Aside from the Date, Amount, and Account, there are two areas that need special consideration when entering an expense; the Tax Status, and the Distribution Method.

Tax Status

There are two kinds of expenses associated with cash accounts: Investment and Non-Investment. Only expenses directly related to investing activities should be marked as such. (e.g., pizza for a club meeting is not tax an investment expense, but the cost of report copies for club members are)

• Investment expenses include such items as rent, office supplies, dues, and subscriptions.
• Non-investment expenses include such items as pizza for the club meeting, flowers, parties, cookies, and greeting cards.

Distribution Method

Allocation attributes portions of the expense, and therefore the ownership and tax consequences of an expense, to each member. Allocation applies only to expense transactions. You can allocate expenses in one of two ways:

• Allocate the expense equally among members.
• Allocate the expense to members in proportion to unit ownership.

For example, if the expense is for copies of reports given out at a meeting, then a 'by member' expense might make sense. If the expense is for bond insurance covering the total portfolio, then it might make sense to distribute the expense 'by ownership share'

Note that equally allocated expenses subtract units from members, and will show up on Individual Valuation Unit Ledger reports. Expenses allocated by unit ownership do not subtract units from members, and do not show up on the Individual Valuation Unit Ledger reports; the system waits until the end of the year (or a members withdrawal) to calculate their share of any expenses entered as By Ownership.

Category

In addition, myICLUB.com allows you to categorize club expenses. This isn't required for tax purposes, but can be handy if the club wants to organize expenses a little more than just as Investment or Non-investment. Once categorized, clubs can review the Expenses report to see how their money is being spent.