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Posted by Ira on July 3, 2007, 7:49 pm
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Greets,
Does anyone know how to enter in an exchange of mutual fund ABC for
mutual XYZ? Its not a "corporate acquisition" or "corporate name
change", since its occuring in mutual funds, but I dont want to lose
the basis of all the dividend reinvestments simply by issuing a sell
and a buy.
Any help is greatly appreciated.
Thanks!
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Posted by Fred Smith on July 3, 2007, 8:11 pm
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Even though it's a mutual fund, a corporate acquisition should work. Unless, of
course, you have the fund in a "single mutual fund" account.
Regardless, just renaming the fund should achieve what you want.
--
Regards,
Fred
> Greets,
>
> Does anyone know how to enter in an exchange of mutual fund ABC for
> mutual XYZ? Its not a "corporate acquisition" or "corporate name
> change", since its occuring in mutual funds, but I dont want to lose
> the basis of all the dividend reinvestments simply by issuing a sell
> and a buy.
>
> Any help is greatly appreciated.
>
> Thanks!
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Posted by dllapides on July 3, 2007, 9:00 pm
Please log in for more thread options I agree with Fred's 1st answer -- Corporate Acquisition (stock for
stock)
This is the best way to haave accurate reports, showing that you hold
ABC until MM-DD-YYYY and then hold XYZ thereafter. (Actually, the
reports will treat the transaction as occuring at the open of MM-DD-
YYYY.) And it preserves the basis of each lot (purchase, dividend
rreinvestment or capital gain reinvestment).
Please note that this will generate a lot of transactions -- 1 Remove
ABC transaction and a proliferation of Add XYZ transactions, 1 Add for
ever purchase, dividend reinvestment and capital gains reinvestment
you have had over the years.
Fred's 2nd answer -- change the fund's name --is simplest, but it
results in your reports showing that you owned XYZ at a time when you
actually did not.
-dll
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Posted by JM on July 4, 2007, 9:22 am
Please log in for more thread options > Greets,
>
> Does anyone know how to enter in an exchange of mutual fund ABC for
> mutual XYZ? Its not a "corporate acquisition" or "corporate name
> change", since its occuring in mutual funds, but I dont want to lose
> the basis of all the dividend reinvestments simply by issuing a sell
> and a buy.
>
> Any help is greatly appreciated.
>
> Thanks!
I think you need to provide more information before anyone can give
you a correct answer.
What exactly do you mean by "EXCHANGE"?
Did you [or your broker] initiate this transaction? - reallocation or
other reason?
Was this in a taxable or a tax deferred account? - possibly a tax-
exempt fund?
If this was a true Sell/Buy sequence, then that is what you enter in
QW.
The cost basis in the new fund, XYZ, is what you paid for it -
period!!
You would likely have capital gains/losses in a Sell/Buy sequence.
Proper accounting for cap gains/losses is critical if this was a
taxable event - perhaps not critical if a non-taxable event.
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Posted by R. C. White on July 4, 2007, 10:08 am
Please log in for more thread options Hi, Ira.
As JM said, we need a lot more information before we can give an intelligent
answer.
First, the Internal Revenue Code taxes gains on "sales and exchanges". In
other words, an exchange of properties is just as taxable as a sale. Gain
or loss is measured by subtracting your adjusted basis for the property
traded away from the fair market value of the property received. Fair
market value for the two properties is deemed to be equal and set at
whichever can be more easily and accurately determined.
Second, there are many exceptions to the general rule. These exceptions are
all spelled out in code sections written by Congress to accomplish certain
governmental goals. Many corporate transactions are very carefully
structured by management (with advice from attorneys and CPAs) to fit within
one of these exceptions. In order for us to know how a particular
transaction is to be treated for tax purposes, we need to read the
voluminous documents from corporate management to see which code section
applies.
Was your mutual fund exchange engineered by the fund managers to fit a code
section? (This is not too unusual when managers are re-aligning funds
within the "family".) Or was it a straightforward exchange that you
initiated by calling your broker and saying that you think XYZ looks better
than your ABC, so please swap them for me? (In that case, you would treat
it as a sale of your ABC and a purchase of XYZ. All prior basis numbers and
dates would be forgotten after the ABC sale is recorded.) Or did the
exchange happen in some other way?
If this is an management-initiated exchange, you should have received
information about what happened "in the real world". With that, you should
be able to figure out how to record it in Quicken - and we'll be glad to
help. You also should discuss this with your own CPA and broker.
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Vista Ultimate x64)
> Greets,
>
> Does anyone know how to enter in an exchange of mutual fund ABC for
> mutual XYZ? Its not a "corporate acquisition" or "corporate name
> change", since its occuring in mutual funds, but I dont want to lose
> the basis of all the dividend reinvestments simply by issuing a sell
> and a buy.
>
> Any help is greatly appreciated.
>
> Thanks!
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