Record Nontaxable and Taxable Distributions

stevebarr32

I have searched and read many posts to please excuse me if I missed the answer to this.

I have my investments recorded in Quicken. I am taking withdrawals and recording as a transfer from the investment account to my cash account. Some are taxable and some are nontaxable.

I would like to record a form of income from the distribution of investments primarily so I can show it as income for cash flow purposes as I budgeted it. When I budget this way, I will then know how much distributions I need in a given month to balance my monthly budget.

How can I record the distribution of investments as income as well as the transfer to cash?

Jim_Harman

I am not sure what you mean by "record the distribution of investments as income". Do you want to see the proceeds from sales of investments in the account or the amount transferred from the investing account to your cash account? 

Generally transfers from a taxable investment account (not an IRA or 401(k)) are not taxable. The sale of a security in the account may generate a taxable capital gain.

Please clarify and/or give an example of what you want to see.

Tom Young

Speaking from a "pure" accounting standpoint, transfers of cash between Accounts aren't income or expenses, but Quicken can accommodate you if you want to see selected transfers presented as such, as illustrated here: As you can see a $500 transfer out from a brokerage Account to the checking Account is shown in the Income section and the principle amount of a mortgage loan payment (a transfer from the checking Account to the loan Account) is recorded in the Expenses section.  In this particular example there IS income earned over in the brokerage Account for the period, but it's NOT included here as "Income" so there's no double-counting of income in the report. 

The way you accomplish this sort of presentation is by selectively modifying the report as to what Accounts in your file "feed" information to the report by their selection or non-selection under the Accounts tab of the customization window, and what transfers to and from Accounts will be treated as Categories by their inclusion or exclusion under the Categories tab of the customization window, followed by allowing certain transfers to be shown or not shown under the Advanced tab of the customization window.

In the above example I have only the checking Account selected under the Accounts tab and I have only the brokerage Account and loan Account selected under the Categories tab.  Under the Advanced tab I have allowed transfers to be included in the report.

Removing the loan Account under the Categories tab results in that transfer's elimination from the report.

In this very simple case with only 3 Accounts in the file and not much activity between them I could select "Include all" transfers to get the desired results, but In a more complex file with more Accounts and lots of transfer activity, and depending on how I budgeted, I might have to select "Exclude internal" transfers to get the desired results.  You'll probably have to play around with this a bit to come up with a report that works for you.

stevebarr32

> @Jim_Harman said:
> I am not sure what you mean by "record the distribution of investments as income". Do you want to see the proceeds from sales of investments in the account or the amount transferred from the investing account to your cash account? 
>
> Generally transfers from a taxable investment account (not an IRA or 401(k)) are not taxable. The sale of a security in the account may generate a taxable capital gain.
>
> Please clarify and/or give an example of what you want to see.

OK let me try and clarify.

My wife and I are recently retired. I am a CPA and track our personal budget and cash flow in extreme detail.

I prepare monthly budgets of income and expenses. I use that net income (loss) to determine how much money I need to withdraw from my investment accounts each month to balance our budget that month.

For example, let's say in September, our budgeted income is $8,000 and our budgeted expenses are $15,000. That tells me that I need $7,000 (after taxes) withdrawn from my investment accounts for September.

So I transfer $7,000 from an investment account to my checking account. I don't care if it's taxable or not. I am not using Quicken for that purpose. I increase my checking account balance and reduce my investment balance. This is a balance sheet only transaction.

I would like to be able to post that $7,000 also in my P&L as income (e.g. Distribution from Investments) so my P&L is relatively balanced each month.

This isn't critical but if I could make it happen, it would be nice.

Thanks in advance.

Jim_Harman

Thanks, that clarifies what you are looking for. As @Tom Young says above, you can't assign a Category to a transfer, but you can set up a Spending or Cash Flow report so selected transfers are included in the Income section. I would do this as follows:

-- Click on the gear to customize the report

-- On the Accounts tab, select the spending accounts you want to include in the report.

-- On the Advanced tab, select "Exclude internal" next to Transfers. This will exclude transfers between the accounts you have selected, but include other transfers.

-- Click on OK to view the report.

-- If the report includes transfers that you do not want to show, go back to the customization and on the Categories tab, scroll down and you will see the accounts in [square brackets]. De-select the ones you don't want.

stevebarr32

> @Jim_Harman said:
> Thanks, that clarifies what you are looking for.
>
> As @Tom Young says above, you can't assign a Category to a transfer, but you can set up a Spending or Cash Flow report so selected transfers are included in the Income section. I would do this as follows:
>
>
> -- Click on the gear to customize the report
>
>
> -- On the Accounts tab, select the spending accounts you want to include in the report.
>
>
> -- On the Advanced tab, select "Exclude internal" next to Transfers. This will exclude transfers between the accounts you have selected, but include other transfers.
>
>
> -- Click on OK to view the report.
>
>
> -- If the report includes transfers that you do not want to show, go back to the customization and on the Categories tab, scroll down and you will see the accounts in [square brackets]. De-select the ones you don't want.

Thank you. I am not getting this to work but it's fine.

stevebarr32

> @Tom Young said:
> Speaking from a "pure" accounting standpoint, transfers of cash between Accounts aren't income or expenses, but Quicken can accommodate you if you want to see selected transfers presented as such, as illustrated here:
> As you can see a $500 transfer out from a brokerage Account to the checking Account is shown in the Income section and the principle amount of a mortgage loan payment (a transfer from the checking Account to the loan Account) is recorded in the Expenses section.  In this particular example there IS income earned over in the brokerage Account for the period, but it's NOT included here as "Income" so there's no double-counting of income in the report. 
> The way you accomplish this sort of presentation is by selectively modifying the report as to what Accounts in your file "feed" information to the report by their selection or non-selection under the Accounts tab of the customization window, and what transfers to and from Accounts will be treated as Categories by their inclusion or exclusion under the Categories tab of the customization window, followed by allowing certain transfers to be shown or not shown under the Advanced tab of the customization window.In the above example I have only the checking Account selected under the Accounts tab and I have only the brokerage Account and loan Account selected under the Categories tab.  Under the Advanced tab I have allowed transfers to be included in the report.Removing the loan Account under the Categories tab results in that transfer's elimination from the report.
> In this very simple case with only 3 Accounts in the file and not much activity between them I could select "Include all" transfers to get the desired results, but In a more complex file with more Accounts and lots of transfer activity, and depending on how I budgeted, I might have to select "Exclude internal" transfers to get the desired results.  You'll probably have to play around with this a bit to come up with a report that works for you.

Thank you. I am not able to duplicate your example. I wonder if I am not recording the transfer correctly. If the transfer does not hit an income account, how does it show up in the report. My report is the budget vs. actual report.

Jim_Harman

Aha. The budget reports work differently. On the Planning > Budgets page, click on Manage Budget Categories ("Categories" is Quicken's term for what accountants call "Accounts". Quicken uses "Account" to refer to an actual account at a bank or other financial institution)

If you go to the Transfers in and Transfers out sections, you can control which transfers are included in the Budget and corresponding reports.

stevebarr32

> @Jim_Harman said:
> Aha. The budget reports work differently. On the Planning > Budgets page, click on Manage Budget Categories ("Categories" is Quicken's term for what accountants call "Accounts". Quicken uses "Account" to refer to an actual account at a bank or other financial institution)
>
> If you go to the Transfers in and Transfers out sections, you can control which transfers are included in the Budget and corresponding reports.

PERFECT. Thank you so much.

Tom Young

If you read your original post closely, you will see that effectively you said that you had already budgeted for the transfer and were now searching how to do the same for the actual income that shows up on the income and expense report.  That's why we started down the wrong path.