shares in one company granted by another company
I received 100 shares in Company B from Company A as, I guess, a dividend. The company B shares had a value on the TSX of a certain amount. Instead of declaringl that value as a dividend, Company A deducted that value from the cost value of their own shares. How on earth do I enter that transaction in Moneydance?
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1 Posted by dwg on 09 Jul, 2025 11:22 PM
What you have is a share purchase funded by a return of capital, it is not all that unusual. This results in a lowering of the cost base of your existing shares.
Unfortunately, although requested on multiple occasions, there is no action type for this in Moneydance.
It comes down to how accurately you wish to record this inside of Moneydance, whether you also keep external records and also what type of cost basis you use.
If you keep lot based cost records and want to maintain complete accuracy of the recorded transactions in Moneydance then you need to enter a sell using the cost base of each lot and then a repurchase at the newer cost base, at the end of this process you have the cash in the Investment account to enter a buy transaction for the new shares at their correct cost price.
This can amount to quite some work depending on your situation.
If you are happy to approximate the data in Moneydance you can use Average costing then for the Return of capital perform a sell for the total amount of the new shares but using no cost per share or number of shares. This reduces your total cost of the existing shares but it will not be reported correctly in a number of places.
I have regular returns of capital and I use this method to get the correct Totals in Moneydance but then maintain the lot records in a spreadsheet so I can handle capital gains and their tax implications in accordance with Tax law. I do not use the first method because of the amount of work involved with the number of lots I own, it would be much too onerous, especially compared to maintaining records outside of Moneydance.
This is an example of where computers are creating more work not less. In the classic manual system you would have kept these records in a worksheet, the computer spreadsheet is the electronic equivalent of these worksheets.
2 Posted by aforkosh on 10 Jul, 2025 07:29 AM
If you're not concerned about the tax implications, a quick and dirty way to handle it is to enter a divided transaction from the old company. The category should be 'Return of Capital', and the amount should correspond to the value of the new shares as of the transaction date (I use the opening price for that day). Then enter a buy transaction for those shares. Your cash balance won't change since the dividend and purchase transactions cancel each other.
This may mess up the cost basis for these securities, but it ensures that the value on any particular day is accurate.
3 Posted by ktimms on 10 Jul, 2025 05:24 PM
Thank you, both dwg and especially aforkosh. Using a category 'Return of Capital' to record the receipt from Company A worked perfectly. The cost basis of Company A was reduced correctly, and the cost basis of Company B now shows up properly on the Portfolio report.
System closed this discussion on 09 Oct, 2025 05:30 PM.