Average Cost Basis - Microsoft Money

In microsoft.public.money, Bob W <Bob W@discussions.microsoft.com>
wrote:

>Mutual Fund within a Brokerage Account, they apply the Capital Gains and
>Dividends earned by this Mutual Fund back into the cost hence the Average
>Cost keep on changing, and hence negating the FIFO etc. methods that are
>embedded in the program.

Actually, Money allow three methods of cost basis for a fund (not a
stock) in the US, matching what the IRS allows: single category
average, double-category average, and actual cost basis where the
individual shares are used. That is set up in the Details for each
fund.

Once you use an averaging method, the IRS requires you to continue
that way with a fund.

>Is there any way to adjust the COST on a individual stock/ Mutual fund ?

Any way? Yes. A specific way that you are thinking of? I doubt it.
What did you have in mind? There is no button to say "match my
broker" or operation to "make my average basis be ___". You would
have to change the underlying Buy and/or ReinvestDividend
transactions. You should only do that in Money if the info there now
is wrong. It may be possible to change that info at the broker if
the broker has an inaccurate history. It is quite common for the
broker to have incomplete info if some transactions were from before
the broker started tracking that info.

For trying to change the basis calculations, if for example, if you
never sold that fund before, you could change the method to what you
are trying to match. Now if your broker has different view of
previous transactions because the broker or Money has an incomplete
history, then making them simply match better would not necessarily
be good. Instead look to change the one that is inaccurate if
possible. If your Money file is accurate, you can ignore the
broker's numbers. I expect there is a disclaimer on the broker's
site to the effect that their basis calculations are not definitive.


>
>Have been using MSMoney 10 yrs + and it is great, this is just a new wrinkle
>to look at.

On Aug 9, 1:15 am, Cal Learner-- MVP <via_newsgr...@please.tnx> wrote:
> In microsoft.public.money, Bob W <Bob W...@discussions.microsoft.com>
> wrote:
>
> >Mutual Fund within a Brokerage Account, they apply the Capital Gains and
> >Dividends earned by this Mutual Fund back into the cost hence the Average
> >Cost keep on changing, and hence negating the FIFO etc. methods that are
> >embedded in the program.
>
> Actually, Money allow three methods of cost basis for a fund (not a
> stock) in the US, matching what the IRS allows: single category
> average, double-category average, and actual cost basis where the
> individual shares are used. That is set up in the Details for each
> fund.
>
> Once you use an averaging method, the IRS requires you to continue
> that way with a fund.
>
> >Is there any way to adjust the COST on a individual stock/ Mutual fund ?
>
> Any way? Yes. A specific way that you are thinking of? I doubt it.
> What did you have in mind? There is no button to say "match my
> broker" or operation to "make my average basis be ___". You would
> have to change the underlying Buy and/or ReinvestDividend
> transactions. You should only do that in Money if the info there now
> is wrong. It may be possible to change that info at the broker if
> the broker has an inaccurate history. It is quite common for the
> broker to have incomplete info if some transactions were from before
> the broker started tracking that info.
>
> For trying to change the basis calculations, if for example, if you
> never sold that fund before, you could change the method to what you
> are trying to match. Now if your broker has different view of
> previous transactions because the broker or Money has an incomplete
> history, then making them simply match better would not necessarily
> be good. Instead look to change the one that is inaccurate if
> possible. If your Money file is accurate, you can ignore the
> broker's numbers. I expect there is a disclaimer on the broker's
> site to the effect that their basis calculations are not definitive.
>
>
>
>
>
> >Have been using MSMoney 10 yrs + and it is great, this is just a new wrinkle
> >to look at.- Hide quoted text -
>
> - Show quoted text -

The Fund earns income on it's investments over the year. The Dividends
and Capital Gains in the Fund are computed and proportioned out to
individual holders as taxable income, the income is then put back into
the fund units owned by the individual, adjusting the cost. i.e. Fund
purchased for 10.00 after capital gains, dividends earned by fund, in
it's investments, your portion adjust the cost to 15.00 so that lets
say if one sells at that moment for 17.00 the your capital gain woul
be 2.00 rather than 7.00.
This is being done more and more so being able to adjust the cost is
desirable,
Maybe not possible.???

In microsoft.public.money, CompuGroup wrote:

>On Aug 9, 1:15 am, Cal Learner-- MVP <via_newsgr...@please.tnx> wrote:
>> In microsoft.public.money, Bob W <Bob W...@discussions.microsoft.com>
>> wrote:
>>
>> >Mutual Fund within a Brokerage Account, they apply the Capital Gains and
>> >Dividends earned by this Mutual Fund back into the cost hence the Average
>> >Cost keep on changing, and hence negating the FIFO etc. methods that are
>> >embedded in the program.
>>
>> Actually, Money allow three methods of cost basis for a fund (not a
>> stock) in the US, matching what the IRS allows: single category
>> average, double-category average, and actual cost basis where the
>> individual shares are used. That is set up in the Details for each
>> fund.
>>
>> Once you use an averaging method, the IRS requires you to continue
>> that way with a fund.
>>
>> >Is there any way to adjust the COST on a individual stock/ Mutual fund ?
>>
>> Any way? Yes. A specific way that you are thinking of? I doubt it.
>> What did you have in mind? There is no button to say "match my
>> broker" or operation to "make my average basis be ___". You would
>> have to change the underlying Buy and/or ReinvestDividend
>> transactions. You should only do that in Money if the info there now
>> is wrong. It may be possible to change that info at the broker if
>> the broker has an inaccurate history. It is quite common for the
>> broker to have incomplete info if some transactions were from before
>> the broker started tracking that info.
>>
>> For trying to change the basis calculations, if for example, if you
>> never sold that fund before, you could change the method to what you
>> are trying to match. Now if your broker has different view of
>> previous transactions because the broker or Money has an incomplete
>> history, then making them simply match better would not necessarily
>> be good. Instead look to change the one that is inaccurate if
>> possible. If your Money file is accurate, you can ignore the
>> broker's numbers. I expect there is a disclaimer on the broker's
>> site to the effect that their basis calculations are not definitive.
>>
>>
>>
>>
>>
>> >Have been using MSMoney 10 yrs + and it is great, this is just a new wrinkle
>> >to look at.- Hide quoted text -
>>
>> - Show quoted text -
>
>The Fund earns income on it's investments over the year. The Dividends
>and Capital Gains in the Fund are computed and proportioned out to
>individual holders as taxable income, the income is then put back into
>the fund units owned by the individual, adjusting the cost. i.e. Fund
>purchased for 10.00 after capital gains, dividends earned by fund, in
>it's investments, your portion adjust the cost to 15.00 so that lets
>say if one sells at that moment for 17.00 the your capital gain woul
>be 2.00 rather than 7.00.

Yes. As it should. A reinvestment is a re-buy of more shares.

>This is being done more and more so being able to adjust the cost is
>desirable,
>Maybe not possible.???

Huh? That is a non sequitur at best. What is your real purpose that
makes you think that some kind of basis adjustment would be a good
idea? In other words, do you have a goal that you think would be met
by changing (fudging) the basis? I doubt that your goal is to pay
capital gains taxes on the gains that you had already been taxed on.


You *could* change the cost basis by the purchase price on the Buy
transactions.

You *could* decrease cost basis by entering a ReturnOfCapital
transactions.

In both cases you would need to also add an a compensating
transaction to the cash account to account for the balance change.

I think changing your basis like this would be a very bad idea.

I am not saying that there would never be a time where a basis
adjustment would be proper. If a Money file were being maintained
after death of the owner it would be proper to set the basis to that
at the time of death. But you have something else in mind.