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Mutual Fund Conversion - Erroneous cost basis

tapeterson

After using the Mutual Fund Conversion transaction, the cost basis for EACH of the lots "Added" by the process for the new MF (over 30 of them) is the total cost for the entire security ($7428.66), instead of the cost basis for that individual lot. Every Added transaction, no matter how many shares has the same identical cost. So it's giving me a total cost basis for this MF of several thousand dollars. The number of shares are correct for each lot, however the share price is incorrect because of the incorrect cost amount.
Using the current version of Quicken/Premier/Windows 2019 R20.15 Build 27.1.20.15
Quicken - Can you fix this?
I found other discussions of this problem that were closed and it is not fixed

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PCWizard

I'm running Quicken Deluxe 2019 for Windows, Version R20.15, Build 27.1.20.15.

Like millions of others who hold Vanguard Investor share mutual funds I'm dealing with the aftermath of their conversions of many of these funds to the Admiral share funds.

Others have reported this same problem that I'm experiencing, on 2/23 Ford Lacy and on 3/24 Sonomaron who I'll quote here, "After using the Mutual Fund Conversion transaction, the cost basis for EACH of the lots "Added" by the process for the new MF (over 40 of them) is the total cost for the entire security ($68,505), instead of the cost basis for that individual lot. Every Added transaction, no matter how many shares has the same identical cost. So it's giving me a total cost basis for this MF of several million dollars. The number of shares are correct for each lot, however the share price is wacked because of the incorrect cost amount. Both MFs (old and new) are set to use Average Cost. Will need to go in and manually adjust the cost for each lot."

The discussion with Sonomaron is labeled CLOSED. I'm experiencing this same issue and it does NOT appear to be fixed in R20.15. I can't imagine that I'm alone.

Can Support please revisit this?

Sherlock

https://community.quicken.com/discussion/7851350/mutual-fund-conversion-quicken-please-fix-it#latest

A moderator may arbitrarily close and reopen a discussion. The fact a discussion has been closed is not an indication an issue has been addressed or is being ignored.

PCWizard

Sherlock, Thanks for suggesting the work-around. Can you elaborate on "you will need to delete the inappropriate Removed and Added transactions introduced into the other accounts." How will one know which are inappropriate? How many for each conversion will be created that need to be removed? I still hope Quicken programmers will actually fix the Mutual Fund Conversion so it works properly and work-arounds aren't considered the ultimate solution...

Sherlock

PCWizard said:

Sherlock, Thanks for suggesting the work-around. Can you elaborate on "you will need to delete the inappropriate Removed and Added transactions introduced into the other accounts." How will one know which are inappropriate? How many for each conversion will be created that need to be removed? I still hope Quicken programmers will actually fix the Mutual Fund Conversion so it works properly and work-arounds aren't considered the ultimate solution...

In each account that holds the original security, the Corporate Acquisition wizard should introduce, on the date specified for the acquisition, one Removed action transaction to remove the holding and an Added action transaction for each lot of the original security to establish the lots for the new security with appropriate dates and cost basis.

How will one know which are inappropriate?

One will know which are inappropriate because they will be the transactions impacting the original and new security holding in the other accounts.

How many for each conversion will be created that need to be removed?

If a security is held in an account and should not be converted, there should be at least two transactions that will need removed.

volvogirl

I have Vanguard. Most of my conversions to Admiral were for all the same # of shares. So I just changed the name and symbol. One fund was so close I just did an adjustment and removed .176 shares. I had 536.743 shares before and they converted in only 536.567 shares.

PCWizard

@Sherlock,

If I understand your work-around comments correctly it sounds like the Corporate Acquisition process presumes the swap should be entered in any and all accounts in Quicken.

I have a Joint Brokerage, IRA and Roth IRA accounts setup. If I'm in the Joint account and run the CA process you're telling me that I need to go into the IRA and Roth IRA and delete the related entries if not appropriate, is that correct?

This seems to run differently than the Mutual Fund Conversion process which seems to limit itself to the current account the Quicken user is in, is that correct?

Finally, I'm wondering if my problems with the MF Conversion process might be confusion on my part entering the parameters. I understand the "Existing fund" and "New mutual fund" fields... but the "Shares of new" and "Price per share of new mutual fund" fields are a bit unclear.

Quicken's help says "enter the number of new share class shares received for each original share class share" in the "Shares of new" field. I believe in a 1 for 1 swap this would be

1. If receiving half as many shares as the original fund this would be a 0.5, correct?

Quicken's help says "enter the closing price of the new share class on the date of conversion" in the "Price per share of new mutual fund" field. Well, this is inconvenient at the least. I can use the web to find the historical price of the new fund on a given date but it also seems the Mutual Fund Conversion tool should be able to calculate that using the total value at conversion divided by the calculated shares derived...

Thanks for your continued comments. I'm an IT tech and this process is a bit confusing to accounting mortals. :-)

[edited for readability]

Sherlock

If I'm in the Joint account and run the CA process you're telling me that I need to go into the IRA and Roth IRA and delete the related entries if not appropriate, is that correct?

Yes but only If you have holdings of the original security in the IRA and Roth IRA on the date of the conversion you do not want converted.

This seems to run differently than the Mutual Fund Conversion process which seems to limit itself to the current account the Quicken user is in, is that correct?

Yes. This is why the Mutual Fund Conversion wizard may prompt for Shares of new where as the Corporate Acquisition wizard prompts for New Shares issued per held share.

If receiving half as many shares as the original fund this would be a 0.5, correct?

0.5 would be the correct entry for the Corporate Acquisition wizard's New Shares issued per held share prompt.

PCWizard

I noticed that there have been 53 views of this discussion. I wonder if anyone else reading this has experienced these problems with Quicken's Mutual Fund Conversion tool trying to account for Vanguard's 7/26 conversions of Investor funds to Admiral funds?

q_lurker

PCWizard said:

...
1. If receiving half as many shares as the original fund this would be a 0.5, correct?
...

No, not 0.5. Unless something changed recently, the Mutual Fund conversion wants the total number of shares added; not the share ratio. The prompt is "Shares of new". If you had 123.45 shares and received "half as many shares as the original fund", you would enter 61.725. That is a key difference from the Corp Acq. approach.

I have never had an issue with the MF conversion, but I have not had a recent conversion in my Vanguard accounts.

PCWizard

q_lurker, thanks for replying. This all seems confusing because the Help explanation of each field in Quicken conflicts with the wording of the field label in the Conversion wizard. Help says, "enter the number of new share class shares received for each original share class share" The "for each original" makes me think that in a 1 for 1 swap one should enter "1". The wizard field is labeled simply "Shares of new" which could be interpreted as you do, simply the number of shares. (see attached screengrab) These are NOT the same things. Quicken needs to clarify and rewrite their Help explanation if necessary.

Mutual Fund Conversion error 3.JPG

For several years both procedures of "Mutual Fund Conversion" and "Corporate Acquistion" alters the lot cost for each transaction converted. (I'm using Quicken Deluxe for Canada.) The total lot cost should be kept the same after the conversion. It seems that all the lots cost in the conversion use the same calculated total average unit cost to then calculate the total cost of each lot. This provides an incorrect cost basis when a lot is sold in the future. In the conversion, the number of units for each lot is calculated correctly. For both of these procedures the lot total cost should be maintained, the number of units calculated and the unit cost calculated accordingly to maintain the cost basis for each lot. Also the "Mutual Fund Conversion" procedure calculates an incorrect total cost value of the total units converted for the removal transaction. Can these procedures be corrected?

Sherlock

The Mutual Fund Conversion wizard has had issues for many years. The status of a discussion in the forum is not an indication the issue has been addressed. I suggest you use the Corporate Acquisition wizard instead. Note: The Corporate Acquisition wizard will apply to all holdings of a security so it may be necessary to delete any inappropriate Removed and Added transactions introduced in other accounts.

Jim_Harman

@tapeterson

Have you selected the "Use average cost" option in the Security Details? Some of the other reports seem to be related to that.

Jim_Harman

In QWin Subscription R21.12, I tried a mutual fund conversion on a test file and found the following:

-- If the current holding IS NOT set to "Use average cost" the conversion works correctly and preserves the original cost basis of each lot and thus the total cost basis.

-- If the current holding IS set to "Use average cost" the market value for the new holding is computed correctly but the cost basis is incorrect. As @tapeterson reports above, it sets the cost basis for each lot of the new holding to the TOTAL cost basis of the original holding. In my test case there were 15 lots, so the total cost basis after conversion is 15 TIMES what it should be.

I believe that in Canada, Average cost is the only option, so as reported elsewhere the conversion function is broken for everyone in Canada.

PCWizard

Jim_Harman, You nailed the solution. I had several funds checked to use average cost. Unfortunately, by this time I had given up completely on the MF Conversion process and used the Corporate Acquisition tool instead. Thanks so much!

tapeterson

Thanks Jim_Harmon. I unchecked the average cost box and now the cost basis is calculated as expected. I am doing this in a Roth IRA account so it really didn't matter since there are no taxes involved. I just think the product should work correctly in all cases. How do we make Quicken aware of these issues since it appears discussion has been going on about this issue for some time with no help from them?

myke

I too have encountered the problem with the recent Vanguard Admiral change. I do have average cost checked and, as predicted, Mutual Fund Conversion is a hot mess, but Corporate Action succeeds - sort of. Each original reinvestment is added, but the cost per share is the average cost per share. Since the share amounts don't change, the cost for each transaction is adjusted from the original. This does have the effect of the TOTAL basis remaining the same. However, I noticed that the newly added Admiral fund did not have average cost checked. As I wanted to go forward with average cost, I checked the box, said OK, and waited for the cost basis to be adjusted - and waited and waited and... It never completed. On a restored copy, I tried first adding the admiral fund to the securities list, then checking the average cost box before doing any conversion. The same thing happened - it never returns from the recalculating cost basis process. I've tried various things without success.

Has anyone else encountered problems with initiating the use of average cost on a mutual fund? I know I have done this in the past - I've been using Quicken for about 25 years. Does anyone know a workaround?

This really should just work.

Roger M

My Vanguard funds are held in IRA accounts, so there is no tax impact. I do, however, like to track cost basis accurately. I too had some of the funds set for average cost basis, and the Mutual Fund Conversion tool didn't work properly. After unchecking the "Use Average Cost Basis" box on those funds, the Fund Conversion now works fine!

Stuart Gallant

Quicken is not reporting Buy/Sell for mutual fund transactions using Vanguard as my FI after I download my transactions over the Web (direct connect). Only Payment/Deposit s shown in the Transaction Register for the proper $$ amount - but the shares are not shown and no adjustment is made in the Portfolio. If I change the Payment/Deposit to Buy/Sell, everything is correct in the Portfolio, etc.

Any thoughts?

myke

> @"Roger M" said:
> My Vanguard funds are held in IRA accounts, so there is no tax impact. I do, however, like to track cost basis accurately. I too had some of the funds set for average cost basis, and the Mutual Fund Conversion tool didn't work properly. After unchecking the "Use Average Cost Basis" box on those funds, the Fund Conversion now works fine!

My problem is that I can't check/uncheck "Use Average Cost Basis". When I do, Quicken loops endlessly - I have to kill the program with Task Manager. Has anyone else experienced this?

Roger M

myke said:
My problem is that I can't check/uncheck "Use Average Cost Basis". When I do, Quicken loops endlessly - I have to kill the program with Task Manager. Has anyone else experienced this?

That sounds like possible data file corruption. Have you tried to validate your data file?

myke

> @Roger M said:
> (Quote)
> That sounds like possible data file corruption. Have you tried to validate your data file?

Thank you, Roger! I tried validating - and it hung, just like when I tried to check/uncheck "Use Average Cost Basis". So I tried repairing price history, then ran validate again. This time it found some anomalies (the file goes back to 1994), but nothing catastrophic or important, and completed. After that, I was able to uncheck average cost on the Vanguard fund successfully. Then I could also use the Mutual Fund Converter to switch to the Admiral fund - it looks like all the lots are there with appropriate basis amounts.

Thanks again for the very useful suggestion!

Roger M

Myke,

Glad to hear that the file validation worked!

This thread does not provide a solution for the erroneous cost basis in the CANADIAN version. I see that the US version, you are able to specify either the average cost basis or actual cost for your fund lots in the conversion. Our Canadian version does not have this ability. Our accounting for taxation purposes is different, where we on the sale of mutual funds must use the "average cost basis" of the units sold. BUT, on fund conversions the actual cost basis of lots MUST be maintained to calculate the "average cost basis" when the time these units are sold. SO, it seems that the Quicken programmers know and are able to maintain the lot costs in the US version. Then why can not this ability be updated in the Canadian version? How can they be notified of this? It has been this way for years..... With the change to a subscription model for Qucken, isn't this the major benefit that the program can be updated, upgraded, and fixed on a regular basis as their marketing maintain.

Sherlock

HF said:

This thread does not provide a solution for the erroneous cost basis in the CANADIAN version. I see that the US version, you are able to specify either the average cost basis or actual cost for your fund lots in the conversion. Our Canadian version does not have this ability. Our accounting for taxation purposes is different, where we on the sale of mutual funds must use the "average cost basis" of the units sold. BUT, on fund conversions the actual cost basis of lots MUST be maintained to calculate the "average cost basis" when the time these units are sold. SO, it seems that the Quicken programmers know and are able to maintain the lot costs in the US version. Then why can not this ability be updated in the Canadian version? How can they be notified of this? It has been this way for years..... With the change to a subscription model for Qucken, isn't this the major benefit that the program can be updated, upgraded, and fixed on a regular basis as their marketing maintain.

Have you tried using the Corporate Acquisition wizard instead of the Mutual Fund Conversion wizard?

Both of the Corporate Acquisition and Mutual Fund conversion in the Canadian version do not maintain the lot cost basis as I had mentioned in my August 11 post.

donaldspeller

I have the same problem with the Vanguard Admiral fund conversion. I do NOT have my account set up\ as a single fund account - its an IRA with multiple funds. There is NO "enter transaction" to select. There is "add transaction" but in the action list there is NO "Mutual Fund Conversion" option

Jim_Harman

@donaldspeller,
What version of Quicken are you running? If you go to Help > About Quicken, what does it say there?

In recent versions of QWin, when you are looking at an investing account transaction list (register), there is a button marked "Enter Transactions" near the top left of the screen. Do you not have this button?