Dividend Reinvestment.

[aviator]

Hi Mark,

Quick question regarding how FM manages ordinary dividend reinvestments vs reinvestments from capital gains.

For example, I have a security that paid three dividends in late December. The first was an ordinary dividend. The other two were short and long term capital gain distributions that were reinvested. FM recorded all three as dividend reinvestments, as opposed to one dividend reinvestment and the other two as ST and LT gains that were reinvested.

Is FM's handling as described by design?

Thanks.

[Mark]

Hi aviator,

No. It will record them as reported by the broker. If you'd like to see how your broker reported them, retrieve transactions for just this one account, covering the date range of these reinvestments, and then look under "Help / Logs / Transaction Retrieve (Parsed)...". You can see how they were coded by the broker's OFX server. If you look at these transactions, if the INCOMETYPE key is set to CGLONG it will be recorded as a LT Cap Gain distribution. If it is set to CGSHORT, it will be a ST Cap Gain distribution. DIV is a dividend.

[aviator]

Got it. I did as you suggested and retrieved transactions only for that one day from that one account. As you said, the transaction came across as a dividend.

A couple of questions:
1) Given the tax implications of ordinary dividends vs capital gains, is there a way to override what the broker sends and have the transaction recorded correctly? This is clearly an issue with the broker but I have no idea where to begin reporting this.

2) The distributions came from a tax-free investment. I believe, but am not sure (please, no one rely on this post for tax advice), that long-term and short-term capital gains from tax-emempt bonds are subject to taxation. As I've classified this bond as tax-free, it's capital gains are also classified as such. Is there a way to change this, i.e. make taxable a single transaction from a tax-exempt security.

Thanks.

[Mark]

Hi aviator,

1) Yes, in the Preview Importing Transactions, you can right mouse click on any transaction and modify the transaction details prior to importing. You can also edit any transaction you want afterwards in the Data Register.

2) No, the "tax-free" property is an investment level property.