Sell Shares to Cover Fees - Something Changed? Best Way?

EdC

Annuities that I own sell various shares of funds to cover fees. For years I would enter Sell Shares transactions entering only number of shares sold (usually small fractional shares), the commission amount to reflect the fee amount, and a $0.00 total sale amount. This would result in accurate decrease in shares and no cash added to account. Importantly, it would also not calculate a share price (that was often not correct due to small numbers) that would be entered into historical share prices. Very easy, minimal data entry required, and maintained history.

I recently upgraded from Q16 Premier to the "improved" subscription version. When I try to now enter the same transaction, it will not allow this. If I put the fee amount in commission, it creates an equal but negative amount in total sale. It will not allow a zero amount in total sale, or forces a calculation of a Price Received. I also see that if I open an old, previously entered transaction, it puts a negative number in the total sale (not the original zero amount).

Any one else seeing this behavior?

Looking for a simple, best way to track shares sold/removed to cover fees and accurately track performance, history, etc. Have seen various suggestions to 1) just remove shares (simplest, but no $ tracking), 2) sell shares, accumulate the cash value and offset with a Misc Expense transaction (extra steps and introduces the unwanted security price history on the fee date).

Thanks

q_lurker

In my opinion, the only correct way has always been Sell the shares and use a MiscExp transaction to record the expense.  Yes, it is an extra step.  I can't see how the computed price/share can be wrong (you gave up $X for Y shares.  That is $X/Y dollars/share.  But if that value does bother you in the price history information you should be able to manually enter a different value for that date, or a download of price information for that date should take precedence over the transaction-computed value.  

Tom Young

"If I put the fee amount in commission, it creates an equal but negative amount in total sale."

I just tried a test sale of a fraction of a share that resulted in gross proceeds of $.50, then entered a commission of $.50, for a result of $0 cash effect.  So, no, I'm not seeing what you're describing. 

From an accounting perspective your method should work fine, with an overstatement of "commission" expense and an understatement of "admin fee" expense.  However, using your method did result in "today's" price being the price I used in my test transaction, as I'd expect.

I'm not sure I'm understanding exactly what you're describing seeing using your usual method with the subscription product.  Maybe post a screenshot?

Jim_Harman

I agree with @q_lurker that the Sell/MiscExp approach is better. Another advantage is that if you assign a security to the MiscExp, the fee reduces the IRR of the investment as shown in the Investment Performance Report, as I believe it should.

Also unless something has changed in QWin Subscription, I think you will find that it is easier to get Quicken to accept the fee as Commission/zero proceeds approach if you use the Enter Transactions Sold dialog rather than trying to enter the transaction directly into the transaction list (register).

Tom Young

@Jim_Harman

In my test transaction I did enter the transaction directly in the transaction list, and it worked fine, it worked exactly as EdC said he was seeing in Quicken versions prior to the subscription product.  Not sure why you think Quicken would accept the transaction more easily using the Enter Transaction route?

EdC

Thanks for responses guys. Here's my input/feedback.

q_lurker: a. Computed price difference is out in the 2nd or 3rd decimal place. No prob for transaction, however when looking at values for 1000+ shares, suddenly statement totals and Quicken totals never match. Not end of the world, but creates confusion. b. Have 4 annuities each with about 6-8 underlying funds and a total of 20-30 transactions to enter each quarter for various fees and transactions. Minimizing data entry and/or not having to correct or delete historical price data a key goal. In past could I copy/paste transaction, enter a few data points (date, # shares, commission) and be done.

Tom: a. I’m unable to perform the transaction you describe unless I put in a price. I also know Q is very picky (or reacts diffrently) depending on order in which the fields get filled in. My goal is to record the reduction in shares, record the fee amount, not add to cash balance, and not enter (or generate) a price for that day. b. Agree that I am not necessarily tracking in a proper category (only in memo field), but is easily view-able in transaction record.

Jim: a. Agree using misc expense for each security may be more precise, but lots of extra data entry required for very small percentage of the total values. b. I think I am using the dialogue. I copy earlier transaction, paste to new line, then “edit” which takes me to dialogue screen. This way notes, comments, selected fund etc. are pre-populated to minimize keystrokes and mouse clicks.

>>>> Attached pdf has some screen shots as requested, along with some commentary.

In case you are wondering, downloading transactions from the financial institution not really an option due to many years of manual data entry I don’t want to lose.

So bottom line... guess I will have to work through the extra steps and data entry required to get everything exactly right. I am a bit concerned what would happen with the old transactions if I ever had to rebuild the database.

Thanks for your help.

Tom Young

@EdC

I certainly was misunderstanding what you said you were doing.  So you literally initiated a sale transaction, entering only the number of shares and the commission expense, and somehow ended up with a net cash effect for the transaction as $0?

I don't see how that's possible.

EdC

Tom: Yes, that's what I've been doing for years in Quicken (albeit in a roundabout way using the commission field). In essence, that is what's happening in the real world... financial institution is selling shares to cover the fees... but no cash activity in/out. Perhaps Quicken could make a new type of transaction "Sell - Shares Sold for Fees" that would be easy to use and works into all calculations and reports. This transaction happens for millions of IRA, 401k and Annuity owners all the time. Can only hope. :-) Thanks

volvogirl

Don't know if this will help or help explain the net cash of zero, but....

This is how I manually enter my monthly 401k fees which are less than 1 dollar……
1. Do a SELL
2. Enter:  Date, Name, # of Shares, Price
3. Change the Sale Amount to the amount of the Fee then TAB back to Lots
Recalculate box should open - Choose Price - OK
4. Then TAB back to Commission and put the Fee into the Commission Box
Sale Amount should change to zero!

The key is to TAB back to the prior fields without hitting enter.

Tom Young

"In essence, that is what's happening in the real world... financial institution is selling shares to cover the fees... but no cash activity in/out."

Although you aren't seeing "cash" flow in and out of the account, each transaction, unarguably, is a sale in the real sense of the term: you have a gain or loss with each transaction.

Assuming you are using "average cost", then when they take away some fraction of a share you are losing a share that cost you (fraction of a share x average cost), but they are giving you "today's" fair market value. (fraction of a share x per share FMV).  Ergo, each fee results in a small gain or loss.

The correct accounting here is obvious, even if there's no "cash" entry you can see in the account: a sale, followed by an expense entry.  The "cash" involved in the sale flows in and flows out in a nanosecond.  I still can't see how what you were doing was working properly.  You used a dollar amount in a transaction styled a "sale" yet somehow the dollar amount never showed up anywhere?

I can come up with a series of accounting entries that could be made in Quicken that would:

1. Reduce the number of shares
2. Create the proper admin fee expense
3. Create a gain or loss on the sall
4. All without affecting the day's "quote"

but it would involve a series of entries that's much longer than simply recording the sale and then expensing the "cash" raised by the sale.

q_lurker

"financial institution is selling shares to cover the fees... but no cash activity in/out. "

Of course there is cash out.  How else would the financial institution get their fee?  If shares are sold (which they are), they are sold for cash.  To get their fee, the FI takes the cash.  That is why I believe the Sale / MiscExp is the most accurate approach.  Looks to me like one additional MiscExp transaction per annuity account.    But that is me, not you.  

"My goal is to record the reduction in shares, record the fee amount, not add to cash balance, and not enter (or generate) a price for that day. "

Toward that goal, I can offer two suggestions:

1. Rather than sell the shares, use a Remove Shares transaction and note the dollar value in the memo field.  The shares will be reduced, the fee amount is in the memo field, no cash is adder to the balance, no price is generated for that date.  It is one transaction per fund per annuity account.
2. Use a Sell Shares transaction, but direct the cash proceeds to the same account.  That is, Record Proceeds not "To this accounts cash balance", but "To: [NQ Annuity-Jackson]" or similar.  By specifying the cash to go to the same account, the cash balance is not affected by the transaction; it goes off into thin air, so to speak.  Again, the shares will be reduced, the fee amount recorded, cash balance will not be affected.  The price history will be affected and will need to be overridden with a manual entry.  Again, one transaction per fund per annuity account.

I agree with @Tom Young.  I don't see how your old system worked as you say it did with no price.

EdC

Thanks for the continued input and insights... best to wrap this up. Final comments.

- As you can see from my transaction register, I had been doing this for years. Perhaps it was exploiting a gap/bug in old versions. There was always the relatively small entry in "Investment Amount" that I never fully understood or felt the need to take the time/effort to understand exactly what the was doing to returns, cost basis, loss/gain or other calculations.
-My comments about no cash activity in/out simply referred to never seeing these as cash transactions in any quarterly report, online activity queries, etc. The sale and subsequent share reduction was the transaction that was clearly taking cash/value from my accounts (and pocket). I get that.
-Volvogirl... your suggestions about using tab (or maybe equivalently pointing and clicking with mouse pointer) rather than using "enter" helps explain prior inconsistencies I was seeing... thank you. I still could not replicate my old process using this... but came close. I can get it to sell shares without a price if commission equals negative of total. To get zero cash seems to require a price (which I don't want to deal with).

I'll continue to experiment with recommended methods and choose the best one to:

-Minimize data input and keystrokes to only what is essential/ important/ meaningful for these particular annuities. For me that is a) share balances/values end of quarter, b) large sell/buy transactions mid quarter, c) some way to maintain a history of fees, and d) "close-but-perhaps-not-exact" reporting of returns, loss/gain, etc.

-Avoid generating "incorrect" share prices that can cause Quicken vs.statement values inconsistencies. (I really don't want to key in security prices to 6 decimal places, or have odd "mid-quarter" prices that can create strange looking numbers and reports).

I really want to emphasize the difficulties and extra work that the imprecise share price can create. As an example, I track 4 annuities that share several of the same underlying funds. When entering transactions that all occur on the same date (i.e annual fee), if I let Quicken calculate the share price, the "last" calculation gets recorded as the price for that date. So when I go back to check data entry using statements, I suddenly see inconsistencies (may be only cents but can be dollars) compared to reports in Quicken. I need to then determine if I made a keying error in share quantity or something else. Makes data entry validation/correction a real bear.

Again... thanks everyone.