Recording free shares (update)

luchsingera's Avatar

luchsingera

02 Dec, 2021 12:13 AM

I am not in agreement withe earlier conclusion on how free shares shall be recorded. Argumentation is based on taxation which is quite different country by country and also user chosen setup to benefit from MD.
In my case taxation details are only pulled partially from MD. I need anyhow respective documents form the financials institutes..
Whereas from my view the free shares have a signification impact in the dilution of my overall stock value and that what's more interesting from me to track.
Thus my suggestion is to add a ned dedicated action 'AdShares' allowing to record them only by number but no value.

  1. 1 Posted by dwg on 02 Dec, 2021 01:55 AM

    dwg's Avatar

    I'm a fellow user.

    I do not believe what you are suggesting is an accurate reflection on the event.

    Moneydance is based on accounting principles. Adding shares for zero cost is not saying that they cost you nothing out of your pocket but rather that the additional shares are worthless.

    When you receive shares with no out of pocket expenses I can think of a number of ways of handling them in real life.

    1. There was a stock split type of event so that the overall share cost is unchanged, each lot of shares has the the same total value but each lot now has more shares so that the per share cost is reduced.

    2. There was an equivalent of a return of capital event so that a fixed amount was received on a per share basis and the total amount was used in a buy transaction at a certain price.

    The effect of this is that each existing lot has a reduce value the new shares have a certain value but your overall cost remains unchanged. The new shares are deemed to have been purchased as a specific lot.

    3. The shares were effectively received as a gift. Hence the gift is taken to have a monetary value equivalent to a specific cost per share *' by the number of shares received.

  2. 2 Posted by luchsingera on 02 Dec, 2021 11:29 AM

    luchsingera's Avatar

    hi dwg

    Luckily I use MD to track my personnel finance in a pragmatic and plausible way without the burden of IFRS or GAAP duties a statutory reporting has to fulfil.
    The situation i face is more along the 3rd possibility you list and the tax impact is hitting my payroll when those shares are vested and others are under the sell-to-cover scheme.

    One of our LTI schemes is as follows: in year 1, i’ll invest my entire bonus buying lets say 1’000 shares and have it blocked for 2 years. After 2 years I'll receive 50% free +500 shares (regardless price). And this is a rolling process year over year.

    Thus also our simple approach just adding shares lowering the average share price while related costs are in my case hitting payroll. Might be that this approach from an accounting principle is debatable but it's a pragmatic approach to record and track those shares.

    And wealth taxability is in my heavily depending on the blocking periods, thus not available in MD.

  3. 3 Posted by dwg on 02 Dec, 2021 09:10 PM

    dwg's Avatar

    Shares received as a gift are not too hard to account for. You create a category called Gift, or as per you example it could be a bonus and you have a bonus category.

    You enter your buy transaction drawing on this category for the funds.

    I like to not only be ale to track my total value but also to get an idea of the gain and only by having the correct cost basis can I do that.

    I do not use Moneydance to calculate taxation as it can not handle things like RoC along with lots correctly. Hence I have supplemental spreadsheets. I can however get an idea of overall results with the way I record transactions and by entering not for value transactions from the spreadsheet data I can use Moneydance to generate a report that is suitable for taxation usage.

  4. System closed this discussion on 03 Mar, 2022 09:20 PM.

  5. luchsingera re-opened this discussion on 11 Mar, 2022 02:15 PM

  6. 4 Posted by luchsingera on 11 Mar, 2022 02:15 PM

    luchsingera's Avatar

    And just to add to this unfinished conversation…
    now left the company and some of the earlier assigned shares have now been removed, i.e. adding and removing shares might be still a desired function and reading earlier recommendation using side templates is quite worrying.

    Cheers
    A

  7. Support Staff 5 Posted by Maddy on 11 Mar, 2022 02:31 PM

    Maddy's Avatar

    Hi,
    Thank you for contacting Moneydance support.

    To delete a security you would have to delete or amend any transaction that uses that security, once all transactions have been removed/changed, remove that security from the Investment Account, then finally use the menu item Tools -> Securities to remove the security.

    The software will not allow you to remove a security that is in use.

    I hope this information is helpful. Please let us know if you have further questions or need more assistance.

    --
    Maddy, Infinite Kind Support

  8. 6 Posted by luchsingera on 11 Mar, 2022 02:34 PM

    luchsingera's Avatar

    Hi Maddy

    It's not about removing securities but to add/remove/or even transfer securities by number of securities without price.

    Thanks
    A

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