Accretion of Bond Discount on Sale

Dixon

Dealing with taxable bonds. I follow the usual way to deal with accounting for this issue, which is to enter a negative return of capital and interest income prior to the sale of the bond. Quicken makes the adjustment for investment purposes (i.e., the adjustment affects the basis showing on the "Investing" screen) but does not affect the calculation on the gain or loss from sale. Has anyone else had this problem? Thanks.

Tom Young

I sold my last bond purchased at a discount back in 2013 and used the negative return of capital technique for the amortization.  The calculation of gain at sale was correct. 

If you look at an Investment Transactions report for this bond over its holding period do you see anything that might explain the apparent miscalculation of gain or loss?

Dixon

There was really nothing on the Investment Transactions report that would indicate some kind of problem. The accretion entry was there as it should be with an increase to both interest income and basis of the bond. But then I decided to try making the accretion entry two (2) days before the sale instead of just one (1) day and that solved it. (It didn't work posting the accretion on the day of the sale either.)

I now have the correct basis and gain on the sale. But it seems odd to me that it works the way it should with two (2) day's notice and not one (1).

Dixon

Nonetheless, Mr. Young, thanks for your input. It was while looking at the Investment Transactions report that the idea to try two (2) days hit me.

Tom Young

I agree, what you've reported seems bizarre;making the entry one day before, two days before or even the date of the sale should not affect the outcome.  Looking at my last discounted bond sale the RtrnCap entry was made the day of the sale.

Dixon

Who knows? It could be that I recorded the sale on the trade date but didn't yet have the information from my broker regarding the accretion. Entering it after the sale may have caused Quicken not to see it for some reason. But then, you would have thought that moving the accretion entries to the day before the trade would have been picked up. I guess it's just another anomaly in the "Quickenverse."