Adjusting for errors in money mkt acct after closing it out

Hi, Jo.

My guess is that the excess is from unrecorded income, which should have been reported as dividends in some prior year(s) - since a Money Market Fund was treated like a special kind of corporation for tax purposes. The fund collected interest and made profits on short-term sales of notes and other interest-bearing assets. While the fund might realize interest and capital gains, what they passed through to account-holders was taxed as dividends.

The income should have been reported as income in the prior years, of course. If the income was intentionally omitted from your return, the IRS might allege fraud, which would let them assess tax "at any time". But if the omission was unintentional and the returns were filed more than three years ago, the statute of limitations has probably run by now and it's too late to correct the omission, even if you want to.

You might have a freebie. Or maybe there was no omission at all, just sloppy bookkeeping. So just (in accountant-speak) debit Cash for the amount of the check, credit Fidelity for the balance in the account and credit Miscellaneous Income for the excess.

One small quibble: There is a difference between a Money Market ACCOUNT, which pays INTEREST at a rate based on the "money market", and a Money Market FUND, which buys and sells short-term assets and pays DIVIDENDS, as I said above. In most cases, the effect on your return and your tax bill would be identical except for which form you would use to report it, and the time limitation would be the same either way.

Remember, Jo: I've been retired for over 20 years and some rules may have changed, so check with your own CPA to be sure.

RC

-- -- R. C. White, CPA San Marcos, TX (Retired. No longer licensed to practice public accounting.) snipped-for-privacy@grandecom.net Microsoft Windows MVP (2002-2010) (Using Quicken Deluxe 2014 R 7 and Windows Live Mail in Win8.1 x64)

I've closed out my Fidelity account, getting a check for the cash which was in a linked Money Market account . Somewhere across the years I introduced some errors into it and Quicken says I have about $300 more than Fidelity had recorded, and I'm inclined to believe them. I have not been using this account for investing for years and looking back on it, I wasn't doing any kind of reconciliations so the error could have happened many, many years ago and I will never find it. What kind of simple adjusting entry can I make in Quicken to wipe out the discrepancy in the Money Mkt Account?

One way to try and find the omission would be to download Dec. 31 statements for all the past years Fidelity offers them for and check balances on that date.

Hi Rc, There are no tax concerns with this discrepancy because I did not use my Qu icken records to report income. I always used Fidelity's 1099. This is so me kind of very sloppy bookkeeping definitely. The cash in this account w as held in a Pennsylvania Tax Free Muni Fund. I occasionally wrote checks a gainst it, in which case enough shares of this fund were sold to cover them . The asset value of a single share was and has always been $1. Initially I had a few mutual funds and one stock there, and any dividends were reinve sted in the fund. The tax exempt dividends from this fund have been minis cule for years, but since i've had it for decades, and I'm strongly incline d to believe it's just some stupidity in how I recorded something, and I ju st never noticed it until I closed out the account. There were some openin g entries back in the 90s for when I moved some holdings from another accou nt into Fidelity, so it might even go back that far. Since it is ancient h istory, and does not have anything to do with taxes, I really don't want t o record it as miscellaneous income since it then would show on my personal P/L as if i made some money, which I didn't.

If I had the energy to try to find the error, using year end statements tha t the other poster suggested I download if i can't find them, which is like ly, is there a way to print a report with a running balance for this accou nt? I tried REgister report and it doesn't give me the balance column that I can see in the register, just the individual transaction amounts.

thanks, jo

On Sunday, July 20, 2014 9:44:48 PM UTC-4, R. C. White wrote:

Hi, Jo.

Since it's your Quicken and nobody is likely to see it but you, just call it anything you want. ;

I bet RC doesn't!

It's the old "short and over" category that I used to see on general ledger account printouts of companies I consulted for back in the day. I've had something similar that I used in the past, but I was hoping there was a way to avoid using it, because it makes me feel like I'm being lazy :(

Quicken records to report income. I always used Fidelity's 1099. This is some kind of very sloppy bookkeeping definitely. The cash in this account was held in a Pennsylvania Tax Free Muni Fund. I occasionally wrote checks against it, in which case enough shares of this fund were sold to cover th em. The asset value of a single share was and has always been $1. Initiall y I had a few mutual funds and one stock there, and any dividends were rein vested in the fund. The tax exempt dividends from this fund have been min iscule for years, but since i've had it for decades, and I'm strongly incli ned to believe it's just some stupidity in how I recorded something, and I just never noticed it until I closed out the account. There were some open ing entries back in the 90s for when I moved some holdings from another acc ount into Fidelity, so it might even go back that far. Since it is ancient history, and does not have anything to do with taxes, I really don't want to record it as miscellaneous income since it then would show on my person al P/L as if i made some money, which I didn't.

hat the other poster suggested I download if i can't find them, which is li kely, is there a way to print a report with a running balance for this acc ount? I tried REgister report and it doesn't give me the balance column th at I can see in the register, just the individual transaction amounts.

I don't recall any Q reports that will give you a running balance, but you may still be able to track the error(s) down.

Try using the Easy Answer>>"What are my investments worth?" report. Once i t opens, Customize & limit the Accounts to only those you're concerned with , then use Custom Dates. If you've got the paper statements, I'd start in

1-5 year increments & see if you can spot differences in the cash amount(s) .

Another alternative, if you've got a spreadsheet, would be to export the re port. Then you could add your own running balance.

y Quicken records to report income. I always used Fidelity's 1099. This i s some kind of very sloppy bookkeeping definitely. The cash in this accou nt was held in a Pennsylvania Tax Free Muni Fund. I occasionally wrote chec ks against it, in which case enough shares of this fund were sold to cover them. The asset value of a single share was and has always been $1. Initia lly I had a few mutual funds and one stock there, and any dividends were re invested in the fund. The tax exempt dividends from this fund have been m iniscule for years, but since i've had it for decades, and I'm strongly inc lined to believe it's just some stupidity in how I recorded something, and I just never noticed it until I closed out the account. There were some op ening entries back in the 90s for when I moved some holdings from another a ccount into Fidelity, so it might even go back that far. Since it is ancie nt history, and does not have anything to do with taxes, I really don't wa nt to record it as miscellaneous income since it then would show on my pers onal P/L as if i made some money, which I didn't.

that the other poster suggested I download if i can't find them, which is likely, is there a way to print a report with a running balance for this a ccount? I tried REgister report and it doesn't give me the balance column that I can see in the register, just the individual transaction amounts.

u may still be able to track the error(s) down.

it opens, Customize & limit the Accounts to only those you're concerned wi th, then use Custom Dates. If you've got the paper statements, I'd start i n 1-5 year increments & see if you can spot differences in the cash amount( s).

report. Then you could add your own running balance.

I'm taking the spreadsheet route. It seems the easiest. I don't have st atements that go back as far as this account does anyway. It seems strange that there isn't a report with a running balance, doesn't it?