Stock Commission Paid By Company

You bought shares with no commission. Just enter what you paid. You could ask a similar question about posting the benefit of buying a shirt at 50% off.

Tom

John Gregory wrote:

Not so , Mr. Tom... I just looked at my 1099 DIV. The total reported includes those commissions. I guess I need to add them to the real dividends then take them out in the commission block of that wizard.

On second thought... I can't just add those commissions to the dividend figure; they won't agree with the statements. Perhaps I should make a separate entry for "Inc - (Income, Dividends, etc)" in the amount of the commission, then list the commission in the appropriate box of the wizard. That would zero the two out but would also create a record of having received the commission as "income" so it agrees with the 1099-Div.

Would that do the trick?

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Hi, John.

As we say so often here...

First, understand what happened "in the real world".

Second, record that in Quicken.

Trying to do the second before the first will get you confused just about every time.

And reinvested dividends are actually two transactions: (1) Received a dividend. (2) Bought more shares.

The two transactions often are collapsed into one, but it's easier to follow what happened if you make two entries.

First: Record the receipt of the dividend. You didn't get cash, so it's hard to see what account to use - and it really doesn't matter because the next entry is going to wipe out whatever you enter this time, so let's just use Cash.

Second, record purchase of new shares, using the proceeds from the dividend. The important thing here is not the price per share. The two important factors are actual number of shares and actual cost to you.

If you try to record the purchase of the shares BEFORE you record the dividend, you get confused - like you have been.

For a quick example, let's make up some numbers:

You hold 100 shares and get a $0.60 per share dividend = $60.00.

Shares are worth $25 dollars today, so you get 2.4 new shares. The commission might normally be $2.40, but you don't have to pay it, so it doesn't matter. Even if the commission were $240, you only had to pay $60 for 2.4 shares, so that's what you record.

So (pardon the accountant-speak - and the formatting):

1st transaction: Debit Cash $60.00 Credit Dividend Income $60.00

2nd transaction: Debit Stock (2.4 new shares) $60.00 Credit Cash $60.00

After the two transactions, the Cash account will be back where it started. The net result: Debit Stock (2.4 new shares) $60.00 Credit Dividend Income $60.00

Since we know how it's going to end up, and since the Cash entries have no lasting effect, we can simply condense the two transactions into the last one.

To take this a step further, if you bought 100 shares for $2500 and paid a $100 commission, your total cost would be $2600. That $2600 would be your basis in the 100 shares, including the commission. Your basis is what it actually cost you, including any commission, transaction tax or other expense, to get ownership of the shares.

RC

R.C.... Wow! You've given me a lot to digest in both your replies. I appreciate it. I'll address the one about the tax refund after I noodle a bit more but right now I'd like to focus on this issue concerning that commission.

I understand all you've explained. In "the real world" I received a concrete stock dividend which I recorded in Quick using the wizard. All was well. It appeared GM gave me "a gift" when I read the statement "company paid" next to the $0.12 commission entry. I knew the most important elements of the entry were the number of shares received - and they were accurate - plus the amount I paid ... which was clearly stated on the statement as "Total Dividend Paid". But then came the 1099-DIV. The sum total of all those "Total Dividend Paid" entries was shy from the box 1a "Total Ordinary Dividends" of the 1099-DIV. That means, I was out of balance when these figures got transferred to TT. (Fact is... it's happened every year for years and I simply ignored it and made manual adjustments in TT. I've simply reached the stage - and have the time - to say "I'm not gonna' settle for that anymore. That's why I'm automated. Find the right way to make this happen.)

Which brings me to the last part of your memo where you demonstrate the hypothetical entries. I understand what you've done (my "Cash" for this transaction is called "Stocks" and serves as an account to hold all stocks I personally hold... hold he certificates). What your example doesn't demonstrate is that gift commission. That "gift" isn't really a gift; I'm taxed for it.

Now the solution I described just before you answered involved that wizard again. If you review, I simply added the commission to the commission line, left the total dividends as reported on the GM statements, then let the Quicken program make the entries. It made two each time. It did what you described and correctly made an entry to record the reinvestment of the divided (so my cost and shares are correct) but then it then created an entry for the commission by labeling it "Miscellaneous" and placing it in the "_DivInc" category (Dividend Income). The resulting transaction shows a negative 12 cents in red next to the name of the stock in the register (one line down from the reinvested dividend entry) indicating the 12 cents were removed from the account. The cash remaining is the same as prior to the dual-entry reinvestment act which was done using just one wizard.

I hope I described this well enough. All seems to be in order. I would just like to make sure I'm not in for any surprises as I go down the road handling similar stocks the same way (with regard to "free commissions"). I really appreciate your help. Please comment. I'll look at the tax refund issue next. That's a tad more involved. I'm the one responsible fro making the deposit in '06; the IRS gave it to me in the Fall of '05. I drag my feet for some unexplained reason when it comes to preparing these taxes.