Before proceeding with the steps below, please check your state's laws for gifts to determine if such gifts are limited to a certain cash value, limited to family members, or are subject to other restrictions.
Note: Be wary of giving units to people who are not prepared to contribute to the club as fully-participating members. By receiving units, they become members of the club and the partnership structure.
For these steps, we make the following assumptions (as an example):
1. The present listing is under the social security number (SSN) for member A.
2. There will be a 50/50 split in the units between member A and B. You can use other percentages if need be, but 50/50 is easy to figure out for this example.
3. The split is not happening at the very start of a year; and the split will require figuring out how much of the current income/loss to apply to each member.
In Addition to the steps below, we also have a simple spreadsheet, which you can use to help keep track of the figures needed when transferring units. The spreadsheet can be accessed by clicking here.
Preliminary Steps:
1. Go to PEOPLE, then click on the member A (if not done already), then choose EDIT PROFILE. If the SSN is not already member A's, enter it, and click OK.
2. If member B is not already in the club, Click PEOPLE, go to ADD MEMBER (left side) and create a listing for member B with Bs name and SSN, then click OK.
To figure the number of units to split:
1. From the main Accounting page, click Member A's name in the Member Value section.
2. Note the number of units held by member A, and the figure in the Total paid in plus earnings to date [PIPE] column, after the latest transaction.
3. Go to Accounting > Utilities > Allocate Income and Expenses.
4. Choose the current year, then click YES.
5. When the allocation is complete, go to Reports > Allocation of Income and Expenses. Choose the current year, and click SUBMIT.
6. Print a copy of the report to work with. On the printed copy, add the figure from the 'Total' column for member A to the PIPE figure you wrote down from the Member Unit Ledger Report.
NOTE: If the Net Profit figure is a loss [negative] subtract that figure instead of adding it.
7. The resulting figure is the Cost Basis for member A's position in the club.
To show the units being removed from member A:
1. Go to Accounting > Members > Beginning Balances.
2. Enter a date one day after the date of the latest Valuation Report.
3. Select member A.
4. For Type, choose Paid In
5. For the amount, enter 50% (or however much you are transferring) of the cost basis calculated for member A. Don't forget to make the numbers negative!
6. Take similar steps for the Units; enter 50% (or however much you are transferring) of the units that you calculated for member A. Again, don't forget to make them negative!
To show the units being added to member B:
1. Go to Accounting > Members > Beginning Balances.
2. Enter the same date as used for member A, above.
3. Select member B (when it asks which member). For amount, enter 50% (or however much you are transferring) of the Cost Basis computed in the previous set of steps for member A.
4. For Type, choose Paid In.
5. Enter 50% (or however much you are transferring) of member A's units in the unit box. In the comments, enter 50% of the units 'gifted'.
When you are done, 50% of member A's position should have been transferred to member B.
