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Posted by Ignatius J. Reilly on February 24, 2008, 1:11 pm
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When buying stocks through a dividend reinvestment plan, the companies
often pay various trading fees, commissions and service fees.
These are considered to be income for tax purposes.
How are these recorded in Quicken?
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Posted by Han on February 24, 2008, 2:03 pm
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> When buying stocks through a dividend reinvestment plan, the companies
> often pay various trading fees, commissions and service fees.
>
> These are considered to be income for tax purposes.
>
> How are these recorded in Quicken?
That is incorrect as stated. When you get a dividend, that is income.
Reinvesting is a term the IRS does not recognize, I believe. If you
reinvest the dividend, you in effect use cash delivered from the dividend
into your account to purchase new shares. Obviously that may incur fees,
just like can happen with a sale.
So if a dividend is $115 (from whatever number of shares you hold - that
does not matter), and you purchase new shares (nominally at $10/share,
but with fees of $15 for the transaction) the cost or "basis" of the 10
new shares is $115, or $11.50 per share. Note again that price per share
is an alien concept to the IRS.
The only things that count for IRS (and in Quicken) are cost (basis),
number of shares, and later on the net selling price. Many people try to
input the price per share into Quicken and because of rounding errors
inherent in computers, they end up with a fractional number of shares
left over, or short, when they sell. Avoid that by inputting just the
number of shares and the cost (plus commissions and fees). Let Quicken
calculate that price per share!
HTH
--
Best regards
Han
email address is invalid
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Posted by Jim-NN7K on February 24, 2008, 2:29 pm
Please log in for more thread options Ignatius J. Reilly wrote:
> When buying stocks through a dividend reinvestment plan, the companies
> often pay various trading fees, commissions and service fees.
>
> These are considered to be income for tax purposes.
>
> How are these recorded in Quicken?
Take a CLOSE look at your statements. the FEES paid
are DEDUCTED from your reinvested dividend (usually)
, and is shown as a Deduction Amount.
The purist would show this as a Commission on the
reinvestment screen, and can be used to offset your
(Gain-Loss)cost basis amount of your stock when
you sell it.
As this amount is USUALLY a small amount 2 cents to 10 cents,
it has little effect on your total return you report to the IRS-
IF that amount is actually paid for by the Company, it will be
stated on your 1099 as "Company Paid Fees", or "Company Paid
Service Charges" - Jim
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