Preparing Investment Club Taxes By Doug Gerlach, ICLUBcentral Inc.

Transcription

1 1 Doug Gerlach ICLUBcentral Inc. 1

2 If you are unable to hear anything: 1. Check speakers or headphones are plugged in. 2. Check volume. 3. Use GoToWebinar sound settings wizard to resolve problems. If graphics or audio drops in & out: 1. Turn off any unnecessary programs. 2. Don t connect to Internet using wifi. 3. Listen using telephone. For or by phone at You don t need microphone. I ll answer questions during presentation & at end. 4 2

3 Handout in PDF format is available in Handouts tab. If necessary, click arrow button to expand GoTo applet. 5 As of 2/1/2018: Federal Tax Printer released. Returns are now being accepted by IRS. State Club Tax Printers in development. No release date set yet. 6 3

4 Reminder: IRS & State Filing Deadlines for Partnerships 7 Form 1065 & related forms & schedules must be filed & provided to partners by March 15, Ensures partners have details needed to file personal returns. Most clubs will meet deadline, though 1099s aren t required to be sent by financial institutions until February 15. Can file for automatic 3-month extension if needed. Late filings are subject to penalty. Disbanding clubs must now file final 1065 by 15 th day of 3 rd month following termination of partnership. 8 4

5 Moved to March 15 Moved to Other Dates Alabama Arizona California Delaware Georgia Mississippi Montana Nebraska New Hampshire New Mexico New York Oklahoma Oregon Rhode Island South Carolina Vermont West Virginia Wisconsin Florida April 1 (was May 1) Louisiana April 15 (was May 15) Information as of February Confirm your state s deadlines directly with state. 9 Facts About Filing Partnership Tax Returns 10 5

6 All investment clubs must file Federal tax return. If club was in operation during any part of year, you must file with IRS. If club disbands, you must file with IRS. Even if club has no gains, purchases, sales, income, and/or expenses for year, you must file with IRS. There are no exceptions. 11 Many states require clubs to file. Some states require clubs to file if any partner is resident in that state: Regardless of whether or not club is officially located there! Include GA, MO, NJ, NY, OR, PA, WV. ICLUBcentral Club State Tax Printer can generate additional state returns at no additional cost. 12 6

7 Massachusetts: Must file online IF: Partnership has 25 or more partners, OR Partnership has more than $50,000 in gross income, OR Partnership has more than $100,000 in gross stock sale proceeds. New Jersey: Must file online IF: Partnership has 10 or more members. Club State Tax Printer will prepare return which you can transcribe to web site. New York: New e-filing requirements taking effect. Wisconsin: Must file online UNLESS: Waiver to file on paper is requested from state & approved prior to filing of return. 13 Since 2015, ICLUBcentral Tax Printers supports large clubs in California (with assets greater than $600,000 & receipts greater than $250,000) for 2014 tax year & going forward. Previously, ICLUBcentral Tax Printer did not support larger clubs. 14 7

8 Wait for necessary data from bank & broker. Banks & brokers have until February 15, 2018 to deliver 1099-B statements. If you sold securities in year, must wait until receiving 1099-B before closing books. 15 IRS will not accept returns prior to January 29, If address of club has changed from 2016 return, submit IRS Form 8822-B before filing return. Provide partners with Schedule K-1 & K-1 code sheet by March 15, Remit tax filing to IRS on/before March 15,

9 Use ICLUBcentral s Club Tax Printer software. Federal Club Tax Printer module. State Club Tax Printer module for 14 states. ICLUBcentral s investment club tax preparation software is approved by tax agencies in all states offered! Available for Club Accounting 3 or myiclub.com. New for 2017: myiclub.com users can e-file their federal return. Order online at or by calling ICLUB. 17 IRS & states releases new forms each year. Can NOT use prior year software for current year. Final forms released by IRS & states as early as November, as late as February. Initial release of ICLUBcentral software may use DRAFT forms, which cannot be used for filing. Programs are auto-updated when FINAL forms are available. ICLUB expects to release Club State Tax Printer software from February to March. 18 9

10 Added IRS e-filing for clubs using myiclub.com. Will provide confirmation of return acceptance from IRS. Can print PDF copy of return for records. Still need to deliver K-1s to partners. No additional charge for e-filing. 19 Getting Ready 20 10

11 Probably cannot file before February 15. Complete Closing the Books tasks. See January 2018 Club Webinar on BetterInvesting.org (log in, then look for Webinar Archives in Tools & Resources section). Make sure you have all 1099s from financial institutions. Make sure address on file with IRS is current. REMINDER: If official address is different from that used on tax forms, submit Form 8822-B BEFORE submitting return. 21 Brokerage- Reported Tax Basis on Sold Securities 22 11

12 Brokerage firms must track cost basis of securities & report basis of sold securities purchased to IRS on Form 1099-B. Brokerages granted extension on 1099 filing deadline from January 31 to February 15. Individuals & partnerships must report cost basis of sold securities on Form Must also disclose if amounts reported: Match what brokerage reports. Don t match what brokerage reports. Aren t reported by brokerage

13 25 If capital gains or cost basis reported to IRS by brokerage firm is incorrect, don t worry. IRS expects that brokerage firms will not have records for all securities held, such as: Equity lots purchased prior to DRIPs, ETFs, Mutual Funds purchased prior to Security lots transferred into account. Using different but still acceptable to IRS method of calculating basis on merger/acquisition/spinoff of stock. If basis is not known by brokerage, you may be able to report it to them. Form 8949 will allow you to reconcile differences. You will not suffer consequences (assuming your records are correct)

14 Preparing Federal Tax Return 27 Be sure all transactions are entered & reconciled. Open/Start Club Tax Printer software. Use Q&A format to generate: Form All related schedules Schedule K-1 for each partner

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16 NOTE: If address has changed from prior year, file IRS Form 8822-B prior to sending form OR e-filing. 31 Inform IRS if any member s ownership is >=50% including indirect family ownership. Family includes spouse, lineal descendant or ancestor, sibling. Does NOT include aunts/uncles, nephews/nieces, in-laws. If club has ANY family members, complete Constructive Ownership worksheet. Easiest way to determine if you need to report. Schedule B-1 will be completed for you if required

17 Select YES to display worksheet (below). 33 Typical responses are indicated; adjust if needed to fit your club s situation

18 Does NOT include ADRs or foreign stocks only accounts outside US. Typical responses are indicated; adjust if needed to fit your club s situation. 35 Confirm

19 If you sold any securities in the year, provide basis information from 1099 OR click box that basis is NOT reported OR click box that no 1099 was received. If broker provides basis for multiple lots with date of VARIOUS, you should be able to calculate Broker 1099 reported basis from your records and use that figure for each myiclubreported lot. 37 Social Security Numbers are required. Click to continue

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21 Members can access their K1 here. Print or save PDF of complete return here. 41 E-File here. Regenerate at any time prior to filing

22 If mailing return: print, sign & send via USPS with return receipt requested; print or save PDF for club records. If e-filing: print or save PDF for club records. 43 Mailing Return & Distributing to Partners 44 22

23 Form 1065 & Schedules K & D: Send one to IRS via Registered Mail, return-receipt requested. Keep one for club records (PDF and/or printed). Schedule K-1: Send one copy of each Schedule K-1 to IRS. Keep one copy of each for club. Give one copy to appropriate partner WITH CODE SHEET: By giving printed copy. By sending PDF. By providing instructions for each member to download their own K-1 from myiclub.com. Also provide Schedule K-1 page 2 (listing of codes used). 45 On myiclub.com, no need to print K-1s for members. Each member logs in to club web site & clicks Taxes tab. Each member can then download his/her information ONLY! 46 23

24 E-Filing Your Club s IRS Return 47 ICLUBcentral is an authorized IRS e-filing provider for investment partnership returns. e-filing is provided at no additional charge for myiclub.com Club Federal Tax Printer purchasers. e-filers will receive submission number that confirms receipt of return by IRS

25 From myiclub Taxes tab, click GO to return to Federal return already generated, then scroll to bottom of page to e-file button. 49 Do NOT abbreviate. Make sure Club Name matches other documents. Confirm all details. Electronic submissions are very picky about special characters, lengths of fields, and other details

26 Confirm/enter details. Create PIN of your own choice Use mouse to sign in box. Don t worry if it looks a bit rough! You can Clear Signature to retry as many times as you want. 51 Confirm all details. Click Continue at bottom of page when ready

27 When ready, click e- File the Return. 53 Submission complete but not yet accepted by IRS. Return to Federal Club Tax Printer page in Taxes tab to check on status

28 Status of submission displayed at top of Federal Tax Printer page. 55 When return is accepted by IRS, status will change to CONFIRMED. Click link to see Submission ID

29 Submission ID is your record of acceptance by IRS. 57 Preparing State Tax Returns 58 29

30 State Tax Returns follow similar Q&A process as Federal return. Prepare Federal return first & make sure it s final, then prepare State return. Remember: You may need to file in more than one state if members reside in other states. 59 For Disbanding Clubs 60 30

31 Club that decides to disband in December will not likely be able to complete process in time to avoid filing return in next year. Disbanding clubs can use prior-year software to generate short-year final return. If current year IRS forms are available by filing deadline, cannot use prior year forms. See: 61 New for Next Year (2018) 62 31

32 Effective January 1, 2018, results of any IRS audit are effective in year of audit. Any new tax liability is paid by partnership rather than flowing through to partners. Effects of audit could be on current partners who were not partners for year audited. Can elect not to be covered by new audit rules if partnership meets certain criteria: Election must be made every year. Process for making the election is not clear at the moment. Partnerships with 10 or fewer partners qualify to make election. Those with partners qualify as long as certain entities are not partners. Currently trusts, including revocable living trusts are non-qualifying partner. 63 In next year s filings, partnerships will be able to elect to opt out of the audit rules. ICLUBcentral recommends making the election. There is nothing to do for the 2017 Tax Year

33 Getting Help 65 Web-based Support Telephone Support ICLUB 9:30 AM to 6:00 PM Eastern Time Monday through Friday Renew your Club Accounting Maintenance or myiclub.com subscription: Call ICLUBcentral at ICLUB Visit

34 Any Questions? ICLUBcentral Inc. Write me: 68 34