Deductions in InvestNext are a tool to reduce the cash that is being paid to an investor from a distribution. This is most commonly used to withhold tax, but can be used anytime we want the investor to receive a lower cash amount than what they were allocated in the distribution.
A deduction is made on an individual investor basis and can be completed in the "Draft" or "Confirmed" distribution stages by clicking on the name of the investor in the Account column and then selecting the Add Deduction button.
The full distribution allocation is what is used in the system/cap table.
When deductions exist, no cash will be moved for those amounts. Only the cash amount will be pulled from their bank account.
Ex. if there is a return of capital for 50K, with a 10K deduction.
The investors capital balance will be decreased by 50k
The investor will be issued a payment of 40K
The remaining 10K is the responsibility of the sponsor (ex. they hold it for taxes as a common example)