How are Investment Clubs organized
How are investment clubs
organized?
The investment club may be organized as a partnership,
trust, corporation, or be held in the name of one or more
members of the group.
Since a partnership is the most common form of organization,
this memo will primarily discuss that type of entity. A
partnership is where a group of individuals pool their
resources and share gains and losses among the members of the
group. The partnership generally does not have to be formally
organized. A W-9 Form, Account Agreement, and an Investment
Club Certification of Investment Powers are needed to open up
an investment club account. If there are four or fewer
participants, a tenants-in-common account could be used instead
of the investment club status.
In order to set up an investment club as a partnership, trust,
or corporation the entity would have to obtain a tax
identification number by filing out Form SS-4. The
identification number may be obtained by phone from the IRS.
The numbers to call are listed by region in the instructions to
Form SS-4. Go to the IRS web site or call the IRS at (800)
829-1040.
Where can I find
more information on investment clubs?
Limited information on investment clubs may be obtained in
IRS Publication 550 entitled "Investment Income and
Expenses" or Publication 541 entitled "Partnerships".
Many books are available at bookstores.
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