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ETF Conversion

Jeff Kantner

How best to record a mutual fund that converts to an ETF? In this case, share counts are equal to the decimals? Is Remove/Add the best option? Wouldn't that change the "long-termness"?

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Tom Young

" Is Remove/Add the best option? Wouldn't that change the 'long-termness'?"

The Add action has a "date acquired" field. What you enter there determines the term of the holding so a correct answer won't affect the term.

As to your first question, assuming that the ticker symbol has changed but the number of shares have remained the same then a "Corporate acquisition (stock for stock)" and entering "1" in the "new shares issued" box should work fine.

All comments

Tom Young

" Is Remove/Add the best option? Wouldn't that change the 'long-termness'?"

The Add action has a "date acquired" field. What you enter there determines the term of the holding so a correct answer won't affect the term.

Jeff Kantner

'Corporate Acquisition' did what is probably best: generated one Remove and 29 Add transactions, each with the Date Acquired field set to the corresponding share count, down to decimals. (As a mutual fund, it has been getting quarterly dividends reinvested for some time.) I don't know how the brokerage firms handle this internally (they coded this as one Sell/Buy pair on the download), but absent a slicker way to retain the holding history in Quicken, this is probably the best (only) way to retain the dates for what amount to 'lots' of a fund. Thanks for the tip.

q_lurker

Jeff Kantner said: (emphasis added)

'Corporate Acquisition' did what is probably best: generated one Remove and 29 Add transactions, each with the Date Acquired field set to the corresponding share count, down to decimals. (As a mutual fund, it has been getting quarterly dividends reinvested for some time.) I don't know how the brokerage firms handle this internally (they coded this as one Sell/Buy pair on the download), but absent a slicker way to retain the holding history in Quicken, this is probably the best (only) way to retain the dates for what amount to 'lots' of a fund. Thanks for the tip.

I don't know if moving from a MF to an ETF is considered a like-kind exchange that is tax free or not. If it is, the the Corp Acq (Remove/Add) path should be fine. If it is not, then the Sell/Buy sequence is applicable. In that second case, the Sell would be generating a Cap Gain/Loss component and the Buy would become a single new lot. I suggest you examine or discuss this with the brokerage. Are they showing a cap gains? Are they showing multiple lots of the current ETF holding? If this is inside a tax-deferred account (IRA, 401k, etc.), the brokerage may be treating this differently than they would for a taxable account transaction. There can be some differences in various Quicken performance measures between the two approaches (though I can't identify such distinctions off the top).

NotACPA

@Jeff Kantner If you please name the MF and the ETF involved, we could do some research to further assist you.

Because, to me, an MF converting to an ETF sounds rather odd, since legally they're VERY different beasts.

Jim_Harman

Vanguard offers ETF versions of several of its popular mutual funds. Conversions from the fund to the ETF are tax free if you hold the fund in a Vanguard brokerage account but not the other way.

Best to check with your brokerage to find the tax treatment of your conversion.

See this Vanguard FAQ for more info
https://investor.vanguard.com/etf/faqs

Jeff Kantner

It's a Guiness Atkinson fund, and within its Info Statement on this I just found this statement:
"each Conversion is structured to qualify as tax-free for U.S. federal income tax purposes. For
some shareholders, there could be a small cash payment for fractional shares, and that could be
taxable"
The Positions page at the brokerage (Fidelity) now shows the holding under the new symbol, with all 29 'lots' carrying their original acquisition dates.
Thank you all for your input.

q_lurker

Jeff Kantner said:

It's a Guiness Atkinson fund, and within its Info Statement on this I just found this statement:
"each Conversion is structured to qualify as tax-free for U.S. federal income tax purposes. For
some shareholders, there could be a small cash payment for fractional shares, and that could be
taxable"
The Positions page at the brokerage (Fidelity) now shows the holding under the new symbol, with all 29 'lots' carrying their original acquisition dates.
Thank you all for your input.

With that info, the Remove/Add transaction set should be the correct process.