Dividend Payment Paid In Error

Leon Pink

Hello All, I am trying to post a reversal of a dividend payment that was paid in error and reversed a few days later. The Company "Postponed" their monthly dividend payment for July and August of this year. However, the July payment posted to my Brokerage account. The initial download shows the dividend coming in and then being reinvested. Four days later the brokerage firm reversed the transaction calling it a Trade Correction.

So, my question is do I simply mark the reversal as Removing Shares and apply the transaction to the date of the first payment or do I need to do something else?

Thanking you all in advance!

Boatnmaniac

Were the initial dividend payment and reinvesting of it two separate transactions?  Or was it downloaded as a single ReinvDiv transaction?

If it was downloaded as two separate transactions, then the Remove Shares transaction will fix the holdings (canceling out the reinvestment transaction) but it will not address the dividend payment transaction so the account's cash would be out of balance.  You could fix the cash issue from the dividend payment transaction by entering another Misc Exp transaction for it or entering a cash balancing transaction.

If there initially was a single ReinvDiv transaction that was downloaded, a Remove Shares transaction would again address the holdings issue and there would be no excess cash to deal with.

But in both cases the Dividend payment would still be captured in the tax reports and Tax Planner as income.  So, I think the best thing to do would be to simply delete the initial dividend payment and ReinvDiv transaction(s) and forget about entering a Remove Shares transaction.  If you want you can enter a brief note about what happened in the Comments field of the General tab of Account Details.

q_lurker

I agree deleting the original downloaded transactions is the cleanest repair. 

I would choose to enter a Reminder transaction with suitable Description and Memo fields for a future reference, if needed. 

[Deleted User]

@Leon Pink I would emulate on Quicken the transactions from your financial institution to account for the reversal.  I would print out the transactions first.  And then enter the same transactions in Quicken.  I would not necessarily delete anything unless that is how your financial institution dealt with the reversal.  In doing so, you will lose the "audit trail" for the reversal.  And as @q_lurker mentioned, I would also add a Reminder transaction to provide further details for future reference, if necessary.

Boatnmaniac

Were the initial dividend payment and reinvesting of it two separate transactions?  Or was it downloaded as a single ReinvDiv transaction?

If it was downloaded as two separate transactions, then the Remove Shares transaction will fix the holdings (canceling out the reinvestment transaction) but it will not address the dividend payment transaction so the account's cash would be out of balance.  You could fix the cash issue from the dividend payment transaction by entering another Misc Exp transaction for it or entering a cash balancing transaction.

If there initially was a single ReinvDiv transaction that was downloaded, a Remove Shares transaction would again address the holdings issue and there would be no excess cash to deal with.

But in both cases the Dividend payment would still be captured in the tax reports and Tax Planner as income.  So, I think the best thing to do would be to simply delete the initial dividend payment and ReinvDiv transaction(s) and forget about entering a Remove Shares transaction.  If you want you can enter a brief note about what happened in the Comments field of the General tab of Account Details.

q_lurker

I agree deleting the original downloaded transactions is the cleanest repair. 

I would choose to enter a Reminder transaction with suitable Description and Memo fields for a future reference, if needed. 

[Deleted User]

@Leon Pink I would emulate on Quicken the transactions from your financial institution to account for the reversal.  I would print out the transactions first.  And then enter the same transactions in Quicken.  I would not necessarily delete anything unless that is how your financial institution dealt with the reversal.  In doing so, you will lose the "audit trail" for the reversal.  And as @q_lurker mentioned, I would also add a Reminder transaction to provide further details for future reference, if necessary.

Leon Pink

@Boatnmaniac, @q_lurker, @Damian Thank you all for your inputs. I ended up deleting the initial pymt & reinvested div, and adding a reminder as to what took place. This way I won't have to deal with it in the future should a question arise. I also printed out the transactions, just in case a question does come up.

q_lurker

For future readers, just to try to close this out and noting the suggestion from @Damian to enter reversal transactions—
For either an original ReinvDiv or an original Div + Buy Shares pair, the only reversal transactions I could imagine would be a Sell Shares at cost (so no realized gain/loss) and a MiscExp transaction using the _DivInc category. That pair would ‘remove’ the shares and ‘correct’ the dividend income records and leave the cash balance unchanged. The consequence would be that the end-of-year 1099-B form would not reflect that sale that Quicken would report and the 1099-Div if so detailed would not show the extra payment and reversal which Quicken would report.  Not particularly big deals in either case but something that could cause some head-scratching. 

[Deleted User]

@q_lurker - I never said to enter reversal transactions.  I said to emulate how the financial institution accounted for the transactions. 

q_lurker

@Damian -- Apologies for misrepresenting your statement.  

What I was trying to say (and that I said rather poorly) was the FI software may have abilities and presentations for reversals that Quicken lack.  The only option I see within Quicken to keep the original and subsequently reverse the original are the Sell and MiscExp pair.  But those may still have potential unintended consequences.