Money or shares received after disbanding

As much as you try to plan ahead, you may find yourself in a situation where a dividend, or interest payment comes in after sending out all of the member checks to close down your club. If that happens, you do have a few options about how to proceed. Before listing the possible courses, we do strongly suggest that no matter what you choose, it should be a matter for the club to decide, not something that should rest on the individual treasurer.

Please note: The steps below assume that the transaction happens in the same year that the club has closed. If that is NOT the case, keep in mind that you will need to regenerate the tax forms, and choose the option for a short year return, since the transaction happened in a new year.

 

The most traditional steps to handle this are:

  • Delete all the member withdrawals that were entered after the final club valuation

  • Enter the transaction(s) on the date that it occurred, or 12/28 of the year it was received, whichever is earlier.

  • Enter a new valuation at least one day after the new transactions.

  • Enter the member withdrawals at least one day after the new valuation.

 

As an alternative to this option the club might elect one member (usually the treasurer) to receive the extra money. In that case, the only difference in the steps would be that instead of deleting and re-entering all of the member withdrawals, the treasurer would only delete and then re-enter one withdrawal. This method can be useful if most, or all of the club took stock as part of their withdrawal, if only because cash and stock withdrawals can take longer to re-enter.

 

Another option, which does not involve re-doing any transactions in the accounting system is to make an entry for a charitable donation:

  • Enter the transaction on the date it occurred, or 12/28 of the year it was received, whichever is earlier.

  • Enter a charitable donation in the accounting system.

  • Send the donation on behalf of the members, not the club.

  • Using the ownership percentage at disbanding, let the members know their share of the contribution, for personal taxes

The only potential down-side to this is that the members will receive less money, on the other hand, they will be able to write off some portion of any capital gains from the club closing.

 

For steps on removing and re-entering withdrawals, please see either:
https://www.iclub.com/faq/index.php?solution_id=1408 if you use the online accounting at myICLUB.com

-OR-

https://www.iclub.com/faq/index.php?solution_id=1409 if you use the desktop Club Accounting 3 program.