Updating the "cost basis" for a security

Marc Dupont

Hello,

I use the Home & Business 2018 Windows version (Canada).

I have a few securities for which the "cost basis" does not match that of the monthly statements I get from my financial institution. Some are mutual funds, others are stocks.

How can I update the cost basis to match my statements?

Looking through previous posts, I found this but it does impact the cash balance of the account and I don't see the Adjustment option.

"To remove residual cost basis (happens sometimes), enter a 'Return of Capital' transaction type.  It can be + or - depending on what is needed to get to -0-.  That will leave you with some unwanted cash in that investment account register.  To remove that, enter a 'Payment/Deposit' transaction with 'Adjustment' in the category field.   That is a category provided by Quicken (in Q Mac 2015/2016) that will not appear in any reports."

Thanks.

Marc

Jim_Harman

Are the share counts correct?

Are these large discrepancies, or something that might be caused by round-off errors?

If you want to keep the performance and tax tracking correct in Quicken, you will need to track down how and when these discrepancies occurred. One way to do this is to go back in time in Quicken and compare to your past statements, to see when the discrepancies first occur.

Situations that can cause  Quicken's cost basis to be wrong include

-- mergers, spinoffs, and share class conversions not entered correctly

-- shares transferred between accounts via Sell/Buy rather than transfers

-- sales where the tax lots sold in Quicken do not match those at the brokerage

-- shares added or removed and the price history added incorrectly

-- unresolved placeholders

If you don't care about tracking the performance history but just want to fix the cost basis, you could use a brute force approach: Back up your data in case you don't like the result, then enter a Remove for all the shares and Add them back with the correct cost. Set the purchase date in the Add so the gain will be long or short term (if that matters in Canada.)  If you have the tax lot detail from the brokerage, you can enter multiple Adds, one for each tax lot.

The downside of doing one Add would be that if in the future you sell part of your holding, Quicken won't know the correct basis of your original tax lots.

Unknown

The cost basis calculations in Quicken often do not match those on the statements of financial institutions. If the past transactions of a particular security are simple (e.g. just a buy and some dividends), I recommend verifying and fixing the prices in all of those transactions. However, if there are many or complicated transactions for this security, then most likely you will never get the cost basis to match with the cost basis on the statement. The cost basis is used in tax calculations. In the USA the tax payer is responsible for providing the cost basis of non-covered securities. In this case the financial institution will not provide this information. So if the security is a covered security then you can rely on the statements and tax statements of the financial institution. If the security is non-covered, you may want to spend the extra effort to correct the records in Quicken.

Marc Dupont

Thank you for your assistance and sorry for the delay replying to your responses.

First, my only motivation for getting the cost basis right is to monitor performance, not for tax calculations. I manage to perfectly match the statements in regard to number of shares and market value.

I have investigated a few of the cases where the cost basis is off and, as Jim suggested, it turned out for the most part to be securities for which mergers had occured. Others appear to be foreign shares, for which I suspect my financial institution reports cost basis in the foreign currency. In a ideal world, as they sometimes do in my statements, I would have a Quicken transaction type only serving to correct the cost basis at a given time. I understand from your responses that I can go back in time and correct the Add/Remove transactions.

And I guess I will get to practice as my November statements include 3 mergers! I normally use the "Corporate acquisition (stock for stock)" command for this, but with little success. Seems I always have to edit the resulting Add/Remove transactions to achieve the correct number of resulting shares.