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Fidelity account downloads mis- characterize long and short term capital gains transactions as divid

unknown

Fidelity account downloads mis- characterize long and short term capital gains transactions as dividends. I am using Quicken Deluxe 2015 for Windows. Is anyone else having this problem?

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Vetta

I see this often with STCG but not LT ones. It is how the FI labels it, not Q.

unknown

STCG are taxed at the same rate as dividends. The comments attached to the downloads correctly identify the gains.

mshiggins

It is up to the financial institution to classify the income correctly. Income downloads from other financial institutions like LPL are correctly classified as short term and long term capital gains.

Have you asked Fidelity why they are classifying the income as dividends?

Vetta

It is up to the financial institution to classify the income correctly. Income downloads from other financial institutions like LPL are correctly classified as short term and long term capital gains.

Have you asked Fidelity why they are classifying the income as dividends?

@mshiggins-- Likely it is for the reason Kayo stated about how they are taxed, though I manually correct them to show as STCGs to be consistent with the 1099s. Fidelity is the only brokerage I've come across that does this.

unknown

Fidelity correctly identifies them correctly in the description. It just appears in the wrong field in the entry. It only started happening the past couple of years. I just did it manually. And it does it for long term gains as well. At first I thought it was only IRA retirement accounts which didn't matter but I even see it in non-retirement accounts as well.

unknown

Fidelitiy's download for Turbotax, etc. does it properly. That is no consolation for those that do their taxes by hand and depend on the accuracy of the printed word.

mshiggins

It is up to the financial institution to classify the income correctly. Income downloads from other financial institutions like LPL are correctly classified as short term and long term capital gains.

Have you asked Fidelity why they are classifying the income as dividends?

How the transactions are taxed would not be a valid reason for why Fidelity can't correctly classify their downloaded transactions.

markus1957

It is up to the financial institution to classify the income correctly. Income downloads from other financial institutions like LPL are correctly classified as short term and long term capital gains.

Have you asked Fidelity why they are classifying the income as dividends?

NMIS and likely other Pershing managed FI's also label all gains as divs.

mshiggins

From C. D. Bales:

There might be some useful information missing from the original post in this discussion.

An individual only has capital gains when they sell shares of a security they own. It's not clear that the original poster did that.

There is no such thing as a capital gains "transaction": if a person sells a security, the transaction is a Sell transaction. A Sell transaction may cause a capital gain/loss, but there is no separate transaction for the gain (or loss). If you have sold any shares of securities you own in Quicken for more or less than you paid for them, you can see how Quicken accounts for that by displaying the Investment Transactions report: the "Sold" transactions that had gains or losses will display the category "_RlzdGain" and the amount of the gain/loss.

When a mutual fund sells shares of a security they own, they may incur a capital gain. If the mutual fund does have capital gains from the sales of securities they own, the individual that owns shares of that mutual fund will only see "distributions" of those capital gains - which occur in the form of "dividends" with the appropriate long-term or short-term designation.

unknown

I understand what you are saying, but if those funds are not in a tax-deferred account, then we are responsible for paying taxes at the proper rate, whether we made the sale or the mutual fund did.

markus1957

From C. D. Bales:

There might be some useful information missing from the original post in this discussion.

An individual only has capital gains when they sell shares of a security they own. It's not clear that the original poster did that.

There is no such thing as a capital gains "transaction": if a person sells a security, the transaction is a Sell transaction. A Sell transaction may cause a capital gain/loss, but there is no separate transaction for the gain (or loss). If you have sold any shares of securities you own in Quicken for more or less than you paid for them, you can see how Quicken accounts for that by displaying the Investment Transactions report: the "Sold" transactions that had gains or losses will display the category "_RlzdGain" and the amount of the gain/loss.

When a mutual fund sells shares of a security they own, they may incur a capital gain. If the mutual fund does have capital gains from the sales of securities they own, the individual that owns shares of that mutual fund will only see "distributions" of those capital gains - which occur in the form of "dividends" with the appropriate long-term or short-term designation.

For clarity, distributions of capital gains from mutual funds are classified on a 1099 as distributions, not dividends with the appropriate long-term or short-term designation. They appear as transactions in a Quicken download and should be designated appropriately in the download as an STCG or LTCG distribution. Most FI's get it right, a few do not and must be edited manually.

unknown

I understand what you are saying, but if those funds are not in a tax-deferred account, then we are responsible for paying taxes at the proper rate, whether we made the sale or the mutual fund did.

Am I missing something? As Markus1957 posted: distributions of capital gains from mutual funds are classified on a 1099 as distributions, not dividends with the appropriate long-term or short-term designation.

Vetta

I understand what you are saying, but if those funds are not in a tax-deferred account, then we are responsible for paying taxes at the proper rate, whether we made the sale or the mutual fund did.

Are you asking about tax treatment or Quicken input?

unknown

I understand what you are saying, but if those funds are not in a tax-deferred account, then we are responsible for paying taxes at the proper rate, whether we made the sale or the mutual fund did.

I'm stating that in the past, Quicken would correctly identify these downloaded transactions, but now they don't. No big deal. I fix it manually.

markus1957

I understand what you are saying, but if those funds are not in a tax-deferred account, then we are responsible for paying taxes at the proper rate, whether we made the sale or the mutual fund did.

It's more likely that in the past Fidelity correctly labeled these downloaded transactions, but now they don't.

unknown

I like to see everything put into its proper tax bucket immediately. However, Fidelity and I assume all other brokerage firms, send out a 1099 which properly puts all transactions into the proper bucket. I have always used this year end report as the gold standard for filling out tax forms. So, from my point of view this discussion, though interesting, does not affect anything.