Investment Basis
Is there any way to adjust the basis of an investment? I received a return of capital payment which reduces the basis, but I don't see any way to represent that in Moneydance.
Is there any way to adjust the basis of an investment? I received a return of capital payment which reduces the basis, but I don't see any way to represent that in Moneydance.
2 Posted by Brian Adler on 11 Sep, 2009 09:33 PM
J.Pearson,
I am very very sorry that this inquiry was overlooked for so long. In the future we will have a native way to record a ROC, but in the meantime we have a work around method. You should create an asset account named specifically for the ROC. The initial amount in the account should be the amount of the ROC. You can then create a transfer transaction that moves the money out the the created account and into your investment account. The only way to have the cost basis change, however is to delete the initial transaction and create a new one that reflects the new CB.
I apologize for for the incredibly delayed reply and that we don't have a more elegant solution. It is something we hope to address in Moneydance 2010.
Sincerely,
Brian Adler
Moneydance Support
3 Posted by jonh on 04 Nov, 2010 07:37 AM
I don't know if this has been settled but here is my answer to this problem:-
I created a "Return of Capital" Income account to which the amount received was credited.
I then created a "SellXfr" entry for the total cost and shares of the respective security using the above Income Account as the Transfer Account.
I then created a "BuyXfr" entry for the "Original Cost" less the "Capital Return" for the total no of shares.
The above entries leave a Nil Balance on the "Return of Capital" account and decrease the Cost of the security by the required amount.
Support Staff 4 Posted by Angie Rauscher on 04 Nov, 2010 01:33 PM
Jon,
It hasn't yet been implemented so this work-around is much appreciated. I always enjoy hearing about how people customize their Moneydance experience! Please let me know if I can be of further assistance,
Angie Rauscher
Moneydance Support
Check out our new blog series, Moneydance on the Road.
5 Posted by HAFMAC on 05 Nov, 2010 04:28 PM
Any update on when MoneyDance will have ROC ability built in. I've been investing in Master Limited Partnerships (MLPs) which are generally in the energy area. For an example, see ticker KMP. A MLP is a partnership, so one change is that your basis is blended (no lots allowed). That was easy to do with MD by choosing average cost rather than lots. When the partnership pays out cash distributions that is a return of capital. For example KMP pays 1.11 per quarter per share. At year end you get a K-1 (a partnership tax form) that shows your share of KMP's earnings for the year that goes on your tax return. This is income to you and increases your basis you have in the shares. It would be nice if MD had native ways to both add and subtract capital from an investment so that MLPs could be properly tracked.
Support Staff 6 Posted by Angie Rauscher on 05 Nov, 2010 07:25 PM
Hafmac,
I don't currently have a timeline for this feature, but we're in the midst of a priority and feature analysis. I have created a ticket for this issue. The ticket is attached to this discussion. By posting in this discussion your interest in the ticket has been registered. This is equivalent to voting for it. We will post on this forum thread if and when there are further developments on this topic.
Thanks for sticking with us while we work to improve how Moneydance deals with return of capital and other interesting investment account factors,
Angie Rauscher
Moneydance Support
7 Posted by davier12 on 08 Mar, 2011 10:34 PM
I would like to add my support of MD having a native way to record ROC. Using the work around suggested changes the date of purchase which then can have a major negative impact on capital gains when sold.
8 Posted by john.prewitt on 24 Jul, 2011 06:57 PM
As MD considers how to implement a Return of Capital (ROC) feature they should consider the actual process within a brokerage house. The company that is going to declare a ROC or even a dividend know how many shares are held by the brokerage house on the date of record. The company sends the ROC based upon so much money per share, usually several weeks later. The brokerage house determines how much money your account is to receive based upon the date of record and then post the money to your account. I've found that one of my brokerage houses adjust the cost bases for the number of shares in my account as of the posting date. If the number of shares have changed since the date of record then the cost basis is wrong. Shares which were sold after the date of record and before the posting date of the ROC would have the cost basis as the date of record. Share purchased since the date of record but before the posting would have a ROC applied. The ROC scheme should consider that the ROC should be applied to the number of shares in the account as of the date of record. The scheme should also be aware that stock position which have multiple lots should apply the ROC to each lots as ROC/share value time the number of shares in the lot.
What I envision is a ROC transaction where the total amount being returned is in the Amount field, date of record is in the Tax Date field, MD determines the number of shares for the security in the account as of the Tax Date and inserts that number into the Shares field, then computes the average ROC/shares and inserts that value into the Price field. After accepting the transaction, MD adjust the cost basis for each lot as of the Tax Date.
John Prewitt
9 Posted by -Kevin N. on 24 Jul, 2011 07:24 PM
Hi All,
My method of recording a ROC is to sell zero shares for the amount of the ROC.
HTH -Kevin N.
10 Posted by john.prewitt on 25 Jul, 2011 12:52 AM
Kevin,
Interesting, does your account have one lot or more than one lot for the security? Are you using Lot Matching? If more than one lot, is one lot long term and the other short term?
John Prewitt
11 Posted by -Kevin N. on 25 Jul, 2011 12:26 PM
Hi John,
Unfortunately, I've long since closed the positions that I used to recieve ROC's from. At the time I did not Lot Match. I admit that the method that I used was quick and dirty but it seemed to work at the time.
-Kevin N.
12 Posted by john.prewitt on 25 Jul, 2011 07:30 PM
Kevin,
Attached you'll find a test case which shows that MD does not handled you scheme correctly. The security detail does show the correct cost basis but the Capital Gains Report shows that the Return of Capital (ROC) for lot matching does not apply the ROC at all and that ROC for average cost applies only half of the ROC amount.
The test case has 2 companies which has identical transactions, 3 buys (2 long/1 short), 1 sell, ROC of $1,000 and then final sell of remaining shares.
John Prewitt
13 Posted by -Kevin N. on 25 Jul, 2011 08:49 PM
Hi John,
This is an interesting thread. I'm left wondering if the method is to blame or is it an issue with the reports.
-Kevin N.
14 Posted by john.prewitt on 25 Jul, 2011 09:01 PM
Kevin,
I would let MD figure that out. At least they have a test case.
John Prewitt
Support Staff 15 Posted by Tom Freeman on 25 Jul, 2011 09:25 PM
John
Thanks for the test case. I have passed it on to the developers. The ticket has been upgraded to "excellent general investments popular suggestion verified", which in Moneydance support speak translates into "users want this".
Tom