'Share Transfer' Changes Cost Basis (Cdn Quicken 2017 Home & Business for Windows)

Norbert · July 2017

I recently transferred shares between accounts. The first three transferred seemed to work fine. The subsequent transfers involving shares that were part of a dividend reinvestment plan generated one 'Removed' transaction and a large (up to 100) 'Added' transactions. I suspect that Quicken was trying to recreate the sequence of transactions to properly calculate the cost basis.

I checked the cost basis in the old account prior to the transfer and again in the new account after the transfer - the cost basis values were incorrect (higher) in all but one transfer.
Has anyone else seen this and figured out the cause?

For the first three transfers, I think I can edit the 'Added' transaction and correct the problem. However, the large number of 'Added' transactions poses a problem in the subsequent transactions. The easiest solution would be to collapse the individual 'Added' transactions into a single one with a matching Cost Basis. However, the 'Removed' and 'Added' transactions are not linked, and I have not figured out a way to delete a block of investment transactions, either within the investment account or from a 'Search All'. Deleting each 'Added' transaction manually will take several hours. Has anyone found a solution?

Thanks, Norbert

q_lurker · July 2017

Sort of. The program is not trying to "recreate the sequence", but it is creating all the data in the new account that you would need to specify specific lots to be sold out of that new account. The transfer is being done on a by-lot basis, though the removal side is all-at-once. I know Canadian laws are different than US, so I do not know if that level of data is helpful or applicable.

That being said, the total cost basis for the entire security and the specific cost basis for each lot should not be changed through the Shares Transferred process. I can't say I have seen that problem before. Specific to the three that transferred as one Add Shares transaction, you should be able to edit that Add transaction and put in the correct basis as you suggested. But I would also encourage you to be very sure of yourself in doing so. I would want to understand what value Quicken did plug in and why. RtrnCap transactions that impact cost basis could be a factor. Commissions on the purchases could be a factor. Prior sales could be a factor. If you are using multiple currencies and the two accounts are in different currencies, that could be a factor.

Hopefully, once you better understand the simpler transfers, your actions for the more complex variation will be clear.

You can delete a block of transactions out of an investment account through a Banking Transactions report. Specify the applicable account and dates, highlight (select) the applicable transactions to be deleted, click the Edit button and go for it --- all after you make sure you have a good backup at hand.

Norbert · July 2017

@q.lurker, thanks for the fast response! Canadian securities taxes do not have the concept of short/medium/long-term capital gains. Before using Quicken, I used to calculate a running ACB using a spreadsheet that takes into account purchases (including dividend re-investments), return of capital, and sales.

The issue is that the reported Cost Basis before and after the stock transfers are different, even through there were no intervening transactions that should affect the ACB.

I am able to create a Banking Transactions report for the specific security in the target account and can select multiple 'Shares Added' transactions. However, I do not see an Edit button. There is a Find/Replace button at the top - it brings up a 'Find and Replace' dialog where I need to specify the find criteria but is designed for banking account columns.

Thanks, Norbert

Unknown · July 2017

There is no "edit button". Run the report, select the transactions, right click to select the menu item to delete them.

Unknown · July 2017

BTW I did a move of a security between accounts recently (Quicken Windows 2017 US) and here is what it should look like:

As you can see from the one I edited all the information about cost, and when it was acquired was reproduced in the Add Shares transaction (one per lot).

The cost basis should be right, but note that other calculations will be wrong.
For instance anything based on "return" especially if you have the portfolio grouped by account (the "return" will be associated with the old account).

And also because the transaction date is use when determining things how long you have owned the security for YTD, 1-Year, ... those calculations will end up with N/A because it thinks you haven't owned the security for that time period.

Norbert · July 2017

@QPW, magic! I can confirm that on my version of Quicken, a Banking Transaction report allows me to select a range of investment transactions, and that right-click/Delete Transactions made the 'small lot' adds disappear. I could then edit the first 'Added' transaction to set the correct Cost Basis. This will save me a lot of time and potential Quicken database corruption.

I should have been able to figure this out myself (:-). I think the 'magnifying cursor' threw me off, in that it implied that only a specific operation was possible, rather than the normal cursor that I associate with selecting and context menus. The brain can play tricks on us....

Thanks, Norbert

Norbert · July 2017

I had a call with a Senior Technical Support person at Quicken yesterday. He had seem similar problems in the past where Quicken had posted a share 'Added' transaction with obviously incorrect values. Unfortunately, the Investment Transactions report for the 'to' account did not show any weird entries.

I had a close look at two securities that were not part of a dividend reinvestment plan, where only one had a different Cost Basis after the share transfer. I manually calculated the Cost Basis for both and verified that the Quicken value in the 'from' account was correct. The security showing an incorrect Cost Basis in the 'to' account had a number of stock splits, which was not the case for the other security. I will be going through a similar procedure for the other securities over the weekend to confirm the hypothesis and also that the 'from' account Cost Basis values are correct.

q_lurker · July 2017

One thing that comes to mind with the splits -- if it was an odd-ratio split, like 3-for-2, you might have been due a fractional share and received cash in lieu of that fractional share. The correct way to handle that is recording it as having received the fractional share, then selling that fractional share. That sale will then drop your total cost basis for that holding slightly. If your differential is small, that could be a consideration.

(Usually from my brokerage information, I see the received and subsequent sale and that is what directly ends up in Quicken, but that is not an absolute.)

Norbert · July 2017

@q.lurker, I was able to demonstrate the problem with a security where no odd-ratio splits were involved. Also, the results are much larger than what would be caused by a 0.5 share sale. In the cases where the split did result in a fractional share, I followed the steps you described above.

Thanks, Norbert

Norbert · July 2017

The fog is starting to lift. The problem was not restricted to securities involving stock splits. The trigger appears to be stock sales combined with additional stock purchases and/or stock splits. I am waiting for confirmation from Quicken Support but it seems that the Cost Basis for the 'to' account was calculated using the FIFO method. Canadians have to use the Adjust Cost Base method (similar to the US 'average basis' calculation) which was correctly used to calculate the Cost Basis in the 'from' account.

Thanks to your tips on how to clean up the hundreds of 'Added' transactions, I have been able to fix up my Quicken accounts.

Unknown · July 2017

Well that sort of makes sense, but I'm not really following what is happening.

FIFO/averaging only applies to securities that have been sold, and those shares shouldn't be in the move of the securities.

Each lot represents an amount of shares bought at a certain price.
As in I buy 10 shares of Google at $123.33 a share.
If I then buy 14 shares of Google at $132.32 a share, that is a different lot.

If I buy 24 shares of Google at the same time, but it gets broken into two buys at different prices, it is possible the broker might send that down as either an averaged price for all, or as two different buys. In either case it isn't Quicken deciding what the cost basis is.

Now say I sell 15 shares. I can decide if I want to use FIFO which would give me 10 shares with a cost basis of $123.33 and 5 at $132.32. Or in fact any combination I would like. Now in Canada it sounds like you would instead take an average cost to decided on taxes. Well that would be on the sell. Note that with using FIFO to decided what shares to sell I would end up with no shares in the first lot, so it will not even be involved in moving the security to the other account. And the second lot would be only transferring the shares that are left in it.

With remove and add there is no sell. Following my buys above I would transfer all the remaining shares so I would end up with a lot of 9 shares at a cost basis of $132.32, and another lot of 24 shares with a cost basis of whatever was sent to Quicken during that buy. (Note for all of this I'm ignoring commission and fees).

So I don't see how the way the taxes are being handled should affect this.

q_lurker · July 2017

@QPW: I took it that he did have some intermediate sales and that for the 'from' account, the effect of those sales considered Average Cost basis and the remaining Cost Basis was properly figured (before the Remove). But as the shares were brought into the new account, a different cost basis was determined (perhaps considering only the purchase price of those moved (added) shares.

Buy 10 @ 10
Buy 10 @ 15
Total Cost = 250 = 12.50/share

Sell 'first' 10 shares, cost basis reduced by 12.50/share to total of $125. (Doesn't really matter if selling first lot or second lot or some of each.)

Transfer shares
The Remove is getting it right - cost bsis of those shares drops by $125 to $0.
But the Add MAY be seeing the first lot sold and looking at the second lot of 10 shares and saying they are coming in at their cost of $15/share = total of $150.
That rings a bell in some deep long forgotten memory bank of mine - either reality or my imagination.
The fix would be as I think Norbert identified - Edit the Add Shares to reflect the proper average cost basis and consolidate multiple lots into one lot in the receiving (to) account.

Unknown · July 2017

Hmm sort of sounds like the "return" numbers were Quicken is holding "magic/hidden" numbers in the account, that don't transfer to the new account.

I was expecting them to fix up the cost basis as needed, but it seems like they took the approach of leaving the original cost basis alone and recalculating depending on what they see in the account and maybe a hidden value.

For instance taking your example.
Buy 10 @ 10
Buy 10 @ 15
Total Cost = 250 = 12.50/share

I sell 10 shares at $12.50 cost basis.
That leaves me with 10 at $12.50 cost basis.
I buy 10 shares at $20 a share.

I take it that the calculation is 10 @ 12.5 "+" 10 @ $20? ($325 / 20 = $16.25)

On the other hand if do the it like this:
Buy 10 @ 10
Sell 10 cost basis is $10
Buy 10 @ 15
Buy 10 @ 20

150 + 200 / 20 = 17.5

If I was going to implement this my first problem would be to know what buys to include. Because just because a lot is sold doesn't mean that it is now taken out of the calculation for the cost basis of other lots. They are probably storing some kind of hidden cost basis value, which isn't getting transferred to the new account.

I have to wonder it they could have made everything easier by just updating the original cost when new lots came in.

As in:
Buy 10 @ 10
Then record Buy 10 @ 12.5, and change first lot to 10 @ 12.5.

Anyway it is done it is clearly going to be confusing.

q_lurker · July 2017

While my prior statement was conjecture, a test series with QW2017 US R6 is behaving as I speculated. The Add Shares side of the transfer is looking at the original cost basis of each lot transferred and using that value rather than using the cost basis computed in the sending account that also considered prior and partial sales of lots. (I did not do any testing with RtrnCap transactions in play.) Stated another way, I created a series of identical buys and sells for two securities, one set up for Average Cost and one not. The final transactions was a Shares transferred. As they Adds came into the "To" account the data was the same even though the prior cost basis values in the "From" account were different.

I noted that for the Shares Transferred pop up for the Average Cost fund, the option was available to Choose lots. That strikes me as odd and incorrect. If the security being transferred is set up for Average Cost, there should be no lot specification applicable. When selling shares of such a security, there is no ability to specify lots. Likewise for a direct Remove Shares. Shares Transferred behaves differently than Sell Shares and Remove Shares.

Now I also feel compelled to note the challenge already in play - that is, these Remove and Add Share transactions are not linked - for either Average cost securities or regular lot-specification securities. Thus if the user executes the Shares transferred function, then subsequently corrects or changes relevant data in the sending account, that change will not be carried over through the Add Shares in the receiving account.

Clearly there is an issue (a bug) with respect to the Shares Transferred for securities set to use Average Cost. (US version for many years) I suspect this is also existent in the same form in the Canadian versions (also for man years).

Unknown · July 2017

I agree, I would bet that the developers never thought of this situation.

Norbert · July 2017

@QPW and @q.lurker, the problem is that Quicken for Canada calculated the Cost Basis in the 'from' account by averaging all stock purchases. However, it calculated the Cost Basis in the 'to' account using the FIFO method, resulting in 'Added' transactions in the 'to' account for each lot of shares purchased. If there were interim sales of shares, these were removed from the purchase history, starting with the oldest purchases. Effectively, that removed those early shares from the Cost Basis calculation in the 'to' account. In on case, the Cost Basis jumped by 85% after the share transfer between Quicken accounts.

@q.lurker, you raise a good point about how well Quicken deals with the flexibility of US capital gains calculation. I am just happy that Canada decided to keep the calculation simple ...

Thanks, Norbert

q_lurker · July 2017

What you are describing is exactly what I have confirmed for the US version when the users opts to use average cost basis for a specific mutual fund security. I believe that to be independent of splits and other such nuances. For the US version, if transferring less than the entire holding the user has the option to specify which lots are transferring (does not have to be FIFO), but even those specified lots transfer at their cost basis, rather than at an average cost basis.

It is a subtle yet definite bug - subtle in that it must be a Shares Transferred action for a security that has had both multiple buys at different prices and at least one sale before the transfer (and for the US user, must have selected average cost for that mutual fund). There are likely more Canadians affected, but most probably did not pick up on it as you did.

Again, my memory and a couple of other clues tell me this has come up before, but it is not a common circumstance.

Unknown · September 2018

I use Canadian H&B 2016. I recently did "transfer shares" from one account to another, and found that the original purchase price was not used, but instead the price on the date of the transfer was now considered the purchase price. This is clearly wrong.
Quicken tech support confirmed this couple of months ago, but no solution in sight. Known issues in the Canadian version go unresolved.

Unknown · September 2018

Sorry...I meant to say that the "transfer" does not include the exchange rate on the date of the purchase, but instead inserts the exchange rate on the date of the transfer. This causes TAX reporting issues to Canada Revenue Agency on USD investments.

Norbert · September 2018

@organone, you raise a different but equally irritating feature of Quicken. Foreign currency transactions are generally a mess, often using the current exchange rate rather than the exchange rate at the time of the transaction. I have yet to get Quicken to accept that this is a problem. For foreign assets, I track transactions via a spreadsheet.

Unknown · September 2018

Norbert...in most reports, there is a box called Transaction Exchange Rate. This will use the exchange rate that was recorded on the date of the transaction. If you do not check this box, the report uses the last recorded exchange rate "on the date you run the report". This is indeed can create a mess, as you have to either manually record exchange rates or do a One Step Update everyday to download the daily exchange rate. Since I became aware of this, I have avoided problems with reporting to CRA. Going forward, I print the report and list the exchange rate in the report header. Hope this helps. (btw...Canadian Quicken use to reliably download USD-CAD historical rates...but that feature stopped working about 3 years ago...and they have not fixed it)

Norbert · September 2018

Very interesting. I see the 'Transaction Exchange Rate' option in investing reports. It does make a difference when I calculate capital gains on USD stocks, but the results are not the same as my spreadsheet. There are no guarantees that my spreadsheet is correct - I will dump the Quicken securities transaction report and see if I can figure out what is happening. So far, I have not found a Quicken report that gives a running ACB.

Do you know when this 'Transaction Exchange Rate' was added? I talked to Quicken about this issue in 2017 and this option was not mentioned. It would be create if Quicken added the same option to banking reports.

Thanks, Norbert

Unknown · September 2018

I've used Canadian Quicken since 2010. TER has been there at least since 2013 or 2014, and possibly sooner. If you use Excel, you can set up a sheet with the daily exchange rates from Bank of Canada, then in another sheet add two columns using VLOOKUP to a Quiken report to automatically insert exact rates for the buy and sell side of any Quicken transaction. It takes time to set up, but once done you'll have it going forward. Best Wishes

'Share Transfer' Changes Cost Basis (Cdn Quicken 2017 Home & Business for Windows)

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