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Dividend - Buy vs Reinvest

Bob.

Hi folks,

Got a dividend yesterday. Both Qwin and Qmac report is as a small LTCG, a small DIV a large DIV and then a BUY for the total of the other three. However online broker shows that BUY as a Reinvest Div.

The totals for Quicken match the broker. The only discrepancy is the Buy vs Reinv.

Should I change it in Quicken and if so why? And if so, why does Quicken get this wrong?

Thx.

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Jon

It's not clear from your description whether Quicken is wrong or not.

It's not at all unusual for mutual fund investments to distribute both capital gains and dividends at the end of the year, and since long term capital gains are taxed differently than dividends I would want to have separate transactions recording the receipt of those amounts. I'm not sure why you would have received two separate dividends unless they were from different assets; if that's the case then I would not want to combine those into single transaction either. But if both came from the same investment then I don't see a problem with combining them.

It's also possible that one of those dividends was actually a short term capital gains distribution; if so I personally would change the transaction to reflect that, but tax-wise I don't think it makes a difference as they are both taxed as ordinary income.

So I would double check your transactions on the brokerage web site to make sure you know exactly what kind of income each of those transactions represent and if necessary change the transactions in Quicken to match.

You could hypothetically get rid of the BUY transaction and turn each of the other three transactions into the appropriate Reinvest transaction but there's no compelling reason to do so other than to have one less transaction in your register.

FWIW, one of my Vanguard mutual funds did its distributions last week. I received a long term capital gain, a short term capital gain, and a dividend; Quicken recorded all three as reinvested dividends, so I had to change two of the transactions in the register.

Bob.

Not at all my question, Jon. But thanks.

The question is Quicken lists the total of the three other amounts as a separate entry as a BUY and the Broken lists that same entry as Reinvest DIV. All the DIV's and LTCG are fine. No questions with any of them.

So,
Div 1 $25
Div 2 $50
LTCG $25

Quicken has a BUY $100
Broker has a REINV DIV $100

Which is correct and why?

In the light of day I looked and Quicken has always listed these as Buys and the Broker has always listed them as Reinv. If I hadn't been made aware of issues like this here in the forums, would never have looked or questioned it.

Jon

The BUY is the correct Quicken transaction in that case. A Reinvest Dividend transaction in Quicken combines a Dividend transaction and a BUY transaction; if you replace the BUY with a Reinvest Dividend then your account balance will be off since the dividends & capital gains would be recorded twice. If you want to get rid of the BUY then you would have to change the other three transactions into the appropriate Reinvest transaction (two Reinvest Dividend transactions and one Reinvest Long Term Capital Gain transaction).

Bob.

I don't want to get rid of anything! Why would you even mention that? I did not?

I thought it was pretty simple as a question. Quicken labels a transaction, and always has as a BUY. The broker labels the same transaction, and always has as REINV. Which is correct and why and how did the other get it wrong and does it matter if I leave it the way it is?

Perhaps more clear? I must not be communicating today. Sorry.

If the buy is correct, then why does the broker have the same entries except their entry for the BUY is REINV? And ALL of the dividends in this account at the broker have the same REINV since the account was opened years ago. I would think they are the source of truth. But maybe not. Which is why I posed the question.

Jon

Your broker can call it whatever they want. What's actually happening is that $100 is taken out of the cash balance of your account & used to purchase shares of your fund and in Quicken that is a BUY transaction. So leave it alone.

Bob.

Any other thoughts? Anyone?

That just does not make sense to me. A dividend is something given to me, not something I buy.

Jon

A dividend is something given to me, not something I buy.

If you are reinvesting the dividend then it is both. You are being given cash and then you are using that cash to purchase (or BUY) more shares of that fund.