How do I record an addition to cost basis reported on 1099

bebob

I'm using Quicken Classic Premier for Windows version R60.20.

Schwab reported an addition to cost basis under a section titled "Widely Held Fixed Investment Trusts (WHFIT) Reporting." According to Schwab's customer service, there was a discrepancy in the income this security earned and what had been paid out during the year, and the remedy they applied was to increase cost basis. This has no effect on the current tax return, but will affect the reported gain when the security is sold. [The shares were originally purchased in one single lot.]

How should I record this in Quicken? Should it be recorded as a "return of capital"? If so, do I also record a negative dividend for the same amount in order not to add any cash to the account? [By the way, that's how I treat other 1099-reported RoC's in Quicken, and I'm not sure that's the best practice.] I'd rather not edit the original purchase details, but I don't know how else to get my information to match Schwab's. Thank you.

Quicken Jasmine

Hello @bebob,

Thanks for reaching out!

In Quicken, the best way to record an addition to cost basis reported on a 1099 under WHFIT Reporting without affecting your cash balance is to use a Return of Capital (RoC) transaction. Since Schwab is increasing the cost basis due to a discrepancy in income versus payouts, recording it this way aligns with how cost basis adjustments are typically handled.

To enter this in Quicken:

1. Open the investment account and go to the Transactions tab.
2. Enter a Return of Capital (RoC) transaction for the affected security, using the amount reported on your 1099.
3. This will reduce your cash balance, so to counteract that, enter a separate negative dividend transaction (MiscInc with a negative value) for the same amount to ensure no cash is added to the account.

This method maintains accurate cost basis tracking while keeping your cash balance unchanged, which seems to match the approach you are already using for other RoC entries. If you’d rather not manually adjust, another option is to see if Quicken’s Adjust Share Balance feature allows for a cost-based correction without altering the original purchase details.

Let me know if you have any questions or need further clarification!

q_lurker

Couple of details — While the 1099 is reporting the data under the label ‘Addition to basis’, the actual value is a negative $0.93. The accounting is reducing the basis by that amount. From the Quicken side, that negative sign makes this a normal Return of Capital transaction and you would enter the amount of the transaction as a positive $0.93. That positive value entry will reduce your basis by that amount.

As to the balancing Dividend transaction, I would cross-check what Quicken is showing for dividends received versus what the 1099 is showing. In all likelihood, the 1999 is reporting $0.93 less as dividends paid by this security than Quicken shows. That would make the correcting dividend transaction the correct path.

Hope this helps.

Quicken Jasmine

https://community.quicken.com/discussion/7961010/how-do-i-record-an-addition-to-cost-basis-reported-on-1099

Just checking in!