undistributed capital gains (REIT)

[JeanneMarie]

I haven't had to deal with this before and I'd be surprised if it ever turned into a big issue for me. Right now, on my very first IRS Form 2439, a grand total of $61 is to be added to one security's tax basis.

But wanting to be a super user.... How can I get FM to consider this in computing basis and gains? I see custom fields in investment properties and custom distribution labels in the program's options, but I don't think either of those is going to help.

My one thought is just increasing the price of an earlier purchase.

Is there some other solution I'm not seeing?


Thanks a bunch.

[Mark]

Hi JeanneMarie,

Here's one idea: Record a reinvested distribution for Y shares, and then a split with a ratio of (X + Y) for X, where X is the number of shares you had before the distribution, and the amount you want to have at the end. Y could be however many shares are appropriate for whatever the value of the distribution was.

[JeanneMarie]

That's quite interesting, but my shares haven't changed. This is a REIT retaining earnings, not a mutual fund reinvesting my earnings in new shares.

Among distribution transactions, you've got one "other" field and two user-defined fields. A user-defined field would record a note, which is better than nothing. What do you use "other" for? Does it have any effect on anything, or is it actually another user-defined field?

Feedback: Consider a new kind of distribution transaction which is the opposite of return of capital--"retained earnings"--increasing rather than decreasing tax basis? Altho it would be recorded as a dollar value, it would have no share impact and no impact in the cash account.

Thanks.

[Mark]

Hi JeanneMarie,

With the method I was describing you'd end up with the same number of shares as you started with. It is like the REIT had earnings, but reinvested them for you, without giving you new shares, and increasing your cost basis.

All of the distribution labels can be customized to use for whatever you want. See "Options / Distribution Labels...".

You could use an Account Fee or a negative Return of Capital distribution to raise your tax basis, but you didn't pay a fee, or pay a negative RofC. It is kind of a strange situation, but it sounds like an automatic internal reinvestment.

[JeanneMarie]

Negative ROC sounds very interesting. I never would have thought of that and will try it.

THANKS!