Called (Muni) Bonds: Suggestions on Categorizing

Tricone

I notice that when I download transactions into a Quicken brokerage account's register, Quicken "automatically" designates the following to any bonds that have been called:

Type: Payment/Deposit
Description/Category: Uncategorized

Does anyone have any suggestions as to how to categorize a called bond? Note that Quicken did also remove the associated called bond's shares in a separate register entry. Just wondering if I should make a category along the lines of "returned principal", or if I should be categorizing the deposit entry with one of Quicken's built-in categories.

Tom Young

A "call", mechanically, is the same as a sale of the bond.  I know nothing about the Mac version but the accounting is along the lines of

Debit (increase) cash in the Account

Credit (decrease) the basis of the investment sold

Debit or credit as the case may be the Category Capital Gain.

I assume Quicken Mac has a "sold" wizard of some sort that will handle this correctly but I'm not sure.

Tricone

Attached is the screenshot of an example. Note that, after downloading/importing, the SF City bond shows both as a "Remove Shares" entry and as a Payment/Deposit entry that is "Uncategorized". What category do you suggest that this is changed to. There currently is not a Capital Gain category, but I can create one.

Rocket J Squirrel

Your brokerage is sending bad transaction data. This is not Quicken's fault.

You simply want a single "Sell" transaction. This will get rid of the shares and add the cash proceeds to your account, resulting in a gain or loss, as appropriate.

I don't have QMac, but if possible, I would edit the Remove Shares and change it to a Sell, then delete the Payment/Deposit.

Tom Young

Make sure you have the right mindset here.  Quicken helps you do your accounting, it doesn't do your accounting for you. 

If you rely entirely on downloads to make accounting entries for you you will run into difficulties because financial institutions, not uncommonly, will send you information that simply isn't correct from a pure accounting standpoint, and that's what you're looking at here. 

Since neither @Rocket J Squirrel nor I have the Mac version we can only assume the Mac version somewhat mimics the Windows versions of Quicken and the correct fix here, given the assumption, is to delete the two entries and initiate within Quicken a "sell" transaction.  You'll tell Quicken the date of the sale (call), the amount of cash received for the sale - $25,000 - and what security was sold.  The Quicken "wizard" should craft the correct accounting entries.

If we are wrong in our assumptions or this is all Greek to you, post back in this thread and one of us will see if we can't get a Mac SU to lend a hand.