If installed on Windows Vista, the following adjustments must also be made for correct operation:
Strictly speaking, "closing the books" is a misnomer. You don't have to put everything on hold while you finish out last year's transactions. You can
continue to record next year's transactions while finishing this year's transactions in preparation for filing the partnership tax return.
Keep one (1) copy with the club’s copy of the IRS filing in the club’s permanent records
13. Mail your Form 1065 tax filing to the IRS before April 15, certified mail, return receipt requested. This is a precaution against the IRS claiming that
you did not file on time. Non-filing and late-filing penalties are calculated per month and per member. To find out where to send your club's forms, visit
the IRS' "where to file" page. There is no street address - the post office knows where
to send it
based on the name IRS, the city, and the ZIP + 4.
14. Attach the return receipt to the Club’s copy of the IRS filing.
15. You're done. Relax, and remind your club that they owe you dinner for the work you've just done.
How to find information on ex-dividend dates
Changes to the tax laws in Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) define certain dividends as "qualifying" for lower tax rates if
the shares are owned for 60 days in the window starting 60 days before the ex-dividend date and ending 60 days after the ex-dividend date.
The ex-dividend date is the earliest date on which a club can sell a stock paying a dividend and still receive that dividend. The ex-dividend date is two
trading days before the record date and typically between two and five weeks before the payment (transaction) date. For more on ex-dividend dates, see this page on the SEC's web site:
If your broker statement does not include the ex-dividend dates, here are some steps for where they can be found:
1. Go to finance.yahoo.com and enter any ticker symbol to get a quote for today.
2. After you get this, click the historical quotes link in the left column, which will get you to the historical quotes for that security.
3. Once you're on this page, enter start and end dates of 1/1/YY and 12/31/YY, select "Dividends Only" to the right of the date boxes, and click the "Get
Prices" button
The list that appears will be not only the ex-dividend date of each dividend, but the per share value of that dividend (rounded to the nearest whole
cent).
More info on tax law change and why it affects Club
Accounting
What is the Compound Annual Return and how is it calculated?
Issue:
One of the most often asked questions by Club Accounting users is, "How is the compound annual and total return shown on the Valuation Statement and Members
Status Report calculated?"
Cause:
Club Accounting uses what is called an "Internal Rate of Return" (IRR) calculation to calculate these returns. This type of calculation takes into account
both the time when money was invested and the amount of money that was invested. Admittedly, it is a complex calculation that is best not attempted manually
but rather left to the computer. Hopefully, the following explanation will make it understandable. But, first, let's define what we mean by the terms
"Compound Annual Rate of Return" (CAR) and "Total Return."
Resolution:
CAR is the rate of return most of us are familiar with when we talk about interest paid on a bank savings account, certificate of deposit or a home
mortgage. It is the yearly rate of return that is earned or paid and that usually is compounded daily, monthly, or yearly. The more often the compounding is
done (interest earned on interest paid) the larger the amount will be for the same rate of CAR. Club Accounting uses daily compounding. However, for
simplicity we will use yearly compounding in all of our examples.
Total Return is the return earned over a specific period of time. For example, if one invests $100 at 6% CAR for six months you would have $103 or a 3%
total return for the period. If the money was invested for 2 years at the same CAR you would have $106 at the end of the first year and $106 x 1.06 = $112.36
at the end of the second year for a total return of 12.36%.
As you see, if you know the CAR and the period of time involved you can calculate the total return. Notice that the CAR and Total Return are the same at
the one-year point. During the first year the CAR is always greater than the Total Return. After one year the Total Return is always greater than the CAR. It
is important to understand the difference between these two returns because during the first year they can look very strange and yet be correct.
For instance, suppose you bought a stock and one week later it had gained 2%. The CAR is the rate you would earn if this same gain continued for a year. A
2% gain in one week equates to about a 180% CAR. On the other hand, the Total Return is only 2%. By using an Internal Rate of Return calculation, which takes
into account both the time and amounts of money invested, we can calculate an accurate CAR. Here is an explanation of how it is done:
If you go to your local bank and open a savings account, the banker tells you that they will pay you a certain annual percent return on your money, say 6%
compounded daily. You agree and deposit a sum in the account. From time to time you may deposit more money or make withdrawals from the account. At any time,
you can ask a bank teller what your balance is and they can tell you. They can do so because they have recorded each of the transactions you have made in the
account and they know they are paying you at a fixed 6 percent interest rate. Knowing these two factors allows them to calculate the third (your present
balance) by adding the proper amount of interest to your balance each day.
The problem is different when you invest in an investment in which the return varies, such as an investment club where the value of the security or
members' units change whenever the club is valued. However, like the bank, the Club Accounting program does know two of the three factors needed to calculate
the third one.
In this case, the program knows all of the transactions that have been entered into the club and it knows the current balance in the account on the
valuation date. What it doesn't know is the compound annual interest rate that would have to be paid on all these transactions to make them total to this
current balance. It can calculate this interest rate but must do so by using trial and error to find an interest rate that when applied to the daily account
balance will result in the current balance. The CAR rate calculated in this way is called an Internal Rate of Return (IRR). Once the CAR is found, a total
return can easily be calculated for any period of time.
A simple example will illustrate the effect of time and dollar amount on the CAR calculation.
Suppose you open a bank account on January 1st and the bank pays you 6% CAR. You deposit $100 to open the account. Then you do nothing with the account
until December the 1st when you deposit $200 more. On December 31st you run a valuation statement. The first $100 would have made 6% a year for one year, and
grown to $106. The second $200 would have made about $1.00 in interest during the month of December. Therefore, the current value would be $307 and the
amount invested or cost is $300. By using the cost and value to calculate the return one would get (7.00/300) x 100 = 2.33%. However, we know that we
actually earned 6.0% CAR for the year not 2.33%. The difference is the result of having most of the money invested for only one month. The IRR calculates the
true interest rate you earned as 6.0%. The formulas for this calculation are included at the bottom of the page.
As you see, one can't just use the cost of a stock, or the amount paid in by a member along with the current value to calculate the CAR. Every security or
member transaction involving money flowing into or out of the club must be considered separately both in time and amount.
Consequently, almost all security and member transactions have an impact on the returns that are calculated. Club Accounting uses the IRR method to
calculate the CAR and Total Return for several different combinations of individual and groups of securities, cash, and members transactions. These are shown
on the Valuation Statement and Members Status Report.
Mathematical Formulas
The following description is for those readers who have a mathematical background and who want an exact definition of the way total return for each
investment period is calculated.
Definition of Variables
Cf(i) Amount of the i-th cash flow transaction during the period. If the transaction by the investor puts money into the investment (member payments or
fees, or security purchase), the amount is negative. If the transaction by the investor receives money from the investment (member withdrawals, security
sales, cash dividends), the amount is positive. The four cash flows used for the four return calculations are described in the bulleted items in previous
section.
N Number of cash flows during the investment period.
V Value of the investment at the end of the investment period.
d(i) Date the i-th cash flow was posted.
D Date of the end of the investment period.
r Estimated annual rate of return.
v Computed value of the investment at the end of the investment period.
The estimated rate of return (r) is varied in the following equation to make the computed value (v) equal to the actual value (V). An iterative procedure
is used. The value of r that makes the two value figures equal (v=V) is the actual annual rate of return.
Formulas
v=Sum(cf(i) * (1 + r)^((D - d(i)) / 365.25))
where i = 1 to n and
D - d(i) is the number of days between D and d(i)
Finally, the total return during the investment period is:
Total Return = (1 + r)^((D - d(n)) / 365.25) -1
This article originally appeared in the Dec 2002 issue of BetterInvesting
note: registration required to view original article
How do I disband my club?
There are two ways to dissolve the club and distribute the proceeds among club members, the "Cash Only" method and the "Cash and Stock Transfer" method.
If there are gains on some of your unsold shares, there may be tax advantages to the Cash and Stock Transfer method (please consult your tax adviser).
Please be advised that after you disband your club the IRS requires you to file your final tax return on the 15th of the 4th month after operations have
ceased. The return will cover the period from the start of the year up to the date that operations ceased.
If you disbanded during the calendar year 2006, the 2005 ICLUB Tax Printers for Club Accounting Online (CAO) or Club Accounting 3 (CA3) can be used to
create these final tax forms. Once you have followed the disbanding directions below, run the Tax Printer. It will detect that the club has dissolved, and
will prepare final returns for the period starting January 1, 2006 and ending with the date that operations ceased. Note - you will have to insert the
beginning and ending dates on all schedules produced by the Tax Printer.
WARNING: You must wait until you have all the income and 1099s from your club's holdings. If you do not, you may end up getting a dividend or other income after you've already disbanded the club and handed out the checks. If this happens, you technically must re-run disbanding the club, change how much you paid everyone out, and refile. Your club is officially disbanded when you cut the checks, not when the vote takes place.
I. Cash Only Withdrawals Method
1. Sell all Securities.
2. Enter all "Sell" transactions into Club Accounting.
3. Record all final/closing expenses.
4. NCA2 users only: use the Audit function (in the Utilities menu) to ensure all information in the current files is consistent.
5. Enter a valuation for the day after all sells and final/closing expenses have been entered.
6. Print a Member Status Report on the last valuation date.
7. Withdraw all members one day after the last valuation date. Do NOT charge any withdrawal fees. You can use the same date for announcement and payout.
8. Print the Withdrawal Distribution Reports.
To process your final tax return you should print and keep copies of the following reports:
* The withdrawal distribution reports for each member
* A copy of the valuation statement that was used to disband the club
* A copy of the Income and Expense report and the Balance Sheet
* A copy of the Transaction Report for the entire year to date.
* A copy of each member’s Individual Valuation Units Ledger from the time they joined the club.
* A copy of the Investment History Report for each stock that you sold or distributed to members.
The IRS currently requires you to file your final form 1065, K and K1 forms on the 15th day of the 4th month following the date operations ceased.
II. Cash and Stock Transfer Withdrawals Method
1. Sell all Securities that are not to be transferred.
2. Enter all "Sell" transactions into Club Accounting for those Securities sold.
3. Record all final/closing expenses.
4. Enter a New Valuation. Use a date after the last sell transactions were entered.
5. NCA2 users only: use the Audit function (in the Utilities menu ) to ensure all information in the current files is consistent; Accounting 3
and Club Accounting Online handle this automatically.
6. Print a Members Status Report for the valuation date in Step 4.
7. Withdraw all members who are receiving CASH ONLY after the valuation date in step 4. Do NOT charge any withdrawal fees. These withdrawals can all
have the same date, which should be one day later than the last valuation. The announcement date and payout date should be the same.
8. Enter any "Stock" withdrawals after all "Cash Only" withdrawals are entered.
9. Club accounting (all versions) will not accept two stock withdrawals on the same day, therefore each withdrawal with a stock transfer must be entered
on a different date. Enter the first stock withdrawal on the date after the valuation date.
Note: previous instructions indicated that a new valuation should be produced for each member withdrawal using stock. This is no longer true.
10. Enter the next stock withdrawal. Date the withdrawal for the next day. Again, announcement and payout dates will be the same.
11. Continue until the last withdrawal is entered, then print Withdrawal Distribution Reports.
If the club uses the Tax Printer software, print the club's 1065 and K-1's for all the members for the final year, using the Tax Printer for the prior
year. Please check the "final return" box on Form 1065 manually.
My maintenance has expired - how do I renew?
Maintenance is required for all Club Accounting users. Current Club Accounting Maintenance entitles your club to free updates to Club Accounting so that
you can be sure your program is always current with tax law and loaded with the latest features. Maintenance means that if you have any questions about the
software, you can contact us online or by telephone, and we'll answer your question quickly. It is also required for software updates, exporting data, and
getting online stock quotes.
Club Accounting Maintenance costs $49 per year. If you are still on NAIC Club Accounting 2, though, I'd highly recommend taking this opportunity to
upgrade to Club Accounting 3 or Club Accounting Online
To order, please call ICLUBcentral at 1-617-661-2582, or purchase online.
My maintenance is listed as expired, it hasn't yet.
If your maintenance is listed as expired, there's three possiblities:
1. Your maintenance has expired. Contact Technical Support to double-check and renew.
2. Your record may be in error. Sometimes we get payments, but the club hasn't been named. Again, contact
Technical Support to correct your record.
3. You or another member of your club has installed Club Accounting on a second computer, which un-registers the first computer. Please note that Club
Accounting is licensed to a Single User for use on a single computer. This same statement is part of the User License and on page one of the manual.
If you want to have multiple copies of the software, there are two options:
1. Purchase a co-Treasurer license for $47 from ICLUBcentral at 617-661-2582.
2. Use an unlicensed copy for display purposes only. Do not make any updates to your club's records on the unlicensed copy, because you will not be able
to export the data. You can use this copy to show your club your data, but not for entering data.
If you are changing Treasurers, simply give the new Treasurer the software, a backup of the data (FILE > EXPORT), and the serial number for the software.
When the new Treasurer installs the software, it will take the license from your installation. Be sure to export the data BEFORE the new Treasurer installs
the software, or you will not be able to do the export!
How to install on a new Treasurer's machine
When changing Treasurers, follow these guidelines:
Import the backup on the new Treasurer's computer.
Note: After you register, the previous Treasurer's software becomes inactive. Make sure you do the backup first!
Serious error message during import
The error appears when you are trying to import data from a later version of Club Accounting than the version installed on your system. For example, if
you have just installed the Club Accounting software off the CD and you have a data disk from your previous Treasurer who updated their software to the
latest version, you may get this error. The fix is simple: upgrade your software to the latest version of Club Accounting.
If you have already installed CA3, select HELP > CHECK FOR UPDATES.
If you have not, install the latest version directly from our web site.
Unable to register software or Error: "Could not connect to the registration server. Please temporarily disable your internet
firewall or try again later."
The answer to this problem is in two parts, the quick fix and the permanent solution. For the quick fix, you can disable your firewall temporarily. For
the permanent solution, you will need to contact your firewall vendor to permanently allow connections to iclub.com. Tell the vendor, "I have a program that
goes to the internet to register and [Norton Internet Security/Zone Alarm/etc] is blocking it. Please help me set up an exception so it is no longer
blocked."
Listed below will be instructions for disabling popular security software. At the bottom will be additional instructions if you are using Windows
Vista.
Windows XP built-in firewall
1. Open your Control Panels and select the Security Center control Panel.
2. Scroll to the bottom, and click on "Manage settings for Windows Firewall".
3. Place the check in "Off (Not recommended)."
For the permanent solution contact Microsoft.
Norton Internet Security or Norton Personal Firewall
1. Open NIS or NPF by double-clicking the icon on your desktop.
2. Click INTERNET STATUS.
3. Click CURRENT STATUS.
4. To disable NIS or NPF, click the DISABLE button. To enable NIS or NPF, click the ENABLE button.
For the permanent solution, contact http://www.symantec.com/techsupp/
McAfee Personal Firewall
1. Click Stop McAfee Firewall to disable the software.
2. From the Welcome to McAfee Firewall screen, go to the Network Control Settings and select Allow All Traffic.
This works for most versions of the McAfee firewall. However, there are many versions, each with different steps to disable. You may need to contact
McAfee directly if this does not apply.
For the permanent solution, contact http://www.mcafeehelp.com
Zone Alarm
1. Right-click the Zone Alarm icon in the System Tray, and select Shutdown Zone Alarm.
For the permanent solution, contact http://www.zonelabs.com/store/content/support/techSupport.jsp
Earthlink Accelerator
1. Right-click the Earthlink Accelerator icon on the system tray next to the clock in the lower-right corner of your screen.
2. Select Disable Earthlink Accelerator.
For the permanent solution, contact http://support.earthlink.net/
Other Web Accelerators
While the Earthlink Accelerator is one of the more popular accelerator programs, the number of web accelerator programs available for free on the internet,
or packaged with other software grows every day. If you are using a dial-up connection, you should check your computer for this sort of software.
Most accelerators will show up in one of three places:
1. As part of a toolbar on your web browser
Even if your web browser is not active, the accelerator can still be running, so make sure to start your web browser and double-check.
2. In the lower right-hand corner of your computer screen, with other running programs
For Windows XP users, make sure to click SHOW HIDDEN ICONS to make sure that all programs show up.
3. In the list of installed programs in the START menu
You should check all three of these places, as there is nothing to stop your computer from having more than one of this type of program installed. If you
find anything with the word ACCELERATOR or WEB in the name in any of those three places, double-check if it is a web accelerator program. If it is, try
disabling it and then using your program again.
Spybot
1. Open Spybot.
2. If you have a shortcut on your desktop, double click it. or Click Start, then All Programs, then Spybot - Search & Destroy and then Spybot - Search
& Destroy.
3. On the left side, click Immunize.
NOTE: You will see 2 items that need to be turned off. The 1st item is the "bad products" that are being blocked. The 2nd item is the Blocker Helper.
4. At the top of the screen, click the Undo button. This will allow all bad products again.
5. In the Browser Helper section, un-check the Enable permanent blocking of bad addresses in Internet Explorer box.
6. From the File menu choose Exit.
NOTE: Spybot is now temporarily disabled.
For the permanent solution, contact http://www.spybot.info/en/support/index.html
This section only applies to Windows Vista:
We have found that the following set of steps can be very useful in getting
our software to work correctly with Windows Vista. If you are running into
trouble with registering the program, connecting to the internet or saving
information, please take these steps, and try the program again.
-
With the program closed, click the WINDOWS button in the lower left corner
of your screen.
-
Go to COMPUTER > C:\ > PROGRAM FILES > ICLUBcentral > CLUB
ACCOUNTING 3
-
Once inside the Club Accounting 3 folder, right-click on the Club Accounting 3 icon, then click PROPERTIES.
-
On the properties window, click the COMPATIBILITY tab.
-
On this tab, click RUN THIS PROGRAM IN COMPATIBILITY MODE.
-
Make sure the selection under this shows Windows XP (Service Pack2)
-
Also on this tab, click RUN THIS PROGRAM AS ADMINISTRATOR.
-
Click APPLY, then OK.
-
If this is successful, Windows will add a small multi-colored shield to the
program icon.
-
If you have the User Account Control (also called UAC) active, Windows will
now ask you to Cancel or Allow the program when you open it. Click ALLOW to
let the program run as normal.
