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Posted by JM on February 28, 2007, 9:35 pm
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> I started some non-retirement investing this year. At the brokerage you
> put money into the account and "money market" shares are purchased at a
> straight $1 = 1 share rate. Later, when you actually invest in
> something, a mutual fund or stock, shares of this money market are sold
> and your mutual fund or stock is purchased.
>
> Importing to TurboTax for the Web creates an Investment Sales Summary
> for the sales of these money market shares. Do I need to pay taxes on
> this?!?
> --
> Andrew DeFaria <http://defaria.com>
> The careful application of terror is also a form of communication.
Buy/Sells of the MM may show up on Sched D in TTax - but with zero
gain/loss. Check this by running QW's Capital Gains Report. The FI
probably will not report these and I delete them.
These Buy/Sells will also inflate the Gross Proceeds in TTax vs what
the FI reports. The Gross Proceeds will automatically adjust as you
delete these transactions and, when done, you should match what the FI
reports to the IRS.
Bottom line - I make sure QW/TTax matches the year-end Form 1099's.
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Posted by Hank Arnold on March 1, 2007, 5:16 am
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You need to consult a tax expert or the IRS to confirm, but MMF sales
are not, AFAIK, subject to capital gains taxes. What *IS* taxable are
the dividends that you get each month. BTW, they are *dividends*, not
*interest*....
How is the account set up? Frankly, I've never considered the import
from TT into Q to be worth the effort to make it reliable...
Regards,
Hank Arnold
Andrew DeFaria wrote:
> I started some non-retirement investing this year. At the brokerage you
> put money into the account and "money market" shares are purchased at a
> straight $1 = 1 share rate. Later, when you actually invest in
> something, a mutual fund or stock, shares of this money market are sold
> and your mutual fund or stock is purchased.
>
> Importing to TurboTax for the Web creates an Investment Sales Summary
> for the sales of these money market shares. Do I need to pay taxes on
> this?!?
> --
> Andrew DeFaria <http://defaria.com>
> The careful application of terror is also a form of communication.
>
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Posted by R. C. White on March 1, 2007, 10:15 am
Please log in for more thread options Hi, Andrew.
It SHOULD work quite simply.
You put in $1,000 and the broker buys 1,000 shares at $1 each. Each day,
the fund manager calculates how much the fund has made that day and pays a
dividend - in shares at $1 per share, not in cash - equal to that day's
earnings. The next day, there's a new dividend, and the next day... By the
time you sell some shares to invest in a stock (Intuit ?), your MMF may have
grown to 1,050 shares at $1 each for a total value of $1,050. You need $800
to pay for the INTU, so your broker sells 800 shares of your MMF at $1 per
share, leaving you with 250 shares worth $1 each. Like I said, it's quite
simple.
Now, it gets complicated - UNnecessarily - when the broker reports the sale
of the 800 shares as though they were shares of IBM or Google, for which the
price is NOT fixed at $1 per share. The same thing happens when your CD
(Certificate of Deposit) matures and the bank reports that you SOLD an
investment. Maybe you put in $10,000, it earned $400 interest, which was
compounded and added to the principal, so your check at maturity was for
$10,400. The bank might report that you sold a CD for $10,400.
In either case, there is a ZERO capital gain. In either case, the interest
or dividend earned should be reported, separately from the sale, as interest
or dividend income. (Probably taxable, but that's a separate topic.) The
income would increase the tax basis of the MMF or of the CD to the value at
the time of sale. Therefore, the gain or loss will always be ZERO.
Reporting the zero gain is entirely proper. Omitting it is also entirely
proper. The definition of Gross Income includes the GAIN on sale of
securities, not the gross proceeds of such sale. So report the MMF sale as
$800 proceeds less $800 adjusted basis leaving $0 gain - or omit it from
your return entirely. Your tax will be the same either way.
In my opinion, brokers and banks should not be required to report such
sales, but the government doesn't let me make the rules. And Intuit doesn't
let me program Quicken or TurboTax, either.
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)
I started some non-retirement investing this year. At the brokerage you put
money into the account and "money market" shares are purchased at a straight
$1 = 1 share rate. Later, when you actually invest in something, a mutual
fund or stock, shares of this money market are sold and your mutual fund or
stock is purchased.
Importing to TurboTax for the Web creates an Investment Sales Summary for
the sales of these money market shares. Do I need to pay taxes on this?!?
--
Andrew DeFaria
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Posted by Walt Bilofsky on March 2, 2007, 12:42 am
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>Importing to TurboTax for the Web creates an Investment Sales Summary
>for the sales of these money market shares. Do I need to pay taxes on
>this?!?
Money market shares are bought at $1 and sold at $1. So there's no
gain or loss and you don't need to pay taxes on it.
Second question: Do you need to report it on your tax return anyway?
The answer is, look at the 1099-B form your brokerage house sends. You
will not see the money market sales reported on it, so no, you
shouldn't report that on your schedule D.
(Your tax return should match what is reported to the IRS. Otherwise
the IRS could get curious, which is bad. So it's a good idea to
compare your 1099-B totals with the totals of your capital gains
transactions. If I have a lot of transactions, I export my capital
gains report from Quicken and use Excel to tote things up. If I have
a substantial difference, I attach an explanatory note to my return.)
Third question: If you don't need to report it on your tax return,
why is Quicken putting it in your capital gains report?
Most of my brokerage accounts don't report money market transactions
to my Quicken. As I recall, Quicken help says that that is up to the
financial institution. There's something that's supposed to come up
when you create the account, where you can designate a fund as the
430 No such article
>Importing to TurboTax for the Web creates an Investment Sales Summary
>for the sales of these money market shares. Do I need to pay taxes on
>this?!?
Money market shares are bought at $1 and sold at $1. So there's no
gain or loss and you don't need to pay taxes on it.
Second question: Do you need to report it on your tax return anyway?
The answer is, look at the 1099-B form your brokerage house sends. You
will not see the money market sales reported on it, so no, you
shouldn't report that on your schedule D.
(Your tax return should match what is reported to the IRS. Otherwise
the IRS could get curious, which is bad. So it's a good idea to
compare your 1099-B totals with the totals of your capital gains
transactions. If I have a lot of transactions, I export my capital
gains report from Quicken and use Excel to tote things up. If I have
a substantial difference, I attach an explanatory note to my return.)
Third question: If you don't need to report it on your tax return,
why is Quicken putting it in your capital gains report?
Most of my brokerage accounts don't report money market transactions
to my Quicken. As I recall, Quicken help says that that is up to the
financial institution. There's something that's supposed to come up
when you create the account, where you can designate a fund as the
"cash" in the account. I've never seen that myself.
In my one account that does pass Quicken the money market
transactions, I delete each money market buy and sell and carry it as
a cash balance, which is a real pain to do but it comes out right.
The other way to make the tax import come out right is to use one
security type or asset class for your money market funds, customize a
captial gains report to exclude that type or class, export the report
to a TXF file and import that file into Turbo Tax. And don't check
off the capital gains when you import everything else directly from
Quicken.
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Posted by Steve Dell on March 4, 2007, 10:53 am
Please log in for more thread options : quoted-printable
You will owe taxes on the interest you get on the money market. Your =
broker will send you a 1099-INT for this purpose.
I started some non-retirement investing this year. At the brokerage =
you put money into the account and "money market" shares are purchased =
at a straight $1 =3D 1 share rate. Later, when you actually invest in =
something, a mutual fund or stock, shares of this money market are sold =
and your mutual fund or stock is purchased.
Importing to TurboTax for the Web creates an Investment Sales Summary =
for the sales of these money market shares. Do I need to pay taxes on =
this?!?
--=20
Andrew DeFaria
The careful application of terror is also a form of communication.=20
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started some non-retirement investing this year. At the brokerage you =
put=20
money into the account and "money market" shares are purchased at a =
straight=20
$1 =3D 1 share rate. Later, when you actually invest in something, a =
mutual fund=20
or stock, shares of this money market are sold and your mutual fund or =
stock=20
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<DIV class=3Dmoz-signature>-- <BR><A =
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