Why is a Gain from a stock sale considered Income if it is within an IRA????

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I am looking at my Income Statement in Quicken and noticed that Gains I realized from the sale of a Stock within my IRA is being considered as part of my Total Income and is being displayed on the Home page (Income & Expenses).

This is NOT income in any since of the Tax Code and makes the chart much less useful since it distorts the Income amount being displayed. There was definitely a gain from the sale but it was not distributed from the IRA (which would be Income). Instead it was simply reinvested as part of a Rebalancing activity.

What I would like is it for only to show Income Categories that relate to Adjusted Gross Income.

Thanks in advance for any help in correcting this error.

Joel

Comments

  • Jon
    Jon SuperUser, Mac Beta Beta
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    You can customize the Income & Expense panel on the Dashboard to exclude your retirement accounts, that should stop the stock sale from appearing on the graph. Click on the little circle with three dots and on the Accounts tab uncheck your retirement accounts.

  • jacobs
    jacobs SuperUser, Mac Beta Beta
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    Gains from a stock sale in a retirement account are income, just not taxable income.

    For some people, in some circumstances, knowing how much the holdings in their retirement account are earning is desirable. For instance, for an individual or couple who have retired and have no income other than their investments, keeping tabs on such performance might be important.

    But as you note, for many people and purposes, focusing on taxable income is the focus. So, as @Jon explained, you can simply exclude your retirement accounts from the Dashboard > Income & Expense card. You can do the same thing in an income statement report by clicking on Edit > Accounts and unchecking your retirement accounts.

    Quicken Mac Subscription • Quicken user since 1993
  • JoelAlbert
    JoelAlbert Member ✭✭
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    Thank you, that helped a bit except…..

    I have transactions where I move money from my Retirement Accounts to my checking accounts to cover expenses. This is actually Income and it won't show in this approach.

    It would be much cleaner if Quicken would use Default Categories (which I am forced to use for transactions inside an Investment Account) that clearly separated Taxable Income from Non-Taxable Income. For instance Taxable>Interest_Income vs. Non-Taxable Interest_Income.

    I see this as a major shortcoming and am forced to export everything to Excel and build my own reports—which defeats the purpose of using a tool which I really like.

  • jacobs
    jacobs SuperUser, Mac Beta Beta
    edited June 4
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    @JoelAlbert So what you're doing is the same as anyone who takes Required Minimum Distributions from retirement accounts: pulling money from a tax-deferred account into a regular account, which is a taxable event.

    And you're correct that Quicken Mac — surprisingly — doesn't have a clean way to do this. So until they do create a better way (more on that in a second), you need to use a bit of a hack.

    The issue is that you need a transfer (from the IRA account to the non-retirement account) and you need a categorized transaction (to record taxable retirement income). Transfers are not — or should not be — income. (In the current Quicken Mac, there is a way to get a transfer to have a category, but it messes up some reports and because it goes against the rules of accounting, the prior Mac product manager has said that senior management has decided they will block this capability in the future.)

    Thus you need to do the transfer, and then additionally create the income. you can do this as split lines in one transaction or as two separate transactions. To do it as a single transaction, create the transaction in your non-retirement destination account. Enter the amount. The first split line is a Transfer form the retirement account. The second split line, for the same amount, should use the category Personal Income>Taxable IRA Withdrawal. Now, here comes the hack: the third split line should be the the negative of the amount transferred, and use the category Adjustment. The first split line moves the money. The second split line creates the taxable income. The third split line balances the transaction by making the income split not affect the cash balance int he receiving account. Here's an example:

    You must make this transaction in the taxable account (the checking or brokerage account where the money was transferred to); if you do it in the retirement account, Quicken will ignore the income you're trying to make taxable.

    If you prefer, you can do a simple transfer transaction, and then a separate zero dollar transaction with the second and third split lines.

    Yup, it's quirky. 😂 But it gets the job done, and it only takes a few seconds to enter the two extra split lines. And it's far less work than tracking this separately in a spreadsheet!

    Once you've done that, please go to the Idea thread (feature request) for Quicken to create a simpler way to deal with taxable withdrawals from retirement accounts, and add your vote!

    Quicken Mac Subscription • Quicken user since 1993
  • JoelAlbert
    JoelAlbert Member ✭✭
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    jacobs,

    Many thanks for the reply and suggestion. I have implemented your approach as well as added my thoughts to the enhancement request.

    Appreciate the help!

    Joel