How do I add a missing cost basis?

kcross4005
kcross4005 Member
edited September 26 in Investing (Windows)
I have a "Buy" transaction to buy a security in 2010 that didn't add the cost basis. I've tried adding an "Add Shares" transaction which added the cost basis but also doubled the shares. I then tried entering a Remove Shares transaction to remove the shares I just added and it took away the cost basis. I also tried adding 0 shares, replacing the original Bought transaction with "Add Shares", but the cost basis remained at zero. I also tried the Reconciling action that someone suggested, but the list of "transactions after decades of entries" didn't appear for me. BTW, other securities bought at the same time *do* have a cost basis, but this one doesn't.

Since there are only 5 transactions for this security I'm tempted to delete them all and manually re-enter, but there must be an easier way. Any suggestions?

Best Answers

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Answer ✓
    I have a "Buy" transaction to buy a security in 2010 that didn't add the cost basis. 
    That initial Buy shares should have created the associated cost basis.  The question is -- why didn't it?  Most likely explanation I can offer is that there is a placeholder involved.  Have you looked?  Do you have your Global preferences set to show hidden transactions (which should show a hidden placeholder)? Edit / Preferences / Investment transactions.  

    Does the Buy decrease the cash balance in the account, or is it a BuyX that draws cash from a different account?  Does the Cash for the Buy show a N/A?

    If an Add Shares is the 'proper' alternative to the Buy, adding 8 shares at $13.8125/share for a total cost of %110.50 should be simpler that your two transaction approach. 
  • volvogirl
    volvogirl SuperUser ✭✭✭✭✭
    Answer ✓
    Price is not the same as cost.  It's price per each share.  So you needed to divide the cost by # of shares ($110.50 / 8).  Then shares X price will give you the cost.  Unless you only bought 1 share, then price will equal cost like you did in the first transaction.   

Answers

  • kcross4005
    kcross4005 Member
    UPDATE. I found a way to add the cost basis. I had 8 shares with no cost basis. The cost basis should be $110.50. When I entered an Add transaction of 8 shares with a price of $110.50, Quicken said that the cost basis was $884. So I changed the Add transaction to only add 1 share with a price of $110.50, then created another Add transaction to add 7 shares with a price of $0.00. Anyone know an easier way to do this?
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Answer ✓
    I have a "Buy" transaction to buy a security in 2010 that didn't add the cost basis. 
    That initial Buy shares should have created the associated cost basis.  The question is -- why didn't it?  Most likely explanation I can offer is that there is a placeholder involved.  Have you looked?  Do you have your Global preferences set to show hidden transactions (which should show a hidden placeholder)? Edit / Preferences / Investment transactions.  

    Does the Buy decrease the cash balance in the account, or is it a BuyX that draws cash from a different account?  Does the Cash for the Buy show a N/A?

    If an Add Shares is the 'proper' alternative to the Buy, adding 8 shares at $13.8125/share for a total cost of %110.50 should be simpler that your two transaction approach. 
  • volvogirl
    volvogirl SuperUser ✭✭✭✭✭
    Answer ✓
    Price is not the same as cost.  It's price per each share.  So you needed to divide the cost by # of shares ($110.50 / 8).  Then shares X price will give you the cost.  Unless you only bought 1 share, then price will equal cost like you did in the first transaction.   
  • kcross4005
    kcross4005 Member
    I'm stuck again. I thought that Cost Basis was the original purchase price of an asset. I have an Added transaction in Quicken that has 220 shares, a price paid of $45.4545, and a total cost of $10,000 (with rounding). It shows a Cost basis of $10,000. Shouldn't the cost basis be $45.4545? (There are no hidden transactions).

    Could this be because it is an Added transaction as opposed to a Bought transaction? If so, then how do I convert it to the proper cost basis?
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    Cost basis is the total you paid for the security, not the price per share, so in your example $10,000 is the correct cost basis. 
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  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    "price paid" is the price per share.



    220 * 45.4545 = $9999.99.
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  • volvogirl
    volvogirl SuperUser ✭✭✭✭✭
    Did you pay $10,000?  Always let Quicken calculate the price per share.  You just enter the # of shares and the total cost.    It will know the right cost per share when you eventually sell it.  
  • kcross4005
    kcross4005 Member
    Jim_Harmon, I was going by the investopedia definition of Cost Basis, which is: "Cost basis is the original value or purchase price of an asset or investment for tax purposes". So you are saying that the asset in this case is all 220 shares in the transation ($10,000)? I was interpreting the asset to be the price of a single share in the transaction.

    Chris_QPW, I was going by the value in Quicken ($10,000) as opposed to the value from my calculator ($9999.99). I'm sure there was some rounding going on.

    wolvogirl, Yes, I did pay $10,000 and the Quicken-calculated price per share was left blank. Figuring that the blank price per share was causing the 0 Cost Basis, I did some math and put in ($10,000 / 220) = 45.4545.
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    "Cost basis is the original value or purchase price of an asset or investment for tax purposes"

    Another way of looking at this is you bought 220 "assets" at the same time, and their cost basis is added together.

    The cost basis of one share of that security is in fact $45.4545.  And you will see that when you sell the shares.  If you sell 1 share its cost basis will be $45.4545.  If you sell two it will be 2 x $45.4545, and so on.
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  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    BTW the main reason for tracking the cost basis is for tax purposes.

    You pay taxes on "income", and the IRS defines "income" as the amount that you sold the security for, minus the amount you paid for it.  If in the future you sell one share of that security lot for $50 then you need to pay tax on $50 - $45.4545 = $4.5455.

    And I used the term "security lot".  Since you bought those shares all at the same time, each share has the same cost basis and as such can be grouped together.  That is what the term security lot means.  Another security lot would most likely have a different cost basis, and as such if you sold one share from the first lot and one from the second, the cost basis for each would have to use the different cost basis per share in the calculation.
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  • kcross4005
    kcross4005 Member
    This makes sense. Thank you all for your responses. I'm smarter now. I'll stop obsessing about a zero value in the cost basis field now. Thanks!
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