Investment Partnerships (LP interests)

me

The new functionality looks interesting.  Has anyone played with it and have any feedback? At first glance it looks like all distributions are treated as capital gains/losses which seems like a big limitation.  What about income distributions which are very common in real estate and debt partnerships (and less so in VC deals)?

Tom Young

"The new functionality looks interesting."

What release are you on where you're seeing some new functionality, and what is it?  I'm always a few steps behind the "latest and greatest" update, but I took a quick trip through the release notes and didn't spot anything "new" along the lines of accounting for Limited Partnership (your "LP"?).

Actually it's really quite difficult - generally impossible - to really account for distributions for many Limited Partnership until after the end of a year when the Schedule K-1 shows up.  In the main you have to keep the cash stated accurately as distributions are received, charging them to "something", and then go back after you receive the Schedule K-1 and straighten them all out.  In many Limited Partnerships the vast majority of the cash received is a return of capital; it just depends on the situation.

Chris_QPW

@Tom Young See this announcement:
Windows R42.XX Release (US) — Quicken

me

Thanks Chris. Sorry my post was  cryptic. I was responding to the new release announcement. 

It seems weird that Quicken would have put so much time into this and missed that there are income distributions. I was wondering what those that have used this functionality (likely beta testers) thought about it. 

Tom Young

"It seems weird that Quicken would have put so much time into this and missed that there are income distributions."

Reading the release note about this, I guess I'd say that allowing for an Investment Partnership security type and asset class, in and of itself, it not a great leap forward in "functionality."  Those things allow you to slice and dice your portfolio in different ways, but those things don't particularly help you in your accounting for transactions of these securities.  Having said that, I guess I don't understand this: "it looks like all distributions are treated as capital gains/losses." 

Real functionality for Investments more readily is obtained by creating Quicken "actions" associated with particular security types, like Bonds Bought, Grant Employee Stock Option, Mutual Fund Conversion, and so forth, though I don't seem to recall that any of these actions are bound only to the security type they refer to; I can post a IntInc to a Stock or a RtrnCap to an Option, even though neither transaction (ordinarily) makes any sense.

Are you saying the new security type Investment Partnership has an action bound to it for distributions out of the partnership and Quicken will only record this as a capital gain/loss?  That doesn't sound right.

me

It seems that way.  Here are the detailed functionality notes:

https://help.quicken.com/display/WIN/Investment+Partnerships+in+Quicken

Tom Young

I take it from your comments that not ALL partnership distributions are purely gains or losses of holdings within the partnership, that some distributions are purely non-capital gains or losses, like an accumulation of dividends?  If that's correct I can see your point that such a distribution, if recorded using the Partnership - Distributions action would be miss-coded.

Can you use the regular Inc - Income (Div, Int, etc.) action against this security to record those distributions?  I'd think you could and I'd think Quicken would sweep that into its special Investment Partnership reports, or could be Customized to do so.

Mike F.

Based on the posts above, some clarification may be in order: Limited partners receive income in the form of distributions. The distribution may be ordinary income, capital gains, return of capital ("ROC"), or any combination thereof. Partnerships issue a K-1, typically in the 2nd half of the year, which provide those details for the prior year's distribution. In other words, you really won't know how to characterize THIS year's distributions (dividends, LT/ST gains, or return of capital) until you receive your K-1 in the FOLLOWING year. So how to characterize the distribution? Just pick something for now and correct it when you get your K-1. If you filed your tax return by the April deadline, you'll have to amend your tax return anyway and can fix any errors in dividend/gains/ROC at that time. If you filed an extension, you can do it right the first time.

Mike F.

Has anyone figured out how to actually create an "Investment Partnership" in Quicken? I have the latest version of Premier, and the release notes mention it, but I've tried adding a new account and can't find where to specify "Investment Partnerships". The online help gives a nice summary of what Investment Partnerships are, and the new types of transactions (including capital calls, but not return of capital...perhaps just use a negative capital call?), but I don't see how to create an Investment Partnership account.

Mike F.

OK, I FINALLY figured it out. I kept looking for an offline investment account type with "partnership" in the name. There is no such thing. There is a set of new "Partnership" transactions that appear in the "Enter Transactions" drop-list.
1) Create a new offline brokerage account with no assets.
2) In the new brokerage account, click the "Enter Transactions" button.
3) in the "Enter Transactions" drop list, press the "P" key to get to the "Partnership" transaction and you'll see "Partnership - Setup".
Beyond that, the Help is helpful: https://help.quicken.com/display/WIN/Investment+Partnerships+in+Quicken

Mike F.

Has anyone been able to make this work? Quicken Tech Support is absolutely clueless on this new feature.
I've setup the partnership and can see the partnership in the Security List. However, the Capital Call transaction input requires me to identify the partnership, but the drop list is empty, so there is no partnership to select. I looked at the Security List again and noticed that Quicken assigned Asset Class "Other" instead of the "Alternatives" mentioned in the Help on Investment Partnerships, so I used one of the "custom" asset classes and called it "Alternatives", but that did not help.
I even created a new partnership with no spaces or special characters in the name, and that didn't help either...the drop list of partnerships to select is still blank. I can't even type in the list.

Mike F.

Tech support made a valiant effort to resolve this, and unfortunately, it appears to be related to my specific Quicken file. We tried validating and repairing, deleting accounts to the point where only one investment account is left, and the partnership still does not appear in the drop list for the capital call...or any other partnership transaction. However, if I create a new Quicken file, everything works as expected. I have to commend the representative from tech support. He bent over backwards to resolve this. Unfortunately, I may have to "suck it up" and just keep this file for historical purposes. Then pick up with a new Quicken file...like I had to do 9 years ago. :(

miklk

They are having problems with the drop-down lists showing the partnerships for some users. I suggest waiting for an update to fix it.

maxwelwp

@Mike F.

Seeing the same thing you experienced - Works in a new datafile but not my existing datafile. Been trying to get resolved since intro of this but no luck.
Quicken asked for sanitized data file BUT they have imposed a 200MB restriction on that so cannot send sanitized version either. Waiting to see what that resolution is. I suspect many of us have larger files than 200MB.

me

I can see the Transaction options, Setup a Partnership, see the Partnership on a normal tranaction screen (like buy a security) but I cannot see the Partnership in the Partnership dropdown for Capital Call. 

maxwelwp

It appears the partnership issue has been resolved in my production datafile with the 42.19 patch recently released. Able to create and select partnership in transaction dropdowns and partnership option now appears in the reports submenu when a partnership exists. 

cdenny

How are people accounting for fee's paid? For example, I have a commitment of 50K but say 5K of it is for fees, not actual investing.

Secondly would a capital gain loss just be a negative cash distribution?

me

Upfront fees like those paid for access are often external to the partnership, that is they are in addition to your commitment and will not be generally shown on partnership statements.  In that case, I'd probably record a misc. expense.  

Typically distributions include basis.  So a $10 distribution with a $1000 basis would record the capital loss you are looking for.

Jackus Blackus

I have added two partnership investments and neither show up anywhere but the partnership investment reports.

Because they don't appear anywhere but in the reports there is no way to make changes later (such as adding the tax id or fixing mistakes).

Also, there doesn't seem to be a way to account for the cash transferred or invested. There is no way to transfer from another account and cash deposited in the account containing the partnership is not deducted.

It seems pretty useless and/or broken to me.