Schwab CD purchase transaction download error

Ken From Vegas

When downloading the purchase of a bank CD bought in the secondary market through Schwab, the transaction is misreported. The transaction should be reported as two line items: the principal and the accrued interest. Instead, the line items show the total transaction and the accrued interest. This double counts the accrued interest. For example, if the principal is $5000 and the accrued interest is $100, Schwab reports $5100 and $100. This makes the total $5200 instead of $5100.

[Deleted User]

@Ken From Vegas - I think you might be confusing Market Value of the CD and accrued interest. Since you bought the CD in the secondary market, the MV will probably not be the same as principal or Face Value. It depends on the price you paid to purchase the CD. Brokered CDs have a daily price that hovers around 100.00. So, if you bought the CD at a premium the price is above 100. So, if the Face Value was 5000, and you are seeing a value above 5000 that could be the MV of the CD at the time of purchase. Accrued interest is a separate component that will simply be added (or subtracted) from your total interest payments for the life of the CD (until maturity date).

I think the best and safest thing to do is post the purchase transactions to Quicken the same way you see the transactions in your account with Schwab.

For tax purposes, Schwab will send you a 1099-INT for the interest piece, and a 1099-B for the capital gains piece which is the net of the purchase price and sale price of the CD. If the CD is held until maturity the price is always 100.00

Schwab should also be sending daily prices through the update file. Be sure to set the CD up on Quicken with the appropriate CUSIP and the pricing should be automatic.