How to Handle Taxes as an Investment Club Member

As a member of mbg investment club, you will receive specific tax documents each year that outline your share of the club’s financial activity. Below is a simple guide to help you understand how to file your taxes as an investment club member.

What to Expect

• Schedule K-1 (Form 1065): Each member will receive a K-1, which reports their share of the club’s income, losses, and capital gains. This information needs to be included in your personal tax return (Form 1040).

• Other Forms: If the club generates dividend or interest income directly, you may also receive Form 1099-DIV or 1099-INT.

How to Report Your K-1 on Your Tax Return

Here’s how to handle your K-1 in specific scenarios:

1. Ordinary Income Example
   If your K-1 shows $1,000 in ordinary income, enter it on Schedule 1 (Form 1040) under "Other Income."

2. Capital Gains Example
   Suppose the K-1 shows a $2,000 long-term capital gain. Report this on Schedule D (Capital Gains and Losses) of your tax return.

3. Dividend Income Example
   If your club distributed $500 in dividends, you will receive a Form 1099-DIV. Enter this amount on Form 1040, Line 3b.

4. Loss Example and Limitations
   If the K-1 shows a $4,000 capital loss, you can deduct up to $3,000 against other income. Any excess can be carried forward to future tax years.

State Tax Filing Considerations

Some states require you to report partnership income even if no federal tax is due. Make sure to check your state’s filing requirements.

Important Deadlines

• March 15: You will receive your K-1 by this date.
• April 15: Ensure you file your personal tax return by the federal deadline.