & Expenses for 1/1 to
12/31.
– Income & Expense Statement & Balance
Sheet.
• Optionally:
– Portfolio Diversification
– Complete Journal for year
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Audit the Books
• Convene Audit Committee of club
members.
– Treasurer is not member, but should be
available for questions.
• Download “Audit Checklist” from
StockCentral Learning Library
– http://www.stockcentral.com/learn/learninglibrary.aspx
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9. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
Treasurer-
Treasurer-Provided Reports
• For the full year:
– Complete Journal/Ledger
– Cash Journal
– Cash Contributions Report
– Transactions Summary
• Put checkmark in box “Subtotal Tax. Distrib's”
Distrib's”
– Individual Investment History
• For each stock owned during period
– Individual Valuation Units Ledger
• For each member
• End-of-Year Valuation Statement
End-of-
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Other Treasurer Provided Documents
• All broker statements
• All trade confirmations.
• All bank statements.
• All deposit slips, if available.
• All cancelled checks.
• All Dividend Reinvestment Plan statements.
• All 1099-
1099-DIV and 1099-INT statements.
1099-
• All stock certificates in possession of club.
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10. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
Audit Committee Tasks
• Committee meets & verifies entries in books from
broker & bank statements.
• Check bank & broker balances to verify entries
matches club's books, including dates.
• Verify club's books show same number of shares
and dividends for each stock as broker & DRP
statements.
• Cross-check check register, bank statement, &
Cross-
club books.
• Verify beginning and ending balances for all
accounts and Valuation Statement.
• Sign “Annual Verification Report.”
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ICLUBcentral Technical Support
• Web-based Support
Web-
– www.iclub.com/support
• Telephone Support
– 877-33-ICLUB
877-33-
– 9:30 AM to 6:00 PM Eastern Time
– Monday through Friday
• Renew your Club Accounting Maintenance or
myiclub.com subscription:
– Call ICLUBcentral at 1-877-33-ICLUB
1-877-33-
– Visit www.iclub.com/store/
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11. Closing the Investment Club Books
By Doug Gerlach, ICLUBcentral Inc,
For More Information
• ICLUBcentral Inc.
www.iclub.com
• Write me:
gerlach@iclub.com
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