Stock Certificate

I have been given a stock certificate. What's the best way to record that asset in Quicken? The assumption here is that I won't take it into the broker right away.

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What I would do is create a new "brokerage" account (clicking the "This account is not held at a financial institution" button), calling it something like "Have certificates." I'd enter the certificate(s) in this account in the appropriate manner according to the nature of how the certificates were acquired. Daily quotes for securities (certificates) held in this account would update their value properly (assuming Quicken's quote server system is working!!) and any subsequent tendering of certificates due to sale, transfer, etc. could be recorded in the usual fashion.
Tom Young
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Hi, Mbt6.
Don't record the certificate; record the value of the shares that it represents. "A stock certificate" could represent a worthless single share of a company that nobody ever heard of, or a million shares of Microsoft. (Of course, the certificate itself might be a collector's item worth many dollars, but I assume that's not the case here, especially since you plan to eventually "take it into the broker".)
You did say "given", right? The rules for gifts are not the same as for inheritances, like-kind exchanges, in-kind bonuses or the receipt of property in other ways rather than buying it. If this was not a gift, then stop reading here and post back with details.
The first step is to determine the value on the date of the gift of the shares represented by the certificate. Since you provided no information at all about that, I'll use 100 shares worth $10 per share as an example. This is the value of the gift you have received. In Quicken, you will record this $1,000 in an Income Category as a Gift Received. (My Quicken has that category, but I don't recall if it was there by default or if I added it.) Gifts received are not "gross income" according to the Internal Revenue Code, so this is non-taxable income which need not even be reported to the IRS by the donee (you, the recipient). The donor may need to report the gift, but that is not - directly - your problem. But read on...
You will need an Asset Account for the value of the shares. Quicken provides for Investing Accounts, but it insists that these must be with a brokerage or trustee, such as an IRA or 401(k) plan. You probably would be better served in this case by a "generic" asset account. Click Property & Debt | Add Account and choose Asset. Name it what you like and start it at any date before the gift (1/1/08 might be a good starting date) and show the value as zero at that point. (Ignore the "Tax" box on the last creation screen.)
Now make your entry for the gift. In accountant-speak: Debit: Asset Account $1,000 Credit : Gift Received $1,000
That's it - for now.
But the hard part might be figuring out your tax "basis for determining gain or loss" in those shares. The basis of property received as a gift is GENERALLY the donor's basis in that property, and the donee also inherits the donor's "holding period" for those shares. But there are many exceptions to the general rule. A tax-sophisticated donor will accompany the certificate with a letter or other document showing the facts that the donee will need for proper treatment of the gift property. If you did not receive such documentation, then you will need to get it from the donor, because nobody else is likely to have the information you need.
For our example, let's say that the donor bought those shares 7 years ago for $2 per share, and that his total basis is $200 and his holding period began on 4/1/01. Your basis in those shares would now be $200 and if you sell them next week for $1100, you would recognize $900 of long-term capital gain. (This is a simple example; let's not get into losses and other complicated situations.)
You need to record BOTH the FMV (Fair Market Value at the date of the gift) and your tax basis for the shares. You can use either FMV or basis as the amount in your Asset Account, and keep good memo entries of the other amount. FMV is the amount of the non-taxable gift you received; tax basis is what you will use as your "cost" on your tax return when you sell the shares.
Since I've been retired for over 15 years, and tax rules continually change, be sure to check with your own CPA to be sure this is still the correct treatment for these shares.
RC
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R. C. White, CPA
San Marcos, TX
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R. C. White wrote:

Hi R.C.,
It is possible to create a Quicken "investment" account without having to tell Quicken that the account is with a specific financial organization.
For the problem stated by the op in this thread, I think creating a Quicken "brokerage" account would be the best bet. That would allow the op to tell Quicken there were "shares" owned for a security with a specific ticker symbol, so prices could be downloaded to keep the security value up-to-date.
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John Pollard
First initial underscore Last name at mchsi dot com
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