Hi - We are set up as a corporation and all members enjoy use of the pool and have ownership. They have one vote per family and they purchase a stock (equity) that is refundable when they resign their membership. They get a check back for $300. We do operate like a co-op, but I can tell you I have never heard anyone use that word or describe the business as a co-op.
For 20 years the stock fee was tracked as income. The return stock fee was setup as an expense. When a member redeemed their stock, a check would be written. Originally thinking the stock fee should be set up as equity/owner's equity. Is this the same you are saying. I apologize, not 100% sure how to set up equity allocated and unallocated equity.
Thank you again!! You are such a big help!
@Swimhole
Sorry to keep dragging this on. Maybe there's a reason this stock fee has been recorded as income? Do members pay a monthly fee in addition to their stock fee? If not, recording it as income has merit. The IRS requires that the way you keep your records should clearly reflect income. So, if the stock fee is a major source of income, you should record it (or a portion of it) as income.
If members pay fees in addition to their stock fee, then, as you suspected, it should be classified as equity. Don't worry about allocated vs. unallocated in this case. Just set up a service item called owner equity (or member equity) and map it to an equity account. Then, use that item to sell and refund the stock fee.
Does your organization have a CPA that prepares your tax return? If so, I would ask them about the forfeiture. If the stock fee is considered equity, I'm not 100% sure that should be recorded as income upon forfeiture.
