With the tax season in full swing, many of our accredited investors are in the process of submitting their tax documentation. Yieldstreet has been distributing Schedule K1 forms, and meanwhile fielding questions investors have about where the numbers reflected on those forms come from. The goal of this article is to give you a breakdown of the numbers on your K1, and where you can find them in your online investment portfolio.
Below we will address the Section and Fields which get the most questions from our investors.
Part I deals with the Partnership information, which will be completed by Yieldstreet to identify the individual SPV name and tax identification number, depending on the investment opportunity that this K1 is for.
Part II deals with the Partner, or the investor. This part contains information about the investor’s participation in the opportunity.
Beginning capital – For most investors, this number will be 0%. If this is not the case for you, please refer to the FAQ below.
Ending capital – This percentage can be determined by taking the ratio of your allocation in a given investment to the total amount raised for the investment. For example, if you allocated $100K to an opportunity that raised $1M, your Ending Capital will be 10%.
FAQ: My Beginning and Ending Capital fields are different, how were they calculated?
Some investors will see both a Beginning and an Ending Capital in Section J. This is because certain opportunities opened prior to January 1, and were funded post January 1. Thus, the Beginning Capital reflected will be Amt Allocated/Amt Raised by January 1, and the Ending Capital will be Amt Allocated/Amt Raised post by December 31, 2016. For a detailed breakdown or if you have any questions, reach out to [email protected]
FAQ: My Ending Capital is 0%. How was this determined?
If the opportunity closed and was repaid during this tax year (by December 31, 2016), your Ending Capital will be 0%.
Beginning capital amount: This number will be $0 if the opportunity opened within the 2016 tax year. If the opportunity was opened before the 2016 tax year, the number reflected will show the amount invested prior to 2016.
Capital contributed during the year: This number will reflect how much you invested in the opportunity during the current tax year.
Current year increase (decrease): This number is determined by subtracting the Interest expenses (Part III/Field 13) from the Interest income (Part III/Field 6). To find out more about Interest Expenses, please refer to the section titled “Other Deductions” below.
Withdrawals and distributions: This number will be the total amount of principal and net interest distributions for the current year. You may get this number by going to the Reports section of your portfolio and adding up all distributions effective in the 2016 tax year.
FAQ: I have added up all distributions from my Portfolio, but my calculation does not match my K1.
On some occasions, there are distributions that were initiated prior to January 1, but did not hit an investor’s bank account until after January 1, and thus would not have been included in this tax year. All Yieldstreet transaction pages have an “Effective Date” on the Transaction tab in your Portfolio. To get the number reflected on your K1, add up all transactions that occurred with the effective date during 2016. The remaining distributions will be reflected on your K1 for 2017.
Ending capital account: This number can be calculated by adding up all the above, minus the distributions. It will be carried over into your 2017 K1 and will be reflected as the Beginning Capital Account.
Interest income: The interest you earned during 2016 on any given opportunity. It can be calculated by going into your Transactions tab and adding up all interest transactions with the effective date during 2016.
Other deductions: In some cases, earlier Yieldstreet opportunities which were pre-funded by Yieldstreet, accumulated interest from the opportunity while it was being filled by investors. Yieldstreet effectively earned that interest. When the opportunity closes, Yieldstreet passes on that interest to the opportunity’s investors in the form of a investment interest deduction.
This communication and the information contained in this article are provided for general informational purposes only and should neither be construed nor intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Any link to a third-party website (or article contained therein) is not an endorsement, authorization or representation of our affiliation with that third party (or article). We do not exercise control over third-party websites, and we are not responsible or liable for the accuracy, legality, appropriateness or any other aspect of such website (or article contained therein).
1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.
2 Represents a net estimated, unrealized annualized internal rate of return (IRR) of your portfolio and is based by reference to the effective distribution dates and amounts to and from the investments, as well as any outstanding principal and accrued and unpaid interest as of the current date, after deduction of management fees and all other expenses charged to the investments.[read more]
3 "Annual interest" represents an annual target rate of interest and "term" represents the estimated term of the investment. Such target returns and estimated term are projections of the returns or term and may ultimately not be achieved. Actual returns and term may be materially different from such projections. These targeted returns and estimated term are based on the underlying agreement between the SPV and borrower or originator, as applicable.
4 Reflects the initial quarterly distribution declared by the board of directors on February 6, 2020, which will be payable to stockholders of record as of June 10, 2020, and the initial offering price of $10 per share.
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6 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.
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