Return of Capital
Re: Return of Capital
After many years of using Quicken, I’ve just upgraded to the
newest, Quicken Deluxe 2017 for Windows on Windows 10. Frankly, I
am very disappointed to see that Quicken’s handling of the Return of Capital
ROC investment transaction is still in error.
It’s a real shame that a great product like Quicken exposes its
reputation to such a simple transaction.
I’ll say again what I and other Quicken users have said and
documented before: For us, the
recipients of Returns of Capital, a ROC transaction is an increase (debit) to cash (for the
particular investment account), and a decrease (credit) to the original cost
basis of the specific security involved (applied to the oldest lot first – See
IRS Publication 550). There is NO income
and NO impact on Market Value.
NONE. Think of a ROC transaction
as a retroactive reduction of original purchase price which included NO
expense; cash flow, yes, but NO expense,
and conversely NO income when that security pays out a ROC. It doesn’t matter if this transaction is
accompanied by an amount reinvested (BUY) transaction.
Early last year (2016 and earlier?) Quicken was correctly
increasing cash in the specific investment account, and correctly decreasing
the cost of the security affected. BUT,
in addition to those correct actions, the ROC transaction was also incorrectly
spinning out an income item, albeit an Uncategorized Income item.
Then later last year (sometime after 04/15/16), ROC
transactions started to be Categorized as, and included with Dividend
Income. At that point, we’ve gone from
bad to worse. (Note: The impacts on Cash and Cost were still being
handled correctly, but income? No).
Most recently, in addition to being erroneously included
with Dividend Income, the amount of ROC transactions has also been incorrectly subtracted
from, of all things, Market Value on the 12/31/16 beginning balance of
2017’s Net Worth report, but oddly, and correctly, not on the 12/31/16 ending
balance of 2016’s Net Worth report;
and the Investment window shows the correct balance for that security as
of 12/31/16. Now we’ve gone from bad, to
worse, to WORSER.
Can you please correct/eliminate these attempted income items
and impacts on market values for the ROC transactions? It would help if the corrections could be
made retroactively to the beginning of 2017.
For quality control purposes, an Income Statement for any
period reveals how Net Worth has changed over that period of time. Therefore, a basic principle of accounting
states that Net Income/Loss for a period SHOULD be equal to the change in that
period’s Net Worth. The Quicken Net
Income and the change in Net Worth do NOT agree, necessitating a lengthy
process of identifying variances and generating reconciling items in order to
create useful reports outside of Quicken.
The ROC transactions are not the only reconciling factors, but appear to
be a major factor.