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Helping Members in difficult times
Rank: Administration
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The current situation is adding stress to many clubs. Some club members are dealing with financial stress and this is carrying over to the club. ICLUBcentral has received a couple of requests from clubs for options in dealing with this situation. The first thing I would suggest is for the club to be flexible. This could mean suspending capital contribution requirements for members experiencing financial stress. This could be for a specific time period that could be extended, if necessary. It can also be until the stress is alleviated for the member. If such a provision is not in the club’s partnership agreement then consider adding such a provision. Due to financial stress some members may be requesting partial or maybe full withdrawals. The accounting software handles both easily. For full withdrawals consider transferring appreciated stock. This gives tax benefits to the club and the withdrawing member. For partial withdrawals the tax benefits of transferring stock for the withdrawing member are much less. In normal times it is not recommended that stock be transferred to pay a partial withdrawal due to the less advantageous tax consequences. This may be a time to make an exception. If stock is transferred for a partial withdrawal, the withdrawing member should be informed their cost basis will be the same as the club’s basis in the transferred securities. The Withdrawal Distribution report will itemize the cost basis to the member receiving the shares. It may also be necessary for the club to sell some shares to fund withdrawals. Generally, it is better to sell stocks with an unrealized loss to help fund a withdrawal. Keep to your policy and procedures for determining what to sell. It may be necessary to sell some appreciated shares. If possible, try to offset any gains with losses to reduce the tax consequences for remaining members. With some thought and planning you can help out members experiencing some difficulty and limit the consequences to the club.
Russell Malley
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 2 users thanked Pawche for this useful post.
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Helping Members in difficult times
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