Section 305(C) dividend: how to record this in Quicken

102Jim

I received a dividend from one of my Fidelity mutual funds that is classified as a 305(c) dividend and the amount is added to the basis of my fund. I don't see any way in Quicken to add to the current basis of the shares without actually buying shares and it won't let me buy zero shares. Seems like this is almost a reverse "return of capital". Is there a way to do this without going back and changing the original purchase cost?

Sherlock

If you want to increase the cost basis, you may enter an negative amount on the return of capital.

Frankx

Hi @102Jim

Disclaimer - I have not had one of these transactions, although I am familiar with the concept.

I agree that the effect of the transaction is that the cost basis is increased with the number of shares not changing.  You can actually make a "return of capital" transaction in Quicken BUT enter the amount (the 305(c) dividend amount) as a negative number, which will increase your cost basis, but leave the number of shares as it is.  I think this will accomplish what you want to do.

Let me know your thoughts and/or how that goes.

Frankx

Sherlock

If you want to increase the cost basis, you may enter an negative amount on the return of capital.

Frankx

Hi @102Jim

Disclaimer - I have not had one of these transactions, although I am familiar with the concept.

I agree that the effect of the transaction is that the cost basis is increased with the number of shares not changing.  You can actually make a "return of capital" transaction in Quicken BUT enter the amount (the 305(c) dividend amount) as a negative number, which will increase your cost basis, but leave the number of shares as it is.  I think this will accomplish what you want to do.

Let me know your thoughts and/or how that goes.

Frankx

Frankx

Really?  A reinvested dividend transaction ALWAYS changes the cost basis.

Sherlock

Frankx said:

Really?  A reinvested dividend transaction ALWAYS changes the cost basis.

Really.  A reinvested dividend transaction not the same as a dividend transaction.

I already deleted my response to your post because I misread it as suggesting a negative dividend instead of the negative return of capital I had posted 12 minutes earlier.

102Jim

Didn't realize that you could enter a negative number with a ROC. So I entered the dividend, then entered the negative ROC. The two entries cancel each other out from a cash on hand basis yet I still register a dividend for tax reporting and the basis in my mutual fund went up, so everything seems to have worked out fine. Thanks for your help.