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How can I reinvest dividend without adding to number of shares? [A Canadian special feature]

SYB

One of my investments reinvests dividends without adding to number of shares. This affects the cost basis. However, the Reinv function does not allow for zero added shares. How can I get around to this is I want Quicken to reflect the cost basis including the reinvested amounts?

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Accepted answers

Tom Young

@SYB

Enter a Return of Capital transaction with a negative dollar amount.

Enter the same Account that you're using as the "Transfer account."

That should work.

Boatnmaniac

I was thinking the same thing as @Tom Young . Since a positive dollar Return of Capital transaction reduces the cost basis of the investment without affecting the number of shares, a negative dollar Return of Capital transaction increases the cost basis of the investment without affecting the number of shares.

All comments

Frankx

Hi @SYB,

I just want to make sure that I understand what you are seeing in your Quicken account. I think you are saying that the "reinvested" dividend amounts are not increasing the number of shares in the account. If that is correct, then those dividends received must be increasing the "cash value" in that account. Is that what is happening?

If the above is correct, what you'll need to do is to change each of the dividend received transactions from a "Div" type (as shown in the Quicken "Action" column) to a "ReinvDiv" type. You'll need to make these correcting entries "one-by-one" for each of the dividend transactions that have been recorded incorrectly. And you will need to know the number of shares that were received for each of those transactions. You should be able to find that data from account statements (either on-line or paper).

Let me know if the above is what is happening and also get back to me if you have any questions.

Frankx

Tom Young

For some reason I think I've answered this question before, but of course I can't find that answer (if it even exists).

Ordinarily a reinvestment of dividends does affect the number of shares but I think there's some unique "Canadian" aspect in play here, maybe something to do with mutual funds? (Just a guess.)

Can you provide more guidance about what's going on here?

SYB

Thank you, Frank and Tom, for your response. What is happening here is that the dividend is being reinvested WITHOUT increasing the number of shares. For example, if you are holding 100 shares, and a dividend of, say, $1,000 is reinvested, the number of shares remains 100, but the cost of the shares has gone up by $1,000. The ReinDiv forces you to add additional number of shares for the dividends reinvested. It does not except "zero" as number of shares. If I ignore the transaction entirely, then by cost basis is understated. Tom, yes, it is a Canadian phenomenon and it has to do with how a particular ETF operates. I will appreciate it very much if you can think of a solution where I can increase the cost basis of the shares without affecting the number of shares.

Tom Young

@SYB

Enter a Return of Capital transaction with a negative dollar amount.

Enter the same Account that you're using as the "Transfer account."

That should work.

Boatnmaniac

Frankx

Here's the answer previously provided
https://community.quicken.com/discussion/comment/20140916#Comment_20140916

Frankx

Boatnmaniac

@SYB - Several people (including myself) have suggested you might want to use the Return of Capital transaction. But you should know that Return of Capital transactions are not taxable events in Quicken so it does not get reported that way (at least not in the US editions).

But you have called this a dividend reinvestment which usually is a taxable event. So, the question for you: Is this considered to be a taxable event in Canada? If so, then perhaps the more complex solution suggested toward the bottom of the thread posted by @Frankx might be more appropriate for you.

SYB

Thank you, Tom and Boatnmaniac. It worked -- an elegant solution! Frank, the dividend is a taxable event in Canada but I don't rely on Quicken for tax purposes so I will stay with the simpler solution of negative Return of Capital.