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January 9, 2003 - ICLUBcentral News

NAIC Software News January 9, 2002


2002 NAIC Club Tax Printer Released on CD & Online

NAIC Software and ICLUBcentral are happy to announce that all versions of the 2002 NAIC Club Tax Printer are now available! The NAIC Club Tax Printer allows you to generate, print, save, and distribute Federal tax forms for your investment club and its members in just minutes. This year, two different versions of the tax printer software are available:

Desktop Version
Works on Windows-based personal computers with NAIC Club Accounting version 2. Now shipping from NAIC on CD, or save your club $5 S&H by downloading the software.

(If your club is still using NCA 1.04, please see for information on how to bring your software up-to-date.)

Online Version
Works on all major operating systems, including Macintosh and Windows, as a part of NAIC Online Club Accounting (NOCA). Enables members to log in and view or print their own tax forms.

Useful tax-related links including state tax information and details on the NAIC Club Tax Printer may be found at

Tax-Time Tips for Treasurers

Who needs to file taxes?

  • All investment clubs that were active during the fiscal year 2002. This means all clubs with any income expenses must file.
  • Your club must file taxes even if your club has no gains.
  • Your club must file taxes even if your club is disbanding.

When should I prepare my taxes?

Before generating club tax forms, wait until you have all necessary data from your broker and bank. Remember that banks and brokers have until January 31, 2003 before they have to deliver 2002 year-end statements, so depending on when you receive this information, you may have to wait until early February 2003 before you can close your 2002 year-end books. Most clubs must complete and remit tax filings to the IRS before April 15, 2002.

How do I close my books?

  1. First, make sure all transactions for dates up to and including December 31, 2002 are entered in your NAIC Club Accounting or NAIC Online Club Accounting software.
  2. Make sure you have created a valuation date for December 31, 2002. Don't use the Valuation Statement for your December meeting to close your club's year-end books.
  3. In NCA 2, use the Audit task to check (and if necessary, correct) any internal inconsistencies which may have crept into your books. The Audit task is located in the Utilities area in NCA 2. NOCA users do not need to run an Audit, since the program automatically audits your transactions as you enter them.
  4. Do a Distribution of Earnings for December 31, 2002. The Distribute task is located in the Utilities area.
  5. Go to the Reports Menu and print a Distribution of Earnings Statement for the interval January 1, 2002 to December 31, 2002, and an Income and Expense Statement and Balance Sheet for the same interval. Make sure every member of your club has access to these reports.

How do I prepare my taxes?

  1. Install and open your copy of the 2002 NAIC Club Tax Printer software program. Use the simple question-and-answer format to print out your:

    a) Form 1065 (including Schedule D, supporting schedules for Schedule K)
    b) Schedule K-1 (one for each partner)

  2. Send one Form 1065 to the IRS, at one of the three regional centers. (You can figure out which one is right for your club by reading your NAIC Club Tax Printer manual or by visiting our Support site.) Keep one copy of the Form 1065 for club records.

  3. Print 3 copies of each Schedule K-1. Send one copy of each Schedule K-1 to the IRS, keep one copy of each for the club, and give the third to the appropriate partner.

Where can I find more information on investment club taxes?

Visit ICLUBcentral's tax season webpage at The page features detailed information about the NAIC Club Tax Printer, links to important tax season resources such as the IRS and state tax agencies, and more.

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Investment Club Therapist: A Bonding Experience
by Doug Gerlach

Dear Doug:

Our club, which was organized about 12 years ago, is debating whether to obtain bond insurance through NAIC. Some members feel it is just good business, while others feel that "no one has sticky fingers," so why spend the money. Even the three seniors members who have about $20,000 each invested in the club are divided on which way to go. Any suggestions?

††- Paula B.

Dear Paula:

To bond or not to bond, that is the question! For those who arenít familiar with NAICís Fidelity Bond, let me first shed a little light on the subject. Hereís a quick definition from the Investment Club Therapist case files: NAICís Fidelity Bond is an insurance policy that helps protect your investment club portfolio from theft of funds by a partner. To qualify, your club must be run according to NAICís guidelines and must carry out an internal audit each year. The costs of coverage vary with the size of your club and are subject to a $1,000 deductible.

Like all insurance plans, your club needs to make its own ďquality of clubĒ decision, balancing the expense of the policy with the risk that youíll someday need the protection. Many new clubs decide to forego the Fidelity Bond for their first few years of operation, since their total value is relatively small, and that to me seems a perfectly valid modus operandi. But larger clubs that have been in existence for many years often make it standard operating procedure to renew their bond every year.

My prescription is to ask your club members to consider their home or auto insurance and if theyíd do without it. It would be terrific not to have to shell out premiums every month, and the risk that youíll actually ever need to collect on a policy might be pretty small. But would you ever go without that coverage?

True, itís very rare that a partner will abscond with club funds. But Iíll bet that in most cases when it happened to a club that didnít carry the Fidelity Bond, those clubs all thought that none of their members had "sticky fingers," so why should they bother with the expense?

If your members are on the fence, then erring on the side of safety probably isnít a bad idea.

- Doug

Doug Gerlach, author of several popular investing books and websites, serves in his spare time as Secretary of NAIC's Computer Group Advisory Board. To ask Doug an investing question yourself, just write to!

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