Re: service fee rebates

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In Reply to: service fee rebates posted by dave on April 16, 2005 at 10:59:13:

: A set of the mutual funds I own offer periodic service fee rebates. These rebates involve the acquisition of additional units of the fund. These new units, however, are not considered when determining the adjusted cost base. Is there a way to enter these additional units into fund manager so that they will not be considered in the adjusted cost base calculations when capital gains are determined?

Hi Dave,

You can do it a couple of ways...

1) Record this as a split, so you end up owning the correct new number of shares. This will keep your cost basis the same as before you received the new shares.

2) Use a Reinvested Account Fee. Account Fee and Return of Capital distribution types will affect your cost basis. So, when you receive an account fee type of distribution this would lower your cost basis if you record it as a positive value that you received. (Normally account fees are recorded as a negative valued distribution, because you are paying them, not receiving them.) Then, when you reinvest that money, it would again raise your cost basis back up by the same amount, so in the end your cost basis will be un-changed.

#2 is probably a better reflection of the real transaction.

Thanks,
Mark
--
Mark Beiley
Fund Manager, portfolio management software for Windows 95/98/ME/NT/00/XP/2003

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