Frequently Asked Questions
Welcome to Turn Two Trading Clubs questions and answers section. Please let us know if the new questions and answers are helpful and if you found the answer to your questions.
Monthly Account Statements:
Beginning with May 2002, all members will receive a printed statement each month itemizing monthly activity. These statements may be used for estimating your taxes and potential payments to the IRS. Form 1099's will be provided at the end of the tax year.
How will you document our participation in the club and how about the arrangement of income and interest payments for tax and legal purposes?
We will draw up a simple partnership agreement and loan agreement wherein you (individually) loan me the money you have contributed. I, in turn pay you interest which we can set at a variable rate (based upon performance). This identifies your return as interest received, not capital gains on securities, which (I believe) qualifies at a lower tax rate, but you need to ask a tax pro on that. Also, for record purposes, these interest payments would be on paper only until you request money from your account.
Once the club is converted and established as a hedge fund, your money would then be identified with the club and would be reported as short term capital gains in accordance with the quarterly club reports. So in layman's terms here is a bulleted version of what we can do: Your contributions (deposits) are principle in a loan to me. We have an agreement that I pay you a variable interest rate with payments being monthly unless otherwise scheduled. Your returns are interest I pay to you for that loan. For tax purposes, you will only need to report the income if you receive more than $400 from me in actual payments. If you take no money out, you will not have reportable income.
What is your policy on Withrawals?
Individuals have 1 week to make withdrawals from their accounts after the monthly update is issued. A deadline for this event is provided in the monthly update email. Individual withdrawals are limited to one half of earned return for that month unless otherwise authorized by the manager. Turn Two is, by nature, very liquid. This results in mostly cash status after each business day. Individuals requiring emergency access to their funds will generally be permitted to withdraw up to their entire account with the funds available within 3 business days to allow for processing of the request. Withdrawal of more than your monthly return will result in liquidation and termination from Turn Two. You will be permitted to rejoin Turn Two after a 90 day waiting period.
What about beneficiary information?
I recommend we all update our wills to include the establishment of our agreement and final disposition of funds. Please send me your beneficiary info as well, this will make the process easier if something were to happen to you. Your final instructions should be included in your will, I would prefer to not have any details of that as it would create havoc if there were any discrepancies. This is all preliminary in nature as I have not fully discussed it with my attorney and therefore details may change. Hope this addresses your concerns and answers any questions, if not call or email. Thanks
How will you cover operating expenses?
Here's the deal! I will create a new account that will accumulate a return each month This account will be for Turn Two Admin, TT# TT0000. This account will appear first on the spreadsheet but will not have a chart attached (wasted space). The account will begin each month at $1000. This will return approx $300-$400 each month to help with operating expenses. The balance will carry over in a checking account, therefore, in the capital account (the spreadsheet) it will begin each month at $1000. This will allow us to look and see what the compound return is for each month by monitoring this "tracking account".
The $1000 dollars will not be deducted from any accounts, it will be artificially inflated into the club balance, therefore lowering everyone's ownership ratio slightly, this will provide the return for the month and will make each person's share of expenses proportionate to their ownership ratio. Once the accululated funds in the checking account have surpassed $1000, I will deposit the $1000 into the Datek account therefore making the club balance real and not artificially inflated by $1000. Growing pains are inevitable with our great fortune.
How do you handle deposits?
Deposits received will be wired on Friday morning and will be included in the beginning balances for the following week. Deposits can be made at anytime. Deposits are collected throughout the week and wired to the brokerage account on Friday morning. These funds will be credited to the individual capital account for opening on Monday of the ensuing week. Deposits will be credited on Friday evening of the week they post.
Deposits can be mailed directly to Datek. The instructions for sending a deposit to Datek are:
Personal check or bank cashier's check ONLY (no money orders - per Datek!)
Payable to following: Datek FBO Dennis Little -or- Dennis Little (Endorse on back - "Payable To Datek")
Include Username in Memo: LITTL42062
Mail to following address:
Datek
PO Box 35999
Newark, NJ
07193-5999
You can mail any way (Regular, Priority, Express). Once the partnership agreements are completed and we open the Club Business checking, we will be doing deposits through that account only. In the meantime, just send your deposits directly to me or Datek, and send me an email noting the amount so I can credit it to you.
Does the IRS provide free tax information and services?
Yes, please refer to the IRS Web Site for more information on IRS Services.
MORE QUESTIONS TO BE ADDED SOON!
