Vangaurd fund conversion without changing basis

[fmuser]

Vanguard merged its Tax-Managed Growth and Income fund into their 500 Index fund earlier this year. I initially handled the conversion as Transfer Out from the old investment, and Transfer In to a new investment (I think FM did all this by default when I downloaded transactions from the Vanguard site), but now I see that tax basis for the new investment is wrong (assumes basis equal to the value on the date of conversion).

The conversion needs to preserve the original tax basis. How can/should I reflect this in FM ?

[Mark]

Hi fmuser,

You have a couple of choices:

1) Record a split, and a name change in the one investment. The split ratio would be <new_shares> for <old_shares>. You will only have one investment to cover this whole case.

2) Use the "Transfer Between" wizard. Right mouse click on the source investment, and choose "Investment Data / Transfer Between..." and fill out that dialog. It will record all the transfers to keep your cost basis the same. You will have 2 investments in this case, one for each the old/new investments.

For either case you'll want to delete the original transfer transactions that were retrieved/recorded that are giving you the incorrect basis. Do this before doing either of the above options.