incorrect cost basis in capital gains report and tax center

Unknown

The transaction is a sale of a number of shares of a security. The sale uses the "specify lots" option to identify the exact shares that are sold.

In the transactions window the correct cost basis and long term capital gains are computed and reported.

But in the capital gains report and in the tax center year-to-date taxes an incorrect cost basis is used and the corresponding long term capital gains and the taxes due are computed incorrectly. The value of the per share cost basis is a mystery since that security never had that price/cost.

This is an internal consistency and calculation error in Quicken
Quicken Premier 2018 version 9.33 on Windows 10

Jim_Harman

US or Canadian version of Quicken? The current US version is R12.15

Unknown

I upgraded to R12.15. Problems remain unchanged

Jim_Harman

Is this the same problem you described here? If so, let's just discuss it in one place.
https://getsatisfaction.com/quickencommunity/topics/the-tax-schedule-and-tax-summary-reports-do-not-...

Jim_Harman

Marc said in the other conversation,

There are two related problems. The second problem was discovered while investigating the first problem.
 1) the reporting of security sales in the transaction is correct but does not match the capital gains report (details) or the summary in the tax center. This the problem I posted separately.
2) when requesting the tax reports (to get details on capital gains) in the tax center, schedule D does include capital gain distributions details, but does not include realized gains details.

When verifying a single transaction on a single day in a taxable account the reporting in the transactions and in the capital gains report are different.

Unknown

This reply was created from a merged topic originally titled Moving to merge.


In Quicken Premier 2018 on Windows 10 the realized gains are NOT included in the schedule D reports. Details of the capital gains distributions are, but of realized gains are not. Details are included in the Capital Gains report but those details are not consistent with the transaction.

Note: This conversation was created from a reply on: The Tax Schedule and Tax Summary reports do not include capital gains & losses..

Unknown

This reply was created from a merged topic originally titled Moving to merge.


There are two related problems. The second problem was discovered while investigating the first problem.
 1) the reporting of security sales in the transaction is correct but does not match the capital gains report (details) or the summary in the tax center. This the problem I posted separately.
2) when requesting the tax reports (to get details on capital gains) in the tax center, schedule D does include capital gain distributions details, but does not include realized gains details.
When verifying a single transaction on a single day in a taxable account the reporting in the transactions and in the capital gains report are different.

Note: This conversation was created from a reply on: The Tax Schedule and Tax Summary reports do not include capital gains & losses..

Jim_Harman

This reply was created from a merged topic originally titled Merging.


@MarcATL,

Here is what I am seeing:

-- The Investing > Investing Activity report has a Capital Gain/Loss (Realized) section. This report includes tax deferred accounts by default, so if you had sales in an IRA or 401k, those gains or losses are included. If I customize the report to exclude the tax deferred accounts, the numbers are consistent with the tax reports.

-- The Sched. D report includes the impact of any capital loss carryover, as it should, and by default only includes taxable accounts.

-- The Capital Gains report also only includes taxable accounts, and does not include the capital gains carry-over.

Note that you can double click on any of the numbers in these reports to see the details.

Do these situations explain what you are seeing? If not, please provide more detail on "not consistent with the transaction."

Also make sure you have resolved any Placeholders associated with securities you have sold, so that your tax lots and cost basis are correct.

Note: This conversation was created from a reply on: The Tax Schedule and Tax Summary reports do not include capital gains & losses..

Jim_Harman

OK,

First I would suggest you not go to Planning > Tax Center and especially not the antique Tax Planner to try to unravel this issue, but focus on the tax reports (Reports > Tax > Capital Gains and Schedule D). Once we have the reports agreeing with the transaction,you can try to figure out what the Tax Center is telling you.

As I understand it you entered a sale and picked particular tax lots, generating capital gains in each lot as shown in lot selection dialog in the transaction.

But when you go to the Capital Gains report, the numbers corresponding to this sale are different.

Do I have it right so far?

If so what is different? is it the cost basis for each lot?

Is this an individual stock or a mutual fund?

If fund, have there been previous sales of this security, and perhaps did you have the Average cost box checked?

Unknown

The actions reported are for a taxable (brokerage) account. I have several sales for individual securities that are reported correctly both in the transactions and in the capital gains report. But each of these securities has a single purchase date and price, so the cost basis is straightforward to determine. I have also several sales for a mutual fund. Shares of this mutual fund have been purchased and sold at different times and prices. Each sale uses the "specify lots" option. The transactions are correctly reported. The capital gains report has the correct sales price and revenue but incorrect cost basis and thus realized long term capital gains. There is no obvious source of the cost basis for the sales, the cost basis does not match any price in the price history of the mutual fund.
The capital gains report and the tax center reported numbers match. The problem came to light when the aggregate realized long term capital gains reported in the tax center were not believable.
It appears that the root cause is that the calculations of the cost basis for the transactions and for the capital gains report are different and produce different numbers for a security (mutual fund) with many purchase and sales transactions.

Jim_Harman

Was there a commission when the fund was purchased? That would affect the cost basis.

Also were there any splits or share class conversions along the way? That would also affect the share prices.

I have more ideas if neither of these apply.

Unknown

Jim, none of these complications were present. Zero commission and no stock splits. Quicken computes the cost basis in a different way in the transaction and the capital gains. It also reports aggregate cost basis in the security detail view but I do not know of a practical way to check that number for a security/mutual fund with many buy and sell transactions.

Jim_Harman

OK,

You should be able to track down what happened as follows:

1) Go to Investing > Portfolio and under Show, pick a view you are not using. group by accounts,  and customize the view to show just the problem account and security. You will want to show at least the Quote/Price, Shares, Market value, and Cost Basis columns. Click on Expand All at the bottom.

2) Set the As of date to the day before the sale. This will show all your tax lots before the sale. There may be dozens of them if you are reinvesting dividends. The total shares, market value, and cost basis will show next to the security name.  Look for any prices that are out of line and investigate why. Maybe a wildly wrong price for a purchase or a reinvested dividend. You can print this with File/Print Portfolio. Back up your data file before making any changes to old transactions.

3) Set the As of date to the date of the sale. This will show all your tax lots after the sale. You can print that too.

4) Go to Reports > Investing > Capital Gains to display the Capital Gains report. Set the date range if necessary to include the sale date, click on the gear at the top right, and select just the problem account and security. You can print this too. 

Check to make sure that the lots on the capital gains report are the ones you think you sold and match the difference in the lots between the first and second reports you printed in steps 2 and 3. Investigate any discrepancies.

Good luck!

q_lurker

The other consideration to look at that I don't think has been mentioned -- Return of Capital Transactions, aka RtrnCap or ROC.  Those impact cost basis and MAY be treated differently by different parts of the program (even though they should not be).  It is also possible that if the RtrnCap transaction went in via an older version, the current program may be handling it better, or differently.  Be on the lookout for RtrnCap transactions.  

If you find anything suspicious in that regard, make a backup and then try the delete and re-enter approach.