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How do I properly enter a "Return Of Capital" at the end of a year on stocks in my account?

mikebecker

I only know the total ROC amount when I receive my "Form 1099-DIV" for income tax filing information after the start of a new year (normally March).
Since there is no actual transfer of any money involved when I aclually receive the "Form 1099-DIV", only a change (decrease) in the "cost basis", do I have to back to each individual quarterly, or monthly, dividend entry and show each ROC amount as a separate part of the cash dividend received? If I do that, I can only breakdowh the dividend into "Dividend", "Capital Gain" and the "Miscellaneous" catagories. There is no way to use the Miscellaenous catagory for ROC and have it change the cost basis that I can see.
The ROC needs to be included somehow in the cash received quarterly and also removed from the cost basis.

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Tom Young

Typically when I receive a 1099-Div that reveals that part of what I used to call "dividends" in Quicken is now a "return of capital", I make a simpe year-end pair of entries. The first is the return of capital, that puts cash into the Account, then I do a negative dividend in the same amount. Like this:

This doesn't affect cash and this suit my purposes. I like to keep my basis in securties correct "overall" and don't worry to much about strick lot by lot agreement to the broker. These sort of entries can also be done quarterly, if you deem it necessary.

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Tom Young

q_lurker

I do not bother going back, but in my case the number of shares is not changing over the course of the year. If you are buying or selling shares including making reinvestments and if you want to be rigorously accurate about it, you would need to make those adjustments dated correctly.

To be fair though, I see it as unlikely your brokerage gets that rigorous. Depending on the specific security, it is likely no such info is available until the early part of the year. I can't see them doing a lot of backend calls, but I have no such insider info.

My general pattern is two transactions dated 12/31 or same as a December dividend. One is the RtrnCap. The second is a MiscExp for the same amount using the _DivInc category.

mikebecker

That is a possible solution but doesn't that leave the ROC amount as cash somewhere in Quicken?

Jim_Harman

That is a possible solution but doesn't that leave the ROC amount as cash somewhere in Quicken?

Per @q_lurker's last sentence, the cash from the ROC is canceled out by the MiscExp, which also reduces the total dividends received.

mikebecker

Bottom line is that you did receive the ROC amount as part of the dividend.
The only actual change needs to be a reduction of the cost basis.

q_lurker

https://community.quicken.com/discussion/comment/20346982#Comment_20346982

Not exactly. You did receive a single cash distribution that was one part dividend income and a second part a return of your investment. Initially, that transaction was booked as all dividend. Hindsight (end of year calculations by the company) revealed the ROC portion vs the dividend portion.

You could delete the initial dividend transaction replacing it with a smaller dividend and a RtrnCap, if that makes more sense to you.

The RtrnCap transaction is the best tool to generate a reduction in your cost basis. But also be aware: Beyond the scope of this discussion, it is not a perfect tool.

mikebecker

Thanks. You're correct, the RtrnCap isn't perfect but I'm not sure that there is a good and/or correct answer.
My Quicken cash balance must match the broker's statement balance no matter what I do, but it takes several extra steps to use the ROC function to change the cost basis amount and also keep the Quicken cash balance correct.