MSUXX dividend payments and cost basis

Mike Judd

In my Morgan Stanley taxable account, I can't seem to get dividend payments to have a $0 cost basis as they are reported at my brokerage for cash and other money market accounts. This throws off my IRR calculations. Any thoughts?

NotACPA

Your brokerage, and Fidelity which does the same thing, are simply wrong. Dividends of a money market fund (such as MSUXX) have a cost basis equal to the value of the dividend that was used to buy them.

Fidelity compounds the error even further by only reporting the $0 basis in retirement accounts claiming, when I've complained to them, that "cost basis isn't needed in retirement accounts, because there's no tax consequences". Which is true, but meaningless because cost basis is still needed for investment performance.

You can complain to MS about this (which probably won't have much impact, but will get you on record).

You could also change all of those Div payment to "Added" … but then your tax records in Q will be wrong unless you record the correct basis ($1/sh) at that time, which leaves you in the same situation your in now.