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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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Is selling privite equity golf membership a capital loss

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Purchased 1/350 undivided interest in private equity golf facility in 1988 for $37,500. Sold membership in 08 for $12,500. Do I have a $25,000 capital loss to report?

DearCustomer

I need you to clarify the charachter of the transaction.

You state first that you had a 1/350th undivided interest in the private equity golf facility; but then you say you sold a membership.

Which is it? did you own a share or was it a membership.

How can you tell the difference. A share would result in your sharing in profits, losses, of the business or being paid dividends, etc.

Tell me more about the relatinship and the shares?

Customer: replied 8 years ago.
The "interest" is in a private golf course owned by individual members (set at 350 members)and referred to as an equity golf club. The value of an equity membership changes each month based on what a departing member is willing to sell his interest for and that a buyer is willing to buy it. A private equity membership share has flucturated in value from $85,000 to $5,000. We are assessed pro-rata to finance operations when deficits occur. If the golf club facility was sold to a purchasing entity -the sales price would be divided by 350 and each owner would get his pro-rata amount. The cost to play is a separate $1000 per month. Hope this helps...

DearCustomer

Since these operate as privately held shares and are negotiable, then there can be a capitall gain or loss.

use schedule D to determine capital gains and losses.

You can not take a marke value decline as a loss.

You realize the gain or loss based ont he capital gains formula at the time you sell your share.

 

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