Re: Year-end REIT L.T.C.G & Dividends re-classifications

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Posted by Mark on June 11, 2006 at 12:13:37:

In Reply to: Year-end REIT L.T.C.G & Dividends re-classifications posted by Frank B on June 11, 2006 at 09:24:24:

: Hi Mark--

: First, I thank you for putting together such a great product at a reasonable price. I purchased Fund Manager at the close of 2005 after using one of your competitor's products for more than 4 years. You are light years ahead of the pack. Please keep up the great work and customer support.

: My question is probably more of a "personal preference" as oppossed to a problem with FM. As we know, most REITS reclassify usually in February of the following year, the dividends and long term capital gains that were paid during an immediately prior calendar year. (2005 divs/ltcg reclassified in Feb 2006) Form 1099 DIVs are issued at that time.

: The total dollar amounts from all ltcg and dividends that were entered in the holding's portfolio, quarterly throughout the year will (hopefully) equal the amounts on the 1099, although in different "catgories".

: Is it practical, will it affect any yields, or costs, is it worth all the trouble if the adjustments to the portfolio holding were made 'after the fact' to equal the 1099 figures?

: Does this all make any sense?

: Thank you again.

: Frank

Hello Frank,

Thanks for the nice compliment on Fund Manager.

By "category", do you mean distribution type? For example, maybe you had $100 in LT Cap Gains, and $50 in dividends, but after the re-classification you had $90 in LT Cap Gains and $60 in dividends? That is how I understood your question, so my answer assumes the above is correct.

In terms of yields, it won't matter, as long as the total distributions remain the same. There is no difference in the yield calculations for the type of distribution, they are all treated the same.

You cost basis would also not be affected by the distribution type, unless it was an "Account Fee" or "Return of Capital" distribution.

It would be a good idea though to correct the previously recorded distributions, just to be consistent with your 1099, and have proper records.

Thanks,
Mark
--
Fund Manager - Portfolio Management Software

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