I have investments that produce dividends which are reinvested. I'd like the dividends to appear as Income and the reinvestment amount as an Expense. Is there a way to do this? The "buy" side of reinvestments doesn't seem to have a category.
"William W. Plummer" wrote in news: snipped-for-privacy@comcast.com:
I suppose there may be some way to do this, but investing is not generally considered an expense. ISTM that is where the trouble lies. I think what might be of more value would be a cash flow report.
scott s. .
Yes. You're right. It is a cash flow problem. I'll experiment with that.
WHat is "ISTM"?
The dividend is taxable income, whether you reinvest it or not. Suppose you post the dividend income to a checking acct, then buy more shares using money from that account in the same amount as the dividend. Would that do what you want? Carl
You don't say what version of QW your using.
In QW05 try: REPORTS > INVESTING > INVESTMENT TRANSACTIONS
Subtotal by Category
May get close to what your looking for.
This gives all income with subtotaals by category and grand total. Buys/Sells are grouped and subtotaled under 'Expense' total.
As you may have figured out from the other responses, your dividends are indeed income, but your subsequent investment of the income is NOT an expense -- you are merely exchanging one asset (money) for another (shares).
Doug
I think it would. In fact I have to do this with reinvested dividends from a double tax free fund. And it is painful. Q05 requires me to delete the original downloaded transaction and then enter a "miscellaneous" transaction with _DblTaxFree as the category.
The *Real* problem seems to be that the buy-side of a reinvestment transaction has no category at all! It should be a "Bought". I wonder how Quicken keeps things straight without this.
William, What is a double tax free fund? On principle, that would seem to be too many 'tax-frees". Carl
Double tax-free means that it is not taxed by either the fed (IRS) or the state. Triple tax-free means it is not subject to local city/county taxes. NB: Quicken cannot set the correct category automatically because whether or not a dividend is taxable depends on where you live for the tax year in question and Quicken does not track you.
"William W. Plummer" wrote in news: snipped-for-privacy@comcast.com:
It Seems To Me
My understanding is that in normal, double-entry bookkeeping, every transaction has matching debit/credit entries in two accounts.
Quicken modifies this behaviour by creating transfers and category transactions. Quicken does not expressly show expense and income accounts (which would require zeroing out at the end of each accounting period). Instead, Quicken uses "categories" which perform an analogous function.
This design seems to have come from a desire to provide simple checkbook register and investment portfolio interfaces for users who do not need or care to follow more rigorous accounting methods. (And Quickbooks is available for that.) But as a result, Quicken tends to avoid using terms like credit and debit, and asset and liability.
Buying a security is a type of asset purchase. It is a transfer from one asset account (cash) to another (investment). From a taxing standpoint, though, you are right in that it can be kind of difficult to report/maintain the proper tax status of the transaction.
scott s. .
We're getting a bit theoretical here, but Quickens "categories" are what bookkeepers call Income accounts and Expense accounts. A quicken Reinvest is two transactions (receive cash from company and exchange cash for shares) and to bookkeepers, 4 entries (2 debit-credit pairs).
But the buy side totally lacks a category in Quicken. So they have fudged something to make every thing balance properly. That's the big hammer approach.
Hi, William.
You seem to understand the situation - and then you go off onto a wild tangent somehow. :>(
Right!
WRONG! Well, your statement is correct, but it implies that there SHOULD be a "category". But, a category, in Quicken-speak, means, as you just said, an EXPENSE. And buying shares is not an expense, it is an investment.
The buy transaction should credit cash, as you say. And it should debit the Investment Account for your shares of stock, whatever you call that Account.
Which "something" do you think they have "fudged"? Debiting the Investment Account, rather than any Category, balances the entry - and is the correct treatment. Why do you think it is not correct?
As we've often explained here, whether your stock is in a mutual fund, or in a DRIP, or simply shares on which you receive a cash dividend that you choose to receive in additional shares, the long form of the accounting entries should look like this:
Cash [Asset Account] $1,000 Dividend Income (Category) $1,000
Stock [Investment Account] $1,000 Cash [Asset Account] $1,000
This can be collapsed into a single entry, and sometimes it's easier to record:
Stock [Investment Account] $1,000 Dividend Income (Category) $1,000
This single-entry approach saves space, but you need to remember that the momentary cash transactions did take place, in most cases.
Either way of entering the dividend/purchase will result in the proper reporting of dividend income and the correct tracking of your tax basis in your stock holdings.
RC
Let's try to stick to the facts rather than your person editorial opinion. You know what they say about opinions....
Why is it that a Reports>Investing>Investment Transactions shows a blank in the category column? What expense account is used?
Under the sheets the cash (asset account) should get a credit and the corresponding debit should be made to an expense account. Then, the expense account should get a credit and the stock (asset) account will receive the corresponding debit.
Because they eliminated the expense account and show the transfer directly between two asset accounts. In real bookkeeping, this should happen because it prevents an audit saying why money flowed.
The kind of asset or the type of asset account that holds it is irrelevant.
the long form of the
Actually, that is the SHORT form because it elides the income and expense accounts.
Yes and it prevents auditing. That is the problem I have.
Income, yes. But my problem is auditing expenses.
Any reasonable accounting package allows complete auditing and if needed, the ability to look at each asset, liability, expense and income account. Quicken tried too hard to simplify and lost critical detail as a result.
No. QP05. the category column is blank for buys caused by a REINVEST transaction.
Yes, in the sense that your networth is not affected by a stock purchase.
But the purpose of a "category" is to allow you to say why VALUE (I didn't say cash, or stock or a boat) changed from one asset account to a different one. For instance, when you take cash out of your pocket and stuff it in your mattress, your net worth stays the same, but you might want to ask quicken for what percent of the money coming out of your pocket has gone into the mattress. (That's different from asking how much is in the mattress.)
What is wrong with using the memo field of the reinvest transactions to note why value changed from one account to another? After all, if you transfer money, you can't use the "category" column either.
And when you reinvest dividends, it is trivial to report on the amount of reinvested dividends for any period. I don't get your beef. Apart from the fact that you are in the minority advocating for the feature - thus implying that if Quicken were to add it, a whole bunch of us will have to pay more so you can figure out how much of your money goes into your mattress. :)
Hi, William.
I was an auditor for over 20 years, but I don't understand why you think that charging a stock purchase to an expense account is important for auditing purposes.
I guess these lines are the heart of my confusion:
HOW does it prevent auditing?
Many kinds of cash flow are neither income nor expenses: borrowings, paybacks, owner withdrawals (in a proprietorship or partnership) or dividends paid (in a corporation), purchase of an automobile or real estate, and on and on. Are you saying that ALL of these should be recorded as expenses?
Perhaps you work for a company that has an accounting system that requires such treatment. The rest of the world does not.
I'm not trying to be flip or cute, William. It's just that we've told you, over and over, that the purchase of a stock (whether by using cash from a bank account or from your brokerage account or from a reinvested dividend) is an investment in an asset. NOT an expense. And you keep insisting that it IS an expense. I'm trying to figure out where you got this impression. Can you point us to a textbook or other accounting reference that says the purchase of an investment is an expense?
Perhaps you just like to argue, William. I don't. I've already given a clear explanation of the proper treatment. You've rejected it. I don't care to argue this point by point.
RC
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