Splitting an investment sale transaction

Jeff Kantner

This question pertains to the behavior of transactions in an Investment account, not specifically about investing itself. If this post belongs elsewhere, let me know.

When an investment is sold (or in my case, a mutual fund is closed - which is pretty much same behavior as "Sell all shares"), Q drops the proceeds into the cash balance of the investment acct, at the MV. Not wrong, but: some of the $$ is funds I invested, some may be dividends reinvested, some (either + or -) is related to price changes.

Is it possible to mark some of the proceeds as mine (i.e., a 'return of capital'), but mark part as Capital Gain (short- or long-term), and thus subject to tax? Objective is to align the Q records a bit more closely to the 1099-Div that will come next year.
It does not appear that investment transactions are "splitable" (a la bank or credit accts), but that is the effect I'd like to achieve.

If I haven't missed something, may turn this into an RFI.
Any guidance appreciated. Gracias.

Jeff Kantner
(This is Q 67.7 classic Premier on Win11, if that matters.)

q_lurker

The distributions reported to you on year end 1099-Div forms are not related to the sale of any of the funds. While during the year, they may all get reported as 'dividends', the 1099-Div may report the toals for the year broken down to:

• Qualified Dividend
• Non-qualified Dividend
• Short-term Capital Gain
• Long-term Capital Gain
• Non-dividend distribution (aka Return of Capital)

I choose not to differentiate the Qualified and Non-qualified portions. Other users do attempt to monitor that distinction for more accurate tax planning.

Usually I see the fund company make the ST/LT/Div distinction at time of payment (and reinvestment) but that is not absolute and they make corrections to that at year end.

I don't recall ever seeing a tracking of the non-dividend payment except as part of the 1099-Div.

If I deem it helpful when I get the 1099-Div, I may make correcting entries in my Quicken records, such as:

• 12/31/xx - RtrnCap - Fund name - Amount
• 12/31/xx - MiscExp - Fund Name - Amount - Category=_DivInc

Or

• 12/31/xx - LTCapGn - Fund name - Amount
• 12/31/xx - MiscExp - Fund Name - Amount - Category=_DivInc

The first transaction puts cash into the account; the second expenses that right back out and reduces previously accumulated total dividends for that fund by that same amount. If you have more specific timing data, the dates can be associated with the dates of actual transactions.

Tom Young

"Q drops the proceeds into the cash balance of the investment acct, at the MV. Not wrong, but: some of the $$ is funds I invested, some may be dividends reinvested, some (either + or -) is related to price changes.

Is it possible to mark some of the proceeds as mine (i.e., a 'return of capital'), but mark part as Capital Gain (short- or long-term), and thus subject to tax? Objective is to align the Q records a bit more closely to the 1099-Div that will come next year."

What I'd say that you missed here is that there is a "Sale" action that should actually be recorded here, not as a "cash deposit" in the value of the proceeds. Quicken will take that sale, split that amount into the basis amount (what you're calling a return of capital) and the capital gain or loss. Properly done that should align Quicken's records perfectly with the year-end 1099-B "Proceeds from Broker and Barter Exchange Transactions", not the 1099-Div.

The "composition" of the basis sold is pretty much irrelevant no matter if that basis consists of "fresh money from outside" purchases, dividends reinvested, etc. It's all "basis." The only distinction is whether the holding period is short term or long term.

Assuming you're using the "Div" action to record dividends received - reinvested or not - the sums of those numbers should match the 1099-Div. Having received the dividend it's pretty much irrelevant how you used the dividend; left it in the Account, spent it, or reinvested it, it's all dividend income, except for the occasional instance where the 1099-Div reports that some of that money was actual return of capital or that some of the money was withheld and paid to a foreign country.

NotACPA

Concur with both @q_lurker and @Tom Young

Jim_Harman

Another way to answer this is that if you look at the account's register, you will see the full proceeds of the sale, but Quicken is keeping track of how much of that was received as a return of your basis, how much the security generated in interest or dividends, and how much was realized and unrealized capital gains.

A reinvested dividend is the same as a dividend received that was used to buy more of the secuity, and is included in the sale proceeds.

You can see this in various Investing and Tax reports. You may find the Investing > Investment Activity report to be useful.