removal of shares without proper accounting

denismegan1951

When you remove shares of stock, there should always be an offsetting account. If you give the stock to grandchildren, you should be able to select remove shares, select account (gifts to grandchild), then you have an offsetting account for the market value of the stock removed. The transaction would be Gift to grandchild $100, Stock in abc $(33), nontaxable gain on sale of stock $(67).

Or Roth Conversion, market value of stock to Roth $100, cost of IRA (75), realized gain on transfer to Roth (25), and somehow, recognition of deferred taxable income $100.

QuickUserPSP

@denismegan1951 - Quicken is a personal accounting program which uses single entry accounting. The purpose and description for each transaction is noted by the use of categories, instead of offsetting accounts. You can also make notations in the memo field. Also, for investment accounts, there are "Reminder" transactions available to add additional information or descriptions if needed.

NotACPA

Alternatively, you could sell those gifted shares at cost, transfer the cash to a checking account and create a fictitious transaction to remove that cash, using your GIFTS category.

Chris_QPW

I agree with @NotACPA if for no other reason than "Remove Shares" is the wrong security action in the first place.

That action is for making shares "just disappear", just as "Add Shares" makes shares "appear from nowhere".

The equivalent in a cash account would be a balance adjustment. In other words, the "other side" of the transaction happened outside of Quicken.

QuickUserPSP

@Chris_QPW - if someone gifts shares of stock and the shares of stock are transferred to another account either internally or externally, I think "Remove Shares" would be appropriate. I have done many account to account transfers for shares of stock and the only option to use in Quicken is "Remove Shares" and "Add Shares". The shares do not just appear or disappear. The other side of the "remove" is the "add" in the other account and vice versa. Even if the account the shares are being transferred to is outside of Quicken, the shares don't just disappear. It is understood that the shares have been transferred to another account that is not set up in Quicken. The purpose and description of the share transfer can be noted in the memo field, whether it be a transfer of shares, share adjustment, or investment removal.

The issue is double entry accounting vs. single entry accounting. For simplicity, personal accounting programs use single entry accounting, but the downside of this is that it lacks the full explanation and audit trail for the transaction, which is made up for by using categories and memos in Quicken.

NotACPA

"The issue is double entry accounting vs. single entry accounting. For
simplicity, personal accounting programs use single entry accounting"

WRONG. Q is "double entry accounting" … it's just not "double data entry". The use of a category, or a transfer, constitutes the other side of the transaction … THAT's the double entry.

Chris_QPW

I really didn't explain what I meant properly. I believe that the use of Remove Shares/Add Shares in Quicken to transfer shares between one account another is a deficiency in Quicken. Quicken really should have a "transfer" for this.

And yes, "sell" might not be the right "term" for what is being done, so maybe another deficiency, and there is the fact that doing things like a Roth Conversion is overly complicated. But using Sell and using transfers to the checking accounts and recording taxes there, is the way in Quicken to get it properly recorded, when you need to account for things like taxes.

BUT what I was saying is even in a double entry system there are transactions that "don't have an account for the other side". There isn't an account system around that doesn't have a way to "remove from books". It is absolutely needed because some things happen outside of your finances.

"Remove/Add shares" to me is such a case.

Have you even noticed these dialogs when creating a new offline account?

These will result in Add Shares, transactions. The shares just "appear" in the register because the "history" of those shares is unknown to Quicken. To me, this is the "use case" of Add/Remove Shares. And the way it behaves where there isn't any "to/from" account is exactly what you expect from a transaction type that is moving thing in and out of your "control/finances". It isn't a good choice for "proper accounting".