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December 15, 2004 - ICLUB News
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ICLUB Insider December 15, 2004


Closing Your Club's Books on the 2004 Tax Year
by the Customer Support Staff,
ICLUBcentral Inc.

First, relax and enjoy your New Year's celebration! The paperwork required to close your books won't be in your hands for at least a few weeks after December 31 -- financial institutions are required to send you your Form 1099 by January 31, so you won't have the necessary information until sometime around then. As a result, you shouldn't plan to close your club's books much before the beginning of February.

When you have all the statements, balances, and reports for December, here's how to close your books for the year:

  1. Make sure that your version of NAIC Club Accounting (NCA) has been upgraded to version 2.5. The update to version 2.5 is free for clubs with a current Support Agreement. Visit ICLUBcentral's web site for information on bringing your copy of NCA up to date.
  2. Correctly identify all mutual funds, REITs, and "other" (Limited and Publicly Traded Partnerships, etc.) securities in the Security Section > Edit/Delete Security Profile screen. Enter the ex-dividend date for each dividend your club received in 2004 in the Accounting > Security Section > View/Edit Delete Security Transactions screen. The ex-dividend date is the first date following the declaration of a dividend on which the purchaser of a stock is not entitled to receive that dividend payment.
  3. Enter all data up to 12/31/04.
  4. Reconcile your Club Accounting records with bank, broker and all DRP statements. Wait until you have received all 1099s from companies, and then print a Transaction Summary Report for the full year. Don't forget to add any Charges Paid by Company as necessary.
  5. Match the total reported on Form 1099 received from company to the total entered in your books.
  6. Verify all members' addresses and Social Security numbers, and your club's Tax ID number.
  7. Enter a Valuation for all securities as of 12/31/04. Use the closing prices for the last trading day of the year, but always use the 12/31/04 date.
  8. Run the Audit Utility.
  9. Run the Distribution of Earnings utility.
  10. Print a Distribution of Earnings Report for all members.
  11. Run the 2004 NAIC Club Tax Printer program for the required IRS filings (Form 1065 and Schedule K-1), and your state filings, if applicable, using the 2004 Club State Tax Printer. You can obtain the 2004 Club Tax Printers from
    Remember, because of the changes to the 2004 tax forms, you cannot use any earlier year's tax printer software to create this year's filings. And you must order before 12/31/04 to receive the $30 NAIC member discount on the software.
  12. Print two copies of Form 1065 (one for IRS, one for the club's permanent records).
  13. Print three copies of Schedule K-1 for each current member and any former member who withdrew during the year. Attach one Schedule K-1 for each member to Form 1065 for IRS filing, give one copy of his/her own Schedule K-1 to each member or withdrawn member (along with the K-1 instructions) and keep one copy with the club's copy of the IRS filing in the club's permanent records.
  14. Mail Form 1065 to the IRS before April 15. Note that non-filing and late-filing penalties are calculated per month and per member. Be sure to send it to the IRS via Certified Mail, return receipt requested.
  15. Attach Return Receipt to the Club's copy of the IRS filing.
  16. Finally, arrange for your club's Verification Committee to review the club's books for the years. (This may be done at any convenient time, preferably after end-of-year closing).


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Last Chance to Save on 2004 Club Tax Printers!
by Douglas Gerlach,
VP of NAIC Products, ICLUBcentral Inc.

Every investment club treasurer is responsible for filing their club's Federal Tax Forms and for giving each club member an official Schedule K-1 for personal tax filings. There is no escaping the IRS -- all investment clubs with any income or expense are legally required to file tax returns, even if the club lost money or didn't make any trades during the year. And that's just for the Federal Government. Many states also require their own returns for the club and each member.

The 2004 NAIC Club Tax Printer makes the task of filing taxes easy and error-free. The software helps you produce "ready-to-mail" Federal Tax Forms for your club and each member. Just print the finished Form 1065 for your club, plus a Schedule K-1 for each member of the Club active in 2004, then review and sign them. Send them off and you're done!

The 2004 NAIC State Club Tax Printer is also available once again this year. The State Club Tax Printers were a big hit last year, and NAIC is once again offering software to print state tax forms for a select group of states: AZ, CA, GA, MA, MD, MN, MO, and NY. This software generates the required state tax forms for the club and for each member for submission to your state's tax agency. The 2004 NAIC State Club Tax Printer is available in a Desktop Version for use with Windows-based PCs, and can be used with NAIC Online Club Accounting (NOCA) as well as NAIC Club Accounting for Windows.


If your club uses the desktop NAIC accounting software (NAIC Club Accounting version 2.5), both the State and Federal Tax Printers are available on CD and by download. For CD orders ONLY, you can call toll-free 1-877-275-6242, extension 0.

If your club uses the online NAIC accounting software (NAIC Online Club Accounting, NOCA), we suggest that you purchase the Online Tax Printer for NOCA by logging in to your NOCA account and clicking the red "Taxes" tab. This will take you to the appropriate purchase site. Alternatively, you can also purchase by selecting the "Online" Tax Printer at the ICLUBcentral web site.


Remember, until December 31, 2004, NAIC members get a $30 discount off the regular price for each 2004 NAIC Tax Printer. After that date, the NAIC member discount will be $20 off the non-member price, so don't wait too long to place your order! For non-NAIC members, the price is $79. To receive the discount, simply enter your NAIC member number and click the "Save $30" button at the ICLUBcentral store before placing your order.

We anticipate the 2004 NAIC Club Federal Tax Printer will ship and be available for downloading in early January, and the 2004 State Tax Printers to be available later in that month. Be sure to place your pre-order today in order to be among the first to receive the Club Tax Printer!

You can learn more about the 2004 NAIC Tax Printers at


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What Are the Characteristics of a Good Company?

When looking for stocks to purchase, make this your key thought: Invest only in well-managed quality growth companies that are fairly valued. The crucial words in the above statement are "well-managed, growth, quality, and value." Let's review each of these important investment characteristics.

First, let's discuss growth.

A growth company is one whose sales (or revenue) and earnings per share (EPS) are growing at a rate higher than that of the overall economy. Growth of sales and earnings causes growth of dividends and stock price. Over the long term, sales and earnings growth should produce comparable growth in dividends and price appreciation. In a "bear" (i.e. down) market, the company may grow sales at the historic rate but the share price may stagnate or decline. In a "bull" (i.e. up) market, the price may increase more than the company's sales or earnings growth. This shows how investor "sentiment" moves the stock price.

A quality, well-managed company will achieve consistent results year after year. Sales and earnings will grow steadily. Return on Shareholders' Equity and Pre-tax Profit on Sales will also be consistent and superior to peer companies. Such performance indicates that a company has a good management team a very valuable asset. It is very informative to compare the company with competitors in the same industry. Companies that are industry leaders are usually well-managed, quality companies with good potential for growth.

Selecting a company which is "fairly valued" is very important to achieving your 15% portfolio growth rate over the 5 year period. If you expect to benefit from price appreciation over time, it is crucial that you buy the stock when the price is reasonable.

One way of describing value is using the Price-Earnings ratio. The PE (Price-Earnings) ratio tells how much investors are willing to pay for each dollar of earnings. As earnings increase, the price will typically increase. If a company's earnings fall, many investors will sell and cause the price to fall.

Historical high and low PEs show the range of value investors have given a company. Comparing the current PE to historical PEs shows whether or not the stock is currently a good value.

To identify a good value, look for a current PE ratio below the historical average PE. This will allow room for the PE to expand to its historical average or higher. This PE expansion, plus the effect of growing sales and earnings, cause price appreciation.

Many people think that the stock market is a very risky place to put their money. However, every type of investment carries some type of risk. In the stock market, investing in well-managed, quality growth companies that are fairly valued decreases risk. Such companies grow their sales and earnings more consistently than most and often this means that their price movements may be more predictable.

A company's debt load has a bearing on the safety of the investment. With a reasonable level of debt, a company can take advantage of opportunities. It will also be able to withstand difficult periods when the general economy is in recession.

Of course, examining all these characteristics is just the task that all of NAIC's Software has been built to accomplish. Whether you're getting started with NAIC Take Stock, learning the SSG with NAIC Classic Plus, building a portfolio with NAIC Investor's Toolkit or going beyond the basics with NAIC Stock Analyst, you've got the tools available to evaluate any company to see how it stacks up in these four critical areas.

For more information on NAIC Software, including downloadable demo versions, please visit:

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