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How do add ownership shares of a private C-Corporation?

Rdoubetw

I own a percentage share of our family business. I am also an active employee and pull a salary. We use a DMS system and CPA to track our finances.

For Quicken, I use Home, Business and Rental Property, to track my personal finances. Do I add the shares as a investment or under Property and Debt?

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Accepted answers

Tom Young

If you want to be able to track both the fair market value of the ownership interest as well as the cost basis then you'd use an Investment Account and create a pseudo security to reflect your ownership. Periodically if you believe the value has changed you could enter a new "quote" for the security. If that's not necessary then a generic asset Account would be the way to go.

Also entering into your decision here could be how you acquired the ownership interest and if you anticipate future changes in the ownership interest.

All comments

Tom Young

Also entering into your decision here could be how you acquired the ownership interest and if you anticipate future changes in the ownership interest.

NotACPA

Your investment holding in the family business and your status as an employee are separate issues.

@Tom Young has answered the ownership question.

Re: your salary, do you have a question about setting that up in Q? Your ownership is irrelevant to salary. I owned stock in the bank where I was an Audit VP also, but that didn't impact my salary.

Rdoubetw

> @"Tom Young" said:
> If you want to be able to track both the fair market value of the ownership interest as well as the cost basis then you'd use an Investment Account and create a pseudo security to reflect your ownership. Periodically if you believe the value has changed you could enter a new "quote" for the security. If that's not necessary then a generic asset Account would be the way to go. Also entering into your decision here could be how you acquired the ownership interest and if you anticipate future changes in the ownership interest.

Thank you, @"Tom Young" . I like the idea of tracking FMV and cost basis. I acquired the ownership interest with a personal bank loan (see below*) and I anticipate a future increase in the ownership interest in next 5 years.

*The loan account is a Direct Connect but is showing up as a Line of Credit, which is frustrating. If I create a manual loan account, Quicken will not let me to link the Investment Account.

Ideally, I would be able to convert the Direct Connect account to a loan account and link it the manual Investment Account.

Is that possible?

Tom Young

Are you saying that the downloading loan (downloading via DC) does allow you to link the loan to an Investment Account?

Is this a "normal" amortizing loan, similar to a mortgage?

I wouldn't think you could link a loan, connected or not, to an Investment Account since within an Investment Account you'd typically have a "margin" loan to support the purchase of a security, and Quicken can't, natively, deal with a margin loan. The closest you can come to a margin loan within an Investment Account is a "sell short" transaction for another pseudo security. I'd call the pseudo security "Margin Loan".

So the full cycle here would be to transfer cash you pulled out of pocket (if any) into the Investment Account, create the pseudo security Margin Loan, sell "X" shares of Margin Loan @ $1 to establish the loan amount, then use the resulting cash to buy the ownership interest "security." If the loan is an amortizing loan then payments would require another transfer of cash into the Investment Account, you'd use part of the cash to "buy back" the Margin Loan security (the principal portion of the payment) at no gain or loss and the rest of the cash to record a MiscExp action for the interest. This, combined with your periodic change in quotes, would show your net equity in the ownership interest, its fair market value, and retain its cost basis.

I guess another approach, if the "linking" aspect is important, would be to put the investment into a generic "Asset" Account, which could be linked to a loan, manual or downloading I'd think, and within the Asset Account periodically click on the Account's "Action" wheel and use "Update Balance" to change the value of the ownership interest.

I have no experience with downloading loans and expect that most downloading loans use Express Web Connect as the downloading method. If your loan is using Direct Connect and isn't an amortizing loan then having Quicken call it a Line of Credit does make sense as Lines of Credit are very similar to credit cards where you dictate withdrawals ("purchases") and payments. Sorry, I'm pretty much at sea here.