Return of Capital, Reprise #23
I guess we will never see the Return of Capital function figured out in MD? Looks like many people before me have asked about it, and supposedly there are tickets put in, but after several years is it actually going to happen?
In the mean time, what's the correct work around?
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1 Posted by dwg on 08 Oct, 2023 12:16 AM
I'm a fellow user.
There is no correct workaround simple because there is no perfect method, they all have their problems and limitations.
The methods range from entering a sale of zero shares for the amount of the return, this can only be done if you use Average cost and the result will be some reports will be wrong. If you need lot information you would have to do it in something like a spreadsheet.
The methods go through to entering a sale at the cost price for each lot then entering purchase transactions for each lot at the new price, performance reports will be wrong doing it this way and if securities have a lot of capital returns there will be a lot of transactions.
Requests for Return of Capital capability go back over a decade.
2 Posted by kennettfinance on 08 Oct, 2023 12:38 AM
How difficult can it be?
3 Posted by Stuart Beesley ... on 08 Oct, 2023 04:30 AM
For simple ROC, the SELL zero shares for the amount of the cost basis correction works quite well.
4 Posted by kennettfinance on 08 Oct, 2023 12:59 PM
@Stuart Beesley
Thank you. For now that's what I am doing. It's only one transaction for near pennies, so it's not really that big of an issue near as I can see. However, I'm beginning to wonder if MD is even useful for tax time as so far I can't seem to figure out how to gather all of the data that TurboTax will need.
5 Posted by kennettfinance on 21 Oct, 2023 12:39 PM
Well, my bothersome stock just sold, and I realize just how much of a headache this can be when it comes to tax time... difficult to get the reports to match up. My wife, who is our tax preparer, used to be a bookkeeper, and this kind of thing just sets her off.
So, I decided to see if I could work around the issue. The sell of zero shares for the ROC didn't jive with the Cost Basis and Gains report, so I tried something else...
Section A is the actual transaction list within Fidelity. We're dealing with 20 shares of Enlink purchased and sold this year with no dividends and just the one ROC.
Section B are the transactions within MD to reflect the transactions at Fidelity, but since we can't do a proper ROC, I figured maybe the better thing to do is to reflect a SELL at the original cost (no dividends earned in between these dates), adjust the price per share based on the ROC ($2.50/20 = $0.125/share (ROCa)), and to show a BUY on the same day for the same shares at the ROCa (negatively adjusted) price. This is where I'm fuzzy on the consequences. Then the actual SELL reflects the true GAIN if I did my math correct. Again, not sure if this logic works, which is why I am posting about it.
Section C and D should be self-explanatory.
So, two questions:
1. Using the the screenshot attached, is what I did going to help or hinder?
2. In Section D, how does the Cost Basis know about the $2.50 in the Running Amount column?
6 Posted by -Kevin N. on 21 Oct, 2023 04:22 PM
Hi kennettfinance,
The Buy & Sell transactions on 2023.08.11 (Section B) do establish a lower cost basis but at the detriment of creating $2.50 in cash. The ROC conundrum.
-Kevin N. (not a member of Moneydance Support)
7 Posted by kennettfinance on 21 Oct, 2023 04:44 PM
So what is supposed to actually happen then? What would be a good way for this to be fixed at the software level?
8 Posted by dwg on 21 Oct, 2023 08:37 PM
A Return of Capital event is expected to result in you receiving money. The shares have a lower cost basis which means it is expected that overall the shares should have cost you less overall, so what actually happened to the $2.50?
To maintain RoC data I use the sell zero shares method to keep the total value in Moneydance correct, things like the cost basis and capital gains reports become crap however. I maintain the cost per share/per lot data in an associated spreadsheet. Legally I have to do capital gains where I am on a lot by lot basis.
System closed this discussion on 20 Jan, 2024 08:40 PM.