Mutual Fund Conversion - Cost Basis error

I am using Quicken Home & Business (Canadian Subscription) Year: 2020, Version R28.15, Build: 27.1.28.15 Edition: Canada

A mutual fund with dividend reinvestments every month recently did a merger. In one account the number of units converted from 411.287 to 415.654 and a corresponding price change was 23.621 to 23.373. There are dozens of transactions since I have owned this security for about 12 years, so there are about 100 reinvestment transactions in addition to the purchase transactions.

A few years ago I transferred this mutual fund from an old investment account to a new one. The transfer created about 50 transactions that added the purchases and dividend reinvestments. It all looked OK.

To enter the "Merger Out" & "Merger In" transactions on my account statement, I used the Mutual Fund Conversion transaction form.
Existing fund: entered the existing fund
New mutual fund: created and entered the new mutual fund
Shares of new: 415.287
Price per share of new mutual fund: $23.373.

Quicken created the single remove transaction to remove the old security and about 100 add transactions. The number of units of the new security was correct, but the cost basis was wrong by a lot, much too large.

I attempted to get advise using the Quicken Support, but after misunderstanding my situation, and writing incoherent suggestions, the support person suddenly signed off without asking whether he had helped to solve the problem. I was disappointed with that experience.

I deleted the transactions created by the Mutual Fund Conversion. Unfortunately, I do not have a record of the cost basis transactions that were created, but they were very large and I did not want to edit about 100 transactions.

Comments

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    a)  See @Jim_Harman 's comments on September 7 in this discussion:
    https://community.quicken.com/discussion/7880573/mutual-fund-conversion-taxable-and-nontaxable

    b)  This discussion might also be relevant:
    https://community.quicken.com/discussion/7849478/mutual-fund-conversion

    Bottom line -- I think the first thing to look at is the Cost basis value shown for each of the Add Shares transactions that were generated.  

  • My experience is described well by sonomaron in March 2019 in the second discussion:
    After doing the conversion the cost basis for EACH of the new lots entered (over 40 of them) is the total cost for the entire security ($68,505), instead of the cost basis for that individual lot. So it's giving me a total cost basis for this MF of several million dollars. Both MFs (old and new) are set to use Average Cost. Will need to go in and manually adjust each lot.

    I have been unable to find a setting to use Average Cost for securities. Is this a feature of the US editions of Quicken that is not available in the Canadian editions? I have looked for it by selecting a security and then Edit Details. The pop-up has no mention of Average Cost.

    I did a test test of transactions in a test account. Transactions entered are a Buy 1000 shares at $10, followed by 5 ReinvDiv of 1 share each at a small range of prices for a total of 1005 shares and a cost of $10,053. Mutual Fund Conversion - entered 1010 as the number of units of the new fund and a price of $9.95. Each of the Added transactions has a number of shares calculated as 1010/1005 * (number of shares in original transaction). The total number of shares added is 1009.999996 (so it is within rounding error of being correct). The investment amount for each of the Added transactions (the Cost Basis) is $1053, the total cost of the original holdings, and the cost per share is calculated as $1053 / (number of shares added). Thus, the Cost Basis for the new fund is the cost basis of the old fund multiplied by the number of Add transactions.

    So, this is a bug in Quicken. What is the best way to report it?
  • Quicken_Tyka
    Quicken_Tyka Alumni ✭✭✭✭
    Hello @longtime-quickenuser

    Thank you for the additional details, although I apologize that you have not received a response.

    If you have not done so already, I would also recommend navigating to Help > Report a Problem to report this issue.

    This report will not receive a response but will be sent to the development team to be used for investigative purposes.

    Thank you,
    -Quicken Tyka
    ~~~***~~~
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