In 2005 version, I've just noticed something . . .
When I enter re-invested dividends I sometimes only put the quantity of
shares and sometimes I extend the amount using the per share re-invest
price. The cost-basis changes for each of these habits.
Which way should I be doing it ?
"Alex Carruthers" wrote in
As far as the IRS is concerned, you received a dividend of $X and bought Y
shares. The cost basis of your original holding doesn't change. You have a
new lot of Y shares bought at $X/Y per share.
For example, on some date you bought 100 shares of XYZ for $90/share
On 15 January they paid a dividend of $.20/share or $20. On that day XYZ
closed at 95.25/share. You received 20/95.25 or .2099 shares. You now
own 2 lots. 100 @ 95 and .2099 @ 95.25.
You received a number of shares that had some value per share. It therefore
had a total $ value (# shares x NAV). The total value is what is important,
here. *That* is added to the cost basis since you will be paying taxes on
The point that John was making is that the cost per share that was reported
is almost certainly rounded off from the actual cost. Most of the time they
round off to, for example, 3 or 4 decimal places. In actuality, though, they
track it in 5,6 or more decimal paces. This means that if you multiply the
number of shares by the cost per share as reported, you will be over or
under calculating the total value.
If you have the total value of the reinvestment, then enter the number of
shares and the total value and let Q calculate the NAV. If all you have is
the number and NAV, then enter them and accept the total value. If you can
figure it out later, re-enter the data to get the *right* value.
Really, though, if you look at the overall picture, I doubt that either way
will make much of a difference. The difference in cost basis is going to be
so small that the tax consequences (and *that* is what is important) will be
small or non-existent....
OK, I follow what's being said. In applying a little thought (I'm not an
acccounting type) it seems that I 'must' tell Q the re-invested price to
enable the cost basis to be adjusted and therefore the gain in value to be
The info I'm fed consists of number of shares to three places and
re-invested price to four places.
Thx for your feedback.