average cost basis differs from brokerage

Jon Foster

Both Schwab and Vanguard average cost basis cals differs from what Quicken produces.  Has anyone else noticed this?

q_lurker

a)  You are going to need to provide further information including what Quicken you are using and possibly more specific data as to the differences.  How much buying and selling has been done?  Div reinvestment?  

b)  The only issue I am aware of relating to average cost basis errors seems to relate to consequences of converting shares from one class to another (Mutual Fund Conversion or Corporate Acquisition - stock for stock).  Comments I saw were from several years ago (and older Quicken versions), so I do not know if anything has changed or been corrected in more recent versions.  (Search box using 'Average Cost Basis' should reveal some of those prior discussions).   

Rocket J Squirrel

In some cases, Quicken doesn't have enough information to present the true basis of securities. For example, individual bonds subject to premium amortization for tax reporting purposes. The brokerage will present "adjusted basis" which will be different from your original "cost basis". Quicken has no idea the basis has been adjusted.

If this doesn't apply to your situation, do as q.lurker suggested and provide more info on the securities in question.

NotACPA

When you sell the particular security, which Lot Selection method have you been using?  Is it the same method, and the same lots, that your brokerage has been choosing?

John Prewitt

I have created a Quicken file which shows that Quicken does not handle average cost sells correctly. It has 3 buys before a sell.  The 3 buys are:
2448.529 shares for $35,000; 3797.678 shares for $54,000 and 1047.236 shares for $15,000.  The total is 7293.443 shares for $104,000 with an average cost per share of $14.26.
Now the sell of 589.868 shares at $14.26/shares should reduce the total cost basis by $8,411.52. substracting this value from $104,000 gives a net cost basis of $95,588.48.  This is simple math.  The total cost basis that Quicken shows on the portfolio page is $95,568.25.  If you subtract this value from $104,000 you get the cost basis that Quicken reduced the cost basis by, i.e., $8,431.75.  If you divide this value by the number of shares sold you get the average per share cost basis that Quicken used, i.e., $14.29.

I ran these numbers thru a spreadsheet and Moneydance(MD).  MD did it correctly.  Quicken did not.

I am using Quicken Deluxe 2019, version 5.92 on MacOS 10.14.1.

q_lurker

John Prewitt said:

I have created a Quicken file which shows that Quicken does not handle average cost sells correctly. It has 3 buys before a sell.  The 3 buys are:
2448.529 shares for $35,000; 3797.678 shares for $54,000 and 1047.236 shares for $15,000.  The total is 7293.443 shares for $104,000 with an average cost per share of $14.26.
Now the sell of 589.868 shares at $14.26/shares should reduce the total cost basis by $8,411.52. substracting this value from $104,000 gives a net cost basis of $95,588.48.  This is simple math.  The total cost basis that Quicken shows on the portfolio page is $95,568.25.  If you subtract this value from $104,000 you get the cost basis that Quicken reduced the cost basis by, i.e., $8,431.75.  If you divide this value by the number of shares sold you get the average per share cost basis that Quicken used, i.e., $14.29.

I ran these numbers thru a spreadsheet and Moneydance(MD).  MD did it correctly.  Quicken did not.

I am using Quicken Deluxe 2019, version 5.92 on MacOS 10.14.1.

Check your calculator.  Check your data.

You bought 7293.443 shares for $104,000 leading to an average cost per share of $14.259383/share.  ($14.26/share is not precise enough)

You sold 589.868 shares for a cost basis reduction of $8411.15 ($0.37 less than your value),  The remaining cost basis is 95,588.85 ($0.37 more than your value).

That is the number my Quicken produces with those four transactions.

If you have traded in that security before in this account, check that the cost basis for the security was $0 to start with.  There can be circumstances (erroneous) where there are zero shares but a non-zero cost basis.

There are certainly circumstances where Quicken can get the average cost basis different from that produced by 'other' sources (brokerages).  Your described data doesn't capture that as I see it.

     

John Prewitt

John Prewitt said:

I have created a Quicken file which shows that Quicken does not handle average cost sells correctly. It has 3 buys before a sell.  The 3 buys are:
2448.529 shares for $35,000; 3797.678 shares for $54,000 and 1047.236 shares for $15,000.  The total is 7293.443 shares for $104,000 with an average cost per share of $14.26.
Now the sell of 589.868 shares at $14.26/shares should reduce the total cost basis by $8,411.52. substracting this value from $104,000 gives a net cost basis of $95,588.48.  This is simple math.  The total cost basis that Quicken shows on the portfolio page is $95,568.25.  If you subtract this value from $104,000 you get the cost basis that Quicken reduced the cost basis by, i.e., $8,431.75.  If you divide this value by the number of shares sold you get the average per share cost basis that Quicken used, i.e., $14.29.

I ran these numbers thru a spreadsheet and Moneydance(MD).  MD did it correctly.  Quicken did not.

I am using Quicken Deluxe 2019, version 5.92 on MacOS 10.14.1.

John Prewitt

The number of shares sold were not sold at $14.26 but at $14.41.  Try using that value and view the portfolio to see the new cost basis.

John Prewitt

My initial comment of using $14.26 was wrong it should be $14.41.

John Prewitt

q_lurker

John Prewitt said:

My initial comment of using $14.26 was wrong it should be $14.41.

a)  It does not (should not) matter at what price you sell the shares - $14.26, $14.41, $100, or $1.  

b)  It appears you are using a Quicken-Mac version.  You have brought these comments into a Quicken-Windows discussion.  I have no information about or access to Q-Mac operations, so I don;t think I can add anything further.

John Prewitt

John Prewitt said:

My initial comment of using $14.26 was wrong it should be $14.41.

Are you saying that the Window’s version works but you don’t know if the Mac version may not work correctly? Did you try using 14.41 to determine if the new cost basis is correct?

q_lurker

John Prewitt said:

My initial comment of using $14.26 was wrong it should be $14.41.

I am saying my QWin 2017 works correctly for the data you offered.  I don't know anything about QMac versions and their processing.

I have used values other than 14.26 for the sale price.  QWin produces for me the same value for cost basis regardless of the sale price.  Why would that be suspect?  

I suggest you start a fresh topic under the QMac Investing category.  Those folks may not be monitoring a discussion under the QWin Investing category.  

John Prewitt

q.lurker,
Thanks for your effort. I have posted this issue in the Quicken for Mac, Investing. I included the image you posted as well as an image of the results from the Quicken for Mac.

John

Ray Cosner

A caution -- You should be able to get the Quicken and brokerage cost bases to agree.  

But if you can't, be sure to use the brokerage data for your tax returns, since they will report those numbers to the IRS.  A significant discrepancy could get you an "interesting" letter from the IRS.

Jack

I am seeing differences in the Capital Gains report with the new version. Same data file ... report run against previous version and then newly released version.

q_lurker

Jack:  The two reports are showing that different lots were sold.  In one case, the lot acquired 11/12/2018 was sold; in the other case a lot from 8/10/17 was sold.  

Edit the two sales transactions and make sure the correct (and consistent) lot is specified.

Jack

I don't understand how that could have happened. The 2 reports were run against the same quicken data file using the same sales transactions which should specify the same lots.  Nothing was changed in the data ... the only difference was the version of Quicken software used to run the report.  Could it be because the investment transactions are now sorted opposite of what they were ... most recent first (used to be oldest first).  I use FIFO for my sales.

Jack

I think what we are seeing is that Quicken does not actually store the lots when the sale transaction is posted but reconstructs the transactions for the Capital Gains report when it is requested.  The "new" sort order (most recent first when it used to be oldest first) that has slipped into the most recent release in the transaction history of the Investing / Portfolio for the individual securities would explain the difference we are seeing if the Capital Gains report assumes that the transactions are sorted like they used to be and simply selects the "First" lots from the list instead of verifying that they are in fact the "oldest" lots in order to satisfy the FIFO requirement..

A6mD8d

All I know is that the ONLY thing that could have caused this problem for me was the upgrade since I generated correct reports right before doing the upgrade (Thank God!) and afterwards noticing the errors in the capital gains reports where cost basis was inflated, transaction history (Security Detail View) not matching the account register chronologically and the lots order in Select Lots being backwards (Newest lots at the top). Using a backup copy of the data file from before the upgrade and rebuilding lots made no difference. I don't appreciate this happening right before tax season starts!!! Quicken had better be careful since any repercussions suffered by taxpayers due to this issue may end up being a legal issue for them.