Portfolio Funding

[Gary T.]

Mark,
Have been a FM user for many years, and when I initially created Portfolio's for our IRA's they were funded with stock and cash from a rollover. I added the stock as a purchase of the amount of shares and the price per share on the day the IRA was established, with a value of zero. Therefore there was no associated redemption in the default cash account. Should I edit this transaction using the new "Transfer In" transaction, whose defination seems to represent what actually happened. If so, what would be the result. Also would the "Transfer-In" and "Transfer-Out" transaction be appropriate way to journalize a stock merger, in which one stock is liquidated at current value, and is becomes another stock of equal value but a different share count.
Thanks,
Gary T.

[Mark]

Hi Gary T.,

Yes, you could replace the purchase with a transfer in. The difference between these is that you can have a separate date and value for the transfer date/value from the original purchase date/value. Also, the transfer in does not pull money out of any default cash account.

For the merger, you could do it a couple of different ways:

1) Simply record a split with a ratio of <new shares> for <old shares> and change the investment's name/symbol.

2) Use the "Transfer Between" wizard. First, create the new investment, with 0 shares initially. Right mouse click on the liquidated investment, and choose "Investment Data / Transfer Between...". Enter in the details of what happened. The Transfer Between wizard will record a single Transfer Out in the liquidated investment, and one Transfer In in the destination investment for each purchase you had in the original investment. This maintains your cost history. A single Transfer In can have only one tax basis cost/date, so by using the Transfer Between wizard you maintain your cost basis perfectly.

Method #1 is probably easier, but method #2 may preserve the history of what really happened a little more clearly. Both will have the same results as far as maintaining cost basis, performance calculations, etc.