Cash Transactions and Cost Basis


R

Roberta

Dividends I receive from mutual fund investments increase their market value
instead of their cost basis. All dividends are automatically reinvested.
How do I correct this?
 
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C

Cal Learner-- MVP

Dividends I receive from mutual fund investments increase their market value
instead of their cost basis. All dividends are automatically reinvested.
How do I correct this?
Either enter the reinvested dividends with a ReinvestDividend
transaction, or enter two transactions: Dividend and Buy.

I am not sure what your first question means. If you reinvest
dividends, your total basis does in fact increase. That is normal
and good. In a taxable account you will be paying tax on the
dividend, whether you reinvest or not. So having a basis for the new
shares makes sense.
 
R

Roberta

The problem is that the Cost Basis is not being increased. Dividends are
being added to Market Value and I can't figure out how to change it.

I have tried enterring the reinvested dividends both ways--as Reinvest
Dividend and as Dividend and Buy. No matter, dividends continue to be added
to market value.
 
M

Mark

You have more shares so Market value WILL increase based upon the current
total number of shares times the last price.
Note: If you enter a new Buy or Reinvest transaction, that "price" will be
added to the price history and if it is the newest entry, it will be used
for the market value calculation.

-Mark
 
R

Roberta

Maybe I haven't described well what I perceive as a problem. Dividends are
being added to both Cost Basis and Market Value.

I have a page of investment transactions (Reinvest Dividend). I have a page
of Cash Transactions (Dividends). I made an initial purchase of shares and
have reinvested all dividends. There is no cash in the account.

The problem: The amounts of the initial Buy and Dividends are being added
to Cost Basis, which is right. Shares accumulated are being added to Market
Value, which is right. BUT dividends in the form of cash are also being
added to Market Value, which is wrong.

I fixed the problem by deleting Dividend entries. That can't be the right.
What is the right way to Cash Transactions without double counting them?







There is a line for
 
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C

Cal Learner-- MVP

Maybe I haven't described well what I perceive as a problem. Dividends are
being added to both Cost Basis and Market Value.
That should not be viewed as a problem.
I have a page of investment transactions (Reinvest Dividend). I have a page
of Cash Transactions (Dividends).
The Dividend, Buy and ReinvestDividend should be entered into the
Investment Transactions register. A dividend should increase the
balance in the Cash Transactions register, but the Buy should
decrease that balance back to zero.

So either enter just a ReinvestDividend, or both a Dividend and a
Buy. In either case, the Cash Transactions register should remain at
(or return to) zero when done.
I made an initial purchase of shares and
have reinvested all dividends. There is no cash in the account.
Right. That should stay that way because you enter a Buy transaction
for the that offsets the Dividend if you choose to use the
two-transaction alternative.
The problem: The amounts of the initial Buy and Dividends are being added
to Cost Basis, which is right. Shares accumulated are being added to Market
Value, which is right. BUT dividends in the form of cash are also being
added to Market Value, which is wrong.
Where are you reading "Market Value"?

Are you saying that the cash balance is becoming non-zero somehow?


I fixed the problem by deleting Dividend entries. That can't be the right.
What is the right way to Cash Transactions without double counting them?
Either enter just a ReinvestDividend, or both a Dividend and a Buy
into the Investment Transactions register. You should not be
entering the dividend into the Cash Transactions register yourself.

Now one thing to make sure you are not doing is entering both a
Dividend *and* a ReinvestDividend transaction. Don't do both.
 
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