Mutual Fund Conversion from Class B Shares to Class A Share

[Oilcan]

I have a mutual fund investment which converts from Class B Shares to
Class A Shares 72 months after the investment. The conversion is not
considered a taxable event. Selling Class B Shares
outright is a taxable event.

I have these investments set-up in single Investment Account within
Quicken. Each month I record off the statement a sale of Class B and a
purchase of Class A. Example:

6/1/2005 - Sell 100 Shares Class B $150
6/1/2005 - Buy 101 Shares Class A $150

(Note the NAV of the classes are generally not the same which is why
the shares differ).

The Sell transaction triggers a Realized Gain (Long Term) within
Quicken. Is there a better way to enter this so a Realized Gain is not
recorded - or have the gain classified as Unrealized?

 

[Andreas Gottstein]

I have a mutual fund investment which converts from Class B Shares to
Class A Shares 72 months after the investment. The conversion is not
considered a taxable event. Selling Class B Shares
outright is a taxable event.

I have these investments set-up in single Investment Account within
Quicken. Each month I record off the statement a sale of Class B and a
purchase of Class A. Example:

6/1/2005 - Sell 100 Shares Class B $150
6/1/2005 - Buy 101 Shares Class A $150

(Note the NAV of the classes are generally not the same which is why
the shares differ).

The Sell transaction triggers a Realized Gain (Long Term) within
Quicken. Is there a better way to enter this so a Realized Gain is not
recorded - or have the gain classified as Unrealized?

What I do for these is a ShareOut/ShareIn
pairing. The important thing is to preserve the
cost basis and purchase date. So, when
you move the Class B shares out, it should ask
you to pick which ones you're moving. Once you
select them ( probably via FIFO ), that dialog
will show you the cost basis. Write that down,
along with the purchase date. When you move the
A class shares in, there are fields which allow
you to specify the cost and purchase date; copy in
what you wrote down.

This is with Q04. I've been doing it like this for
a while, so there may be more automated ways now.

Cheers,
ANdyG

 

[Mike B]

I have a mutual fund investment which converts from Class B Shares to
Class A Shares 72 months after the investment. The conversion is not
considered a taxable event. Selling Class B Shares
outright is a taxable event.

I have these investments set-up in single Investment Account within
Quicken. Each month I record off the statement a sale of Class B and a
purchase of Class A. Example:

6/1/2005 - Sell 100 Shares Class B $150
6/1/2005 - Buy 101 Shares Class A $150

(Note the NAV of the classes are generally not the same which is why
the shares differ).

The Sell transaction triggers a Realized Gain (Long Term) within
Quicken. Is there a better way to enter this so a Realized Gain is
not recorded - or have the gain classified as Unrealized?

Yes, on the date of conversion, do a ShrsOut transaction and a ShrsIn
transaction with the acquisition date as the original purchase date of the
shares you are converting. That is similar to the Corporate Acquisition that
Quicken use, but only applies to one lot whereas the Corp. Acq. applies to
all lots of the shares you own.

 

[John Pollard]

What I do for these is a ShareOut/ShareIn
pairing. The important thing is to preserve the
cost basis and purchase date. So, when
you move the Class B shares out, it should ask
you to pick which ones you're moving. Once you
select them ( probably via FIFO ), that dialog
will show you the cost basis. Write that down,
along with the purchase date. When you move the
A class shares in, there are fields which allow
you to specify the cost and purchase date; copy in
what you wrote down.

And if you should forget the cost or purchase date, you can just
run a Capital Gains report which will show both (with $0.00
capital gains).

 

[Oilcan]

Thank you all for your responses. I am working with conversions that
began in 4/2002. I've deleted the transactions from 4/1/2002 forward
and have started re-entering the data.

For 4/1/2002 Removed 33.664 shares of Class B using FIFO. Quicken
removed 21.174 shares from the 4/25/1996 lot and 12.49 share from the
5/20/1996 lot. The balance in the 5/20/1996 lot is 8.684 shares. I
then entered the new investment and reinvested dividends for 4/2002 on
Class B.

I recorded two Add Shares for Class A - 21.198 shares and 12.556 for
the 4/25 & 5/20/1996 acquired dates for tax purposes. I then entered
the reinvested dividends for 4/2002 on Class A. Everything balances
for 4/2002.

Following the same logic for 5/1/2002, Removed 33.874 share of Class B.
Again using FIFO, Quicken should remove the first 8.684 shares from
the 5/20/1996 lot, .143 shares from the 5/24/1996 lot, etc. Quicken
starts by removing .098 shares from the 5/24/1996 lot, the xx shares
from the 6/20/1996 lot, etc.

Am I not understanding something here? It looks like an ugly bug in
Quicken to me. I am using 2005 Premier Release 3.

 

[Oilcan]

Thanks all for your help. I had to change some settings on my
investment and I got it to work. One 'buy' morphed upto six entries in
one month due to lots.