Here’s a general overview of how basis is adjusted, following typical investment club accounting practices:

### First, what is “Basis” or "Cost Basis" for a member?
A member’s basis is the total amount they have invested in the club, adjusted for any club income, expenses, and distributions allocated to them over time. Measured against their Market value on the Member Status report, Cost Basis lets a member see how much their investment in the club has increased over time.

How Basis is Adjusted Upon Withdrawal

1. **Calculate the Withdrawal Amount**
- For a full withdrawal, the value of the member’s withdrawal is their number of units multiplied by the unit value from the club's Valuation report.
- For a partial withdrawal, the club determines the amount or value of the withdrawal.

2. **Determine the Member’s Final Basis**
- The myICLUB.com site tracks each member’s basis, including their contributions, share of club income/losses, and any prior withdrawals or distributions.
- When a member withdraws, the system checks for any gains or losses up to the Announcement date used in the withdrawal. Those gains or losses are applied to the Member's Basis; we call this new figure the Adjusted Tax Basis. On a full withdrawal, the member's entire share for the year is applied; in a partial withdrawal, the system takes a percentage of gains and losses depending on how much the member is taking in their withdrawal.

3. **Adjust the Member’s Basis**
- The member's regular basis, plus or minus any gains or losses for the year is their Adjusted Tax basis.
- That Adjusted Tax Basis is then reduced by the amount of the withdrawal.
- If the withdrawal amount is greater than their Adjusted Tax basis, the excess is generally treated as a capital gain for tax purposes.
- If the withdrawal amount is less than their basis, the difference may be a capital loss.

4. **Club’s Records Update**
- The club’s accounting records are automatically updated to reflect the withdrawal.
- After a full withdrawal, the member’s final Cost Basis goes to zero; any difference between the cash they received and the cost basis after the withdrawal will show up on the Withdrawal Details report as either Capital Gain or Capital Loss depending if the member took more or less than their Adjusted Tax Basis.
- In a partial withdrawal, the final Cost Basis only goes to zero if the member had a capital gain. If the member did not take more than their Adjusted Tax Basis, then their basis is simply adjusted down on the Member Status and other reports.

### Example
Suppose a member’s basis is $5,000. They withdraw and receive $6,000 (because the club’s investments have appreciated), the $1,000 excess is a capital gain. On the other hand, if they receive $4,500, the $500 difference is a capital loss.