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Investment Trust Return of Capital

Questions about updating prices or transactions in Fund Manager

Postby twj332 » Sat May 07, 2016 6:15 pm

I have question re: Investment Trust Return of Capital (ROC) Real Estate Investment Trusts (REIT)

Issue:
Investment trusts & REIT investments, which pay monthly distributions, and provide in Canada a T3 summary (USA form 1099). This reporting form for tax purposes indicates how much of the annual distributions included a Return of Capital and is reported as (CRA) box 42 - Amount resulting in cost base adjustment - This amount represents a return of capital from the trust.The the amount monthly that is a return of capital is not known or declared by trust till year end.
This results in reduction of the ACB. [ACB should change as 2 types of distributions will adjust your cost basis. A return of capital (ROC) lowers your basis, and an account fee paid increases your basis.]
Question:
How do I enter this ROC amount without adjusting 12 monthly distribution amounts?

There is a suggestion here for a negative ROC entry to offset, but I cant see that this would reduce the cost base properly. viewtopic.php?f=7&t=672&p=2380&hilit=return+of+capital+ROC#p2380

Ideally since the ROC amount is known at year end - to enter once in FM would be ideal.

Thanks
Terry
twj332
 
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Postby Mark » Sun May 08, 2016 9:29 am

Hi Terry,

If you don't know how to allocate the monthly distributions at the time each one is paid, then I don't see an easy way to just record it once at the end of the year. Ideally you would record each transaction as it actually happens. If you received a total RofC, spread out over 12 monthly payments, that is the best way to record it. If you don't know the allocation, you could just record a single distribution monthly, and then at the end of the year, copy/paste those 12 distributions. You would have to go in and edit each of the 24 distributions. Change 12 of them to RofC, and enter the appropriate amounts.

Another option you could consider is to record the 12 monthly distributions as one type of distribution (say type "Other"). At the end of the year, you could record a negative "Other" distribution, and a positive "RofC" distribution for the same amount. You're basically re-characterizing the distribution type at the end of the year. This will result in the same performance figures as if you had recorded all 24 distributions, split throughout the year.
Thanks,
Mark
Fund Manager - Portfolio Management Software
Mark
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Postby twj332 » Sun May 08, 2016 5:01 pm

Hello Mark

It is unfortunate that these break downs for Return of Capital (ROC), Foreign non-business income are not known till year end.

I will copy and paste so that I can as well adjust and track each amount and have a correct cost base for the income trust.

Thanks for you detailed response.

Terry
twj332
 
Posts: 43
Joined: Sun Sep 13, 2009 11:49 am


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