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Tax forms are done
Form 1065 K-1s are on their way to everyone in the club. Let me know if
you don't receive one by Wednesday. February's Better Investing has an
article about club taxes, which I've excerpted below.
The audit committee's deadline is coming up on March 31, for returning
the Fidelity Bond Verifcation Report. I think the only item we didn't
finish in December was the final one, which is satisfied by the
Distribution of Earnings report
(http://www.woodland.org/hpd/private/1999earnings.html). Can we plan to
sign off on this at the next meeting?
>From Better Investing, February 2000:
"When the Form 1065 and each partner's K-1s are finished, one copy of
the Form 1065 and one copy each of the K-1s should be sent to the IRS by
the due date. Each partner should also receive a copy of their
respective Schedule K1 for use in filing their personal tax returns.
This copy is kept with their tax records; it is not filed with their tax
returns. The club should also keep a copy of all the forms with the
club records for future reference."
"Some clubs are under the misconception that if they have a net loss for
the year, they do not have to file. This is incorrect. The character
of the taxable items can not be netted against the expenses, or
deductions. The items flow through to the partners and are commingled
wit the same items earned at the personal level. In our illustration of
a K-1 for example (see page 38), Mary Baker must claim $6 of interest
income and $38 of dividend income on page 1 of her personal tax return,
Form 1040, and so on. She is not allowed ot deduct her expenses from
her earnings and use the net figure."
"Please note that in many cases [the club's] expenses will not be
allowed at the personal level. There is a maximum allowed for the
Miscellaneous Deductions section of Schedule A - Itemized Deductions of
2 percent. In other words, you may only use the excess amount of
miscellaneous deductions that exceed two percent of your adjusted gross