Missing column and incorrect calculation of gain/loss
I would like to identify an issue with the way that Quicken mishandles the calculation of capital gain or loss related to Schedule 3 of the Canadian tax forms. The Government of Canada has issued this simple directive for filling in the Schedule 3 form:
"To calculate your capital gain or loss, you need to know the following three amounts:
* the proceeds of disposition;
* the adjusted cost base (ACB); and
* the outlays and expenses incurred to sell your property.
Your realized capital gain or loss is calculated by subtracting the total of your property's ACB, and any outlays and expenses incurred to sell your property, from the proceeds of disposition."
Just for clarification, when I buy stocks, I pay the cost of the shares, plus a brokerage commission/fee. The total cost for this part of the transaction is referred to as the adjusted cost base (ACB) amount. When I finally sell the shares, the "proceeds of disposition" (aka net proceeds) amount that I receive in my account, is derived by subtracting the brokerage selling commission/fee (aka outlay and expenses) from the total (gross) proceeds of disposition of the transaction. With call or put options, the process evolves much the same, depending on the transaction type and chosen investment strategy.
The issue with Quicken is that it does not include, or use, the column for "Outlays and Expenses". The amount that is shown in the "Realized Gain/Loss" column is therefore incorrect (inflated) since the brokerage commission/fee is not being subtracted from the overall "Realized Gain/Loss" amount. Depending on your brokerage commission/fees and the number of trades you transact yearly, your realized gains or losses differences can be significant.
In the the report Quicken "Capital Gains", I also noted that the "proceeds of disposition" column is labelled "Gross Proceeds" This is incorrect since this column should be labelled "Net Proceeds". The column is shown correctly if you run a "Schedule 3 - Capital Gains - Tax Year 20xx" report. I use TurboTax for my yearly income tax return so if Quicken was working correctly, I would be able to get all of my input information directly from the Schedule 3 Quicken report. As it stands right now, I have to recalculate the required information by searching and gathering it either from my Quicken trading account or from my brokerage's T5008 slip and Trading Summary. It is very time consuming when entering multiple transactions into to a tax program.
I don't know if this issue also affects other transactions handled under Schedule 3 since I only use the section pertaining to gains/losses of shares/options. I think that now we are having to pay a yearly subscription fee for Quicken, their products should be debugged. While some of these bugs may be minor, their presence makes their product look pretty sloppy and doesn't inspire perspective users to buy Quicken products.
"To calculate your capital gain or loss, you need to know the following three amounts:
* the proceeds of disposition;
* the adjusted cost base (ACB); and
* the outlays and expenses incurred to sell your property.
Your realized capital gain or loss is calculated by subtracting the total of your property's ACB, and any outlays and expenses incurred to sell your property, from the proceeds of disposition."
Just for clarification, when I buy stocks, I pay the cost of the shares, plus a brokerage commission/fee. The total cost for this part of the transaction is referred to as the adjusted cost base (ACB) amount. When I finally sell the shares, the "proceeds of disposition" (aka net proceeds) amount that I receive in my account, is derived by subtracting the brokerage selling commission/fee (aka outlay and expenses) from the total (gross) proceeds of disposition of the transaction. With call or put options, the process evolves much the same, depending on the transaction type and chosen investment strategy.
The issue with Quicken is that it does not include, or use, the column for "Outlays and Expenses". The amount that is shown in the "Realized Gain/Loss" column is therefore incorrect (inflated) since the brokerage commission/fee is not being subtracted from the overall "Realized Gain/Loss" amount. Depending on your brokerage commission/fees and the number of trades you transact yearly, your realized gains or losses differences can be significant.
In the the report Quicken "Capital Gains", I also noted that the "proceeds of disposition" column is labelled "Gross Proceeds" This is incorrect since this column should be labelled "Net Proceeds". The column is shown correctly if you run a "Schedule 3 - Capital Gains - Tax Year 20xx" report. I use TurboTax for my yearly income tax return so if Quicken was working correctly, I would be able to get all of my input information directly from the Schedule 3 Quicken report. As it stands right now, I have to recalculate the required information by searching and gathering it either from my Quicken trading account or from my brokerage's T5008 slip and Trading Summary. It is very time consuming when entering multiple transactions into to a tax program.
I don't know if this issue also affects other transactions handled under Schedule 3 since I only use the section pertaining to gains/losses of shares/options. I think that now we are having to pay a yearly subscription fee for Quicken, their products should be debugged. While some of these bugs may be minor, their presence makes their product look pretty sloppy and doesn't inspire perspective users to buy Quicken products.
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Comments
Where do you see this column for "Outlays and Expenses"? Is it a column in the investment account transaction list?
When you enter your investment buys and sells in Quicken, do you enter an amount for the commission?
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In Quicken, the Outlays and Expenses column is missing in the reports related to Schedule 3 of the Canadian Income Tax forms. It should be there, since as indicated the amounts are required as part of the calculations for gains or losses. If you want to see the Schedule 3 tax form access this link: www.cra-arc.gc.ca/E/pbg/tf/5000-s3/5000-s3-16e.pdf
When I do my income tax, I use section 3 of that Schedule (in TurboTax) to enter my stock and option transactions. The heading of the various columns are near the top of the form.
To answer your second question: In Quicken I record all of the information related to an overall buy transaction,which is the purchase price + buying commission. This is the "adjusted cost base" information for Schedule 3. When I sell the stock, I record the net amount + the selling commission. for the transaction These become the "proceeds of disposition" and "outlays and expenses" amounts respectively for Schedule 3.
So all of the information is in Quicken, the problem is that the report doesn't do the calculations properly and the appropriate information is not shown in the Gain/Loss reports.
Thanks for your help