Done a few investment club returns in the past. They were all Partnership returns (Form 1065). The General Partner is responsible for the return and each memeber gets a K-1 for his personal return.
I have been doing "investment club" tax returns for more than thirty years. I have *never* seen one that had - in my opinion - adequate operating rules. Many of them just muddle along "rulewise" by the seat of their pants. Or my pants, since I end up making up rules for them.
First problem will be when the four initial members pay in different amounts at different times, the second problem will be when they want to let a fifth member in, and the third problem will be when one of them wants out.
Have the "investors" thought about rules for these events? Don't forget that the "investors" will be looking at market value of the club's investments, and you'll be looking at the cost of those investments, if you even get that much information. Who will be doing the bookkeeping?
Is your "client" really ready to pay for your advice and assistance in *operating* the club? I don't mean investment advice and I don't mean preparing the club's tax return, I mean advice on how to administer the *membership* in their club.
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= Quickfinder Team Member
