Transferring stock - as a Gift [edit]

NebularNovice
NebularNovice Member ✭✭

How do I get Quicken to record a gift to a relative made by transferring stock directly from my account to the relative's account within the same brokerage?

I can Remove the stock from my account. That will properly reduce the number of shares and give the proper cost of the remaining shares. The problem is that I do not see a way to put the gift amount into a category such as Gifts Given. How do I get that recorded?

I know the proper tax treatment. My question is how to get Quicken to record the gift for my review when I print reports.

(This is a repost of a question I posted yesterday which disappeared. I asked about the disappearance separately.)

Quicken Deluxe for Windows

Best Answers

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited July 2023 Answer ✓

    And here's yet another way to do this:

    1st, Create a Cash Account called "Gifts of Stock Clearing." Then when you make the gift:

    1. Remove the shares from the Investment Account. That Account is now properly stated and your net worth is decreased.
    2. In Gifts of Stock Clearing Account enter a deposit of the FMV of the stock gifted with a Category of [Gifts of Stock Clearing]. This will "magically" add this "cash" to the Account, increasing your net worth, but without affecting any other Account or Category.
    3. Then "spend" the cash in the Gifts of Stock Clearing Account with a Category of Gifts Given;Stock Shares. Make a memo entry as to the stock and number of shares. This will zero out the Account, decrease you net worth to its proper amount and the expense will be recorded appropriately.

    Do your relative a favor and be sure to tell them your holding period and your basis in the gift. There's no "step up/step down" in play here and they will need that information if and when they sell the stock.

  • QWinUser
    QWinUser Member ✭✭✭✭
    edited July 2023 Answer ✓

    When you create a transaction that nets to zero, there is no effect on cash. The "Contra-category" is a term I use to describe a category that is solely used to offset a transaction that shouldn't affect cash. It is not a special feature.

    I use this method to record any non-cash charitable donations that I need to have in Quicken for tax purposes. It's worked well for me for many years and shows up appropriately on Quicken Tax Reports.

    Here is how you make a "zero balance" transaction in Quicken -

    1. Add a Withdrawal transaction with the full amount (value) of stock gift.
    2. After you enter the transaction, click on "Edit" and go back into the transaction and click on "Split".
    3. That will bring up the split window where you can add the offset entry which will make the transaction net to zero. (see the screen print above in my other post)
    4. After the offsetting entry has been entered, click on the "Adjust" button at the bottom of the split screen. (see the screen print above in my other post)
    5. The split total then will change to zero.
    6. Hit "Ok" to save the transaction.

    There will be ample places were you can add additional information to describe the gifting. There are the memo fields for each of the split transitions, as well as a main memo field for the total transaction.

    When I use this method for Non-cash Charitable donations, I add a description with the dollar value, in the main memo field so I can clearly see what the transaction is about when I am going through my register. This "zero balance" transaction for gifting that you would use, would always be coupled with the stock share withdrawal so it should be clear what it's used for.

  • QWinUser
    QWinUser Member ✭✭✭✭
    Answer ✓

    This type of cash transfer of transferring into the same account is used to establish beginni ng balances and update asset accounts such as "House Value". I used this type of transaction because it didn't require a category. If you are concerned about using this type of transaction, then your other option is to use a "contra-category" as I initially mentioned.

    You would set up another category as an expense that would offset the "gift" category. It could be named something like "Stock Shares Gifted - Offset". Then it would be easier to see that the main category is removing cash, and the "contra-category" is then putting it back.

    Fill out the fields so you know that this Deposit transaction is an offset to the "Withdraw" transaction.

    I think this second method might be a better way to adjust the cash. In the other method, I was just trying to find a way to not have to use a "contra-category".

    No matter what method you use, you will need an "offset" to the Withdrawal transaction, and you need to use the Withdraw transaction because it's the only way to "attach" the "gift given" category.

Answers

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭

    if you need to show as a gift, you need sell the security shares for the value of the gift. You then use a Withdrawal, Write Check, or MiscExp transaction to remove the cash from the sale against the desired category.

  • QWinUser
    QWinUser Member ✭✭✭✭

    @NebularNovice - maybe this will work for you-

    • Create a category for the gifted stock such as "Gifts Given:Stock Shares"
    • Create a contra-category such as "Gifts Given:Stock Shares - Offset"

    Each time you remove the stock shares from your account for gifting, use a Withdrawal transaction and create a split transaction as such:

    The first line shows the withdrawal for the stock gift. The second line is an offset. Add any pertinent information you need to describe the stock gift. You should then be able to run reports showing your stock gifts by using the "Gifts Given:Stock Shares" category.

  • NebularNovice
    NebularNovice Member ✭✭

    Thanks for the response, but I will not implement it because it would create a real mess of fake cash movements and phantom capital gains.

  • NebularNovice
    NebularNovice Member ✭✭

    Thanks, QWinUser. That has some potential.

    Is contra-category a special feature in Quicken or a "normal" category I set up and treat as a contra?

    I don't know how I can do a withdrawal entry without messing things up. I believe a withdrawal applies only to cash, which is not involved here. You show a net of $0 for the split, but Quicken won't let me enter a withdrawal for $0, so whatever I enter will be fake and throw me out of balance in the account.

    Doing a split with a contra has some potential, need to figure out a way to enter it without affecting cash. If I had a real withdrawal entry, I could piggy-back on it, but the most recent withdrawal in that account is almost 4 years ago. I could also piggy-back on a deposit, but nothing available there either.

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited July 2023 Answer ✓

    And here's yet another way to do this:

    1st, Create a Cash Account called "Gifts of Stock Clearing." Then when you make the gift:

    1. Remove the shares from the Investment Account. That Account is now properly stated and your net worth is decreased.
    2. In Gifts of Stock Clearing Account enter a deposit of the FMV of the stock gifted with a Category of [Gifts of Stock Clearing]. This will "magically" add this "cash" to the Account, increasing your net worth, but without affecting any other Account or Category.
    3. Then "spend" the cash in the Gifts of Stock Clearing Account with a Category of Gifts Given;Stock Shares. Make a memo entry as to the stock and number of shares. This will zero out the Account, decrease you net worth to its proper amount and the expense will be recorded appropriately.

    Do your relative a favor and be sure to tell them your holding period and your basis in the gift. There's no "step up/step down" in play here and they will need that information if and when they sell the stock.

  • QWinUser
    QWinUser Member ✭✭✭✭
    edited July 2023 Answer ✓

    When you create a transaction that nets to zero, there is no effect on cash. The "Contra-category" is a term I use to describe a category that is solely used to offset a transaction that shouldn't affect cash. It is not a special feature.

    I use this method to record any non-cash charitable donations that I need to have in Quicken for tax purposes. It's worked well for me for many years and shows up appropriately on Quicken Tax Reports.

    Here is how you make a "zero balance" transaction in Quicken -

    1. Add a Withdrawal transaction with the full amount (value) of stock gift.
    2. After you enter the transaction, click on "Edit" and go back into the transaction and click on "Split".
    3. That will bring up the split window where you can add the offset entry which will make the transaction net to zero. (see the screen print above in my other post)
    4. After the offsetting entry has been entered, click on the "Adjust" button at the bottom of the split screen. (see the screen print above in my other post)
    5. The split total then will change to zero.
    6. Hit "Ok" to save the transaction.

    There will be ample places were you can add additional information to describe the gifting. There are the memo fields for each of the split transitions, as well as a main memo field for the total transaction.

    When I use this method for Non-cash Charitable donations, I add a description with the dollar value, in the main memo field so I can clearly see what the transaction is about when I am going through my register. This "zero balance" transaction for gifting that you would use, would always be coupled with the stock share withdrawal so it should be clear what it's used for.

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭

    I understand your reluctance, but categories (like Gifts Given) only operate on a cash basis. Fake cash movements are required to reach your objective.

    FWIW, my process for gifts to charities is:

    • Remove shares (no cap gains)
    • Add shares basis at gifted value
    • Sell shares at gifted value (no cap gains)
    • Write Check to charity for gifted value.

    Maybe that is more suitable to you.

  • NebularNovice
    NebularNovice Member ✭✭

    Thanks to Tom Young and QWinUser. I think either of those approaches will work for me.

    QWinUser's approach to entering a zero balance transaction is an interesting workaround.

    I definitely informed my relative of my basis and purchase date. However to give credit to Vanguard, this stock transfer was executed between Vanguard brokerage accounts, and Vanguard carried over the cost basis and purchase date into the recipient's account. Since it is a covered security, they will presumably provide that information on any 1099-B resulting from sale of this stock.

    Thanks again.

  • QWinUser
    QWinUser Member ✭✭✭✭
    edited July 2023

    @NebularNovice - just to let you know, there is a glitch in the Withdrawal transaction where it changes to a Deposit transaction as you are entering it. When this happens, just go back to the transaction "Action" field and change it back to "Withdrawal" before you hit enter. If you hit enter before you make this correction, it will show up as a Deposit. Just go back in then and change it back to "Withdrawal".

  • NebularNovice
    NebularNovice Member ✭✭

    Thanks again. I did note the change to Deposit. I didn't realize I could change it back, but I don't see that it makes any difference as long as the amount is zero.

  • QWinUser
    QWinUser Member ✭✭✭✭

    If it is coded as a deposit, it could change the "stock value withdrawal" to a "stock value deposit". You can confirm this by running a report and making sure that the transaction is going in the right direction (out of the account). If it is not then all you need to do is go back into the split and simply change the sign (+,-) for each of the split transactions.

  • NebularNovice
    NebularNovice Member ✭✭

    I thought withdrawal and deposit referred to cash withdrawn or deposited, not stock value.

    I'm not sure what report you are thinking would show the direction (which is actually 0). I ran Investment Transactions. The pseudo-entry shows as action:Cash, security:Cash, category:—Split— and otherwise blank — that is, no amount or sign shown.

    This is what I would expect since there really is no direction to a zero transaction. My main remaining issue is where to bury the contra account.

    The approach suggested by q_lurker gets around the problem of a phantom balance left in an account by using a transaction type (Shares Added) which can be entered as single-entry with no balancing amount. I don't have to say anything about where the shares came from. I need to think of some transaction type which can be single entry without requiring phantom cash and capital gain (even 0).

  • QWinUser
    QWinUser Member ✭✭✭✭
    edited July 2023

    The withdrawal portion represents the value of the gifted stock. The deposit is an offset category so that cash is not affected.

    When you run reports you should always "show splits". Not doing so would cause —Split— category that really doesn't show anything.

    Run a report with this option checked, on just the gift category you created, and see how it looks. It should be a negative amount to show the amount leaving the account.

  • QWinUser
    QWinUser Member ✭✭✭✭

    A "contra-account" is not created. I called it a "contra-category" for lack of a better way to describe it. It doesn't need to be hidden,

  • QWinUser
    QWinUser Member ✭✭✭✭

    My example above is for a banking transaction report. But of course you would create an Investment Transaction report since it is for an investment account. If you use a Banking Transaction report on an Investment account, the Buys and Sells will show zero for amounts.

  • NebularNovice
    NebularNovice Member ✭✭

    I want it hidden so it doesn't mess up my reports. If I put it in as an expense account, it shows up on any expense report, etc. It doesn't have to actually be hidden, but put someplace where it doesn't interfere.

    I know I could actually hide the category, but I don't want to do that to an active category. (It doesn't work anyway.)

  • QWinUser
    QWinUser Member ✭✭✭✭

    Let me create some "A to Z" instructions for you with some sample reports so you can set it up properly and see how it works. I think my instructions may have been too "piecemeal."

    I will get back to you sometime tomorrow. Once you can see the "whole picture", I think it will be clearer to you.

  • NebularNovice
    NebularNovice Member ✭✭

    I agree that reporting splits should be used all the time. Unfortunately Show splits does not show as an option for Investment transaction reports. I haven't been able to find that option anywhere except the general Transaction report.

    I was able to run Transaction report with Show Splits. When set for All categories, the two lines of the split showed as I would expect. There is no indication whether the transaction is a Deposit or Withdrawal.

    You suggested running the report on just the new category. The crazy part is that I can't do that because that category does not appear in the list to be selected. Thus the split does not show fully when I select all the Gifts given categories

    (I see your latest comment, but will go ahead and send this in case it might be helpful to you — since I already have it typed in.)

  • NebularNovice
    NebularNovice Member ✭✭

    This is not a crash priority situation. You don't have take time away from a summer weekend on this.

  • QWinUser
    QWinUser Member ✭✭✭✭
    edited July 2023

    ………………..

  • QWinUser
    QWinUser Member ✭✭✭✭
    edited July 2023

    @NebularNovice

    I compiled everything together into what I hope is concise and understandable. I did some testing on the investment reporting capabilities and found that even though you can create split transactions in an investment account, the investment transaction report doesn't have the ability to show split transactions. You could use a banking transaction report but that doesn’t show amounts for certain investment transactions. This in my opinion is a major deficiency in investment reporting. Therefore, I had to change some of the steps in creating the transactions without using split transactions.

    1.. If you haven’t already, create category (or sub-category) for your gifting. It can be anything you want but make sure to code it as an expense.

    2.. Whenever stock shares are removed from your investment account and a “Remove” transaction get posted to Quicken, you will first create a “Withdraw” transaction. This “Withdraw” transaction creates the stock gift category for reporting purposes.

    a. Payee = the recipient of the stock gift
    b. Date = the same date as your “Remove” shares transaction.
    c. Category = is the category you created to show the stock gifting transaction.
    d. Amount = is the Fair Market Value (FMV) of the gift.
    e. Memo = add any description you need to describe the gift.
    f. Number = Optional but can be used to further identify the transaction.

    3.. You will then need to create an offsetting transaction so that your cash balance in your investment account is not affected. For this, I found it is best to use a “Cash Transferred into Account” transaction. No category is required for this transaction so you won’t need to create a “contra-category”.


    a. Transaction date = the same date as your “Remove” and “Withdraw” transactions.
    b. Amount to transfer = is the Fair Market Value (FMV) of the gift.

    c. Transfer account - should be the same as what's in the "Account" field.

    d. Memo = can be left blank or used if needed for additional information.
    e. Description = add any description you need to describe the gift.

    4.. After these two transactions are entered, you should end up with three transactions for each stock gift you make.

    a. The “Remove” transaction which shows the share withdrawal or transfer to the gift recipient’s investment account.
    b. The “Withdrawal” transaction that shows the stock share gift category and FMV.
    c. The “Cash Transfer In” transaction which is needed to offset the “Withdrawal” transaction.


    Please let me know if you have any questions.

  • QWinUser
    QWinUser Member ✭✭✭✭

    Not a problem. I used to be a trainer and document writer before I retired. I also had to know the systems well. So, this is not work for me. I found some interesting and quirky things on the investments side of Quicken when I was looking into your issue.

  • NebularNovice
    NebularNovice Member ✭✭

    Thanks for the detailed instructions. I think the steps are working to get the gift correctly stated. I'm still a bit worried about pseudo-cash transactions.

    I'm even more concerned about the transfer of cash into the account. I considered that type of transaction, but rejected it because I needed to specify a transfer account. I have set the transfer as you suggested, coming from the current investment account, but I don't understand why that actually put any net cash into the account. It seems to me that transferring from an account back into the same account should have no effect on cash balance into the account. However the transaction did increase the cash balance in the account. Where did the cash come from?

  • QWinUser
    QWinUser Member ✭✭✭✭
    Answer ✓

    This type of cash transfer of transferring into the same account is used to establish beginni ng balances and update asset accounts such as "House Value". I used this type of transaction because it didn't require a category. If you are concerned about using this type of transaction, then your other option is to use a "contra-category" as I initially mentioned.

    You would set up another category as an expense that would offset the "gift" category. It could be named something like "Stock Shares Gifted - Offset". Then it would be easier to see that the main category is removing cash, and the "contra-category" is then putting it back.

    Fill out the fields so you know that this Deposit transaction is an offset to the "Withdraw" transaction.

    I think this second method might be a better way to adjust the cash. In the other method, I was just trying to find a way to not have to use a "contra-category".

    No matter what method you use, you will need an "offset" to the Withdrawal transaction, and you need to use the Withdraw transaction because it's the only way to "attach" the "gift given" category.

  • NebularNovice
    NebularNovice Member ✭✭
    edited July 2023

    Now that you relate the cash added to the setup for beginning balance, I understand why cash just appears out of thin air. I still have no idea why that transaction requires a source account. That's what confuses me.

    I'm going to avoid using an offset account until I know where to use it. I'll keep using the Cash Added to create the cash to withdraw.

    Thanks for your help.

  • QWinUser
    QWinUser Member ✭✭✭✭

    @NebularNovice you are very welcome. I think there should be an ability to add a category for at least the FMV to the share delivery transactions. Or have a "MEMO transaction" that would augment an investment transaction with reportable information. Or even enhancing the "Reminder" transaction to include a category would help.

This discussion has been closed.