Cash Distribution

Russ Donovan

When my broker reports "a cash distribution" (vs. a dividend"), should it be entered in Quicken as "Return of Capital", or as a Dividend? I don't believe it's relevant, but I'm using Quicken 2018 for Windows.

Vetta

It depends. If it's definitely not a dividend it might be a Return of Capital, proceeds from a merger/reorganization fractional sale or something else entirely. Can you give us more detail about a particular transaction and maybe we can help clarify it for you?

Russ Donovan

OK, this is how it appears on my brokerage statement:

J_Mike

@Russ

You likely will not know the details of the distribution until the issuer closes their books at year-end and prepares the Form1099.
Meanwhile, you can choose to record these distributions as either dividends or ROC - your choice. You can go back and edit/adjust these entries later after receiving the Form 1099.

I own a security that does this routinely and I just report the distributions as dividends - until I receive the 1099. The final result is usually a mix of dividends and ROC.

Tom Young

You have invested in a partnership, you haven't bought a "stock."

The perceived advantage of investing in MLP's is that they throw off a lot of cash that gets distributed to partners and, generally, the cash is not income to the partners - indeed the partnership as a whole might be losing money.  In the main these distributions serve as reduction in your basis in the partnership.

You will be receiving a Schedule K-1 at some point, though it might be in late February or even March, that "passes through" to you your share of the partnership's activities and you'll need to enter that information on your own income tax returns.   (Partnerships file income tax returns with the IRS but do not pay taxes.)

Russ Donovan

Thanks! I conclude that I have been handling this correctly in Quicken by selecting "Return of Capital", agreed?

Tom Young

Russ Donovan said:

Thanks! I conclude that I have been handling this correctly in Quicken by selecting "Return of Capital", agreed?

It's probably the closest thing to the correct answer, subject to information ultimately received on the Schedule K-1.

Unknown

I base my recording on past experience with each security, posting a "distribution" to dividends, interest, capital gain, return of capital, etc. using the percentage split reported on the previous years T3 or T5013.  If you don't have a T3 or T5013 for the previous year, they can usually be found at the web site for the security under "Investors" and then "Tax Information" for the previous year.  When I receive the appropriate T3 or T5013 I go back and edit the years worth of entries to conform.