Add Investment Distribution Type that can be reversed / properly allocated at year end [EDITED]

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LuckyP62
LuckyP62 Member
edited June 12 in Investments

REITS and some mutual funds provide general cash distributions through the year that need to be reallocated at tax time to ROC, Dividend, Interest, Foreign Income, WIthHolding tax, Cap Gains. Currently no way to do this as a set of year end adjusting entries since you cannot enter negative income amounts to offset the Interest or Div transactions used during the year. More of an issue in DRIP situations where funds are reinvested.

[EDIT: See this post further down the thread for a clearer description]

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  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
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    "Currently no way to do this as a set of year end adjusting entries since you cannot enter negative income amounts to offset the Interest or Div transactions used during the year."

    I've always been able to make year end entries that affect income up or down depending on the nature of the amount reported on the 1099. Here's an entry I just made in a test file:

    You can see here that the "opening balance" of cash before the two correcting entries - $6,828.59 - is unchanged after the corrections, and the amount of dividend income is reduced.

  • LuckyP62
    LuckyP62 Member
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    you using quicken Mac? This is in the Mac section. Cannot enter negative income amounts on Mac version - can’t speak for Windows version.

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
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    @LuckyP62

    Overlooked the "Mac" aspect of the idea.

  • jacobs
    jacobs SuperUser, Mac Beta Beta
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    @LuckyP62 While you can't enter a negative Dividend in Quicken Mac, did you try using the Return of Capital transaction type @Tom Young used in his example? You enter the number as a positive, but Quicken treats it as money into your account. (It doesn't show on any tax reports because it is not a taxable event).

    For the negative dividend issue, here's the way I believe it should be done. (I've created a test, shown below, to do this, and it seems right to me — but none of my investments have such transactions, so I haven't done this myself in a real situation.)

    • Create a new expense category, such as "Investment Misc. Expenses" with a subcategory for "Dividends".
    • Assign this Dividends subcategory to the appropriate tax line: Schedule B: Dividend Income.
    • In the register, create a new transaction with Type=Miscellaneous Expense.
    • Enter the security and the amount — as a positive number
    • Select the Dividend category you created above.

    This will show in your register as Cash Out, and it will show in a Tax Schedule Report as negative dividend income.

    In this example, I created a $125 Dividend from Apple on 6/11, a negative dividend transaction for $12 as described above on 6/11, and a Return of Capital of $100 on 6/12:

    The Schedule B or Tax Schedule report correctly shows the positive $125 dividend and the negative $12 dividend:

    The Return of Capital transaction doesn't show on any tax report, because it isn't a taxable event.

    Quicken Mac Subscription • Quicken user since 1993
  • LuckyP62
    LuckyP62 Member
    edited June 12
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    I use the negative ROC at times - depends on the security. Most of my REITS pay almost 100% ROC, so that's my go to. I have another dozen or so securities that pay all kinds of different income types (maybe more prevalent in Canada), so starting with a negative ROC doesn't work.

    I also have a workaround for the lack of negative dividend. /interest/ cap gain. I created an "Investment Distribution" category and post Misc Inc Types when I get the distribution, then Misc Exp Type to reverse at year end. Then have a check report to make sure I removed it all. Works fine for most items - is a pain for anything that is on a DRIP. The redistributed income has to be entered at a distribution and a buy rather than a single reinvest transaction. Adds about 100 additional entries a month for me across all our accounts (my brokerage does not support detailed transaction downloads).

    What would be nice and the reason for the post - maybe I need to word it better: Have a Type called Reinvest Distribution (and a simple Distribution type as well). At year end, you select a menu item / click a button that says "Allocate Distributions". It then comes up with a list of all your Distribution types for the year by account / security. Selecting one opens a dialogue window that allows you to allocate the distribution (creates a split transaction that has validation so the final sum is zero and your entire Distribution is reversed).

  • jacobs
    jacobs SuperUser, Mac Beta Beta
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    @LuckyP62 Thanks for clarifying. I didn't seem from your initial post that you already had a way of handling these transactions, which is why I took time to document it. I now understand you're proposing a feature to make it easier to handle these types of transactions.

    My gut feeling is that there are a lot of investment features which affect more people on a regular basis which will probably rank higher on the development list. But it's fine to propose it here, and if enough other Quicken Mac users vote for this functionality, it will get forwarded to the developers for consideration. Just don't expect anything to happen too quickly! 😀

    (I took the liberty of making slight edits to the title of the thread and your posts above with the intention of catching the eyes of like-minded Quicken Mac users.)

    Quicken Mac Subscription • Quicken user since 1993