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TIPS again: sales

Questions about updating prices or transactions in Fund Manager

Postby dlevy » Fri Feb 19, 2021 5:09 pm

There have been a number of discussions about TIPS such as this one: https://www.fundmanagersoftware.com/forum/viewtopic.php?f=6&t=3461&p=13810&hilit=TIPS#p13810.

The challenge is the price times quantity is not the market value because there is the inflation factor to consider. I thought I had worked out how to deal with all of this when a new wrinkle seems to have shown up.

I just downloaded a sale transaction from Schwab. With 1000 face of a bond with a price of 124.3515 the product of the two is $1243.51 which ignores the factor. The account was credited with $1593.60 which includes the factor. The transaction import into FM brought in the $1243.51 and the cash was out of balance -- I had to correct this by hand.

One twist -- the sell was originally on 8/31/2020 and everything downloaded and reconciled correctly. For a variety of reasons, I had to re-download everything and I observed this new problem. Did anything change on either the Schwab or the FM side since that date?

With thanks,

David
dlevy
 
Posts: 64
Joined: Tue May 13, 2014 4:42 pm

Postby Mark » Fri Feb 19, 2021 5:24 pm

Hi David,

Nothing in the transaction retrieve related to this has changed in FM. I couldn't say for sure in Schwab, but I would be surprised if anything changed.

FM requires any transaction to be self-consistent, so the prices * shares = value. If you want the value to be $1593, then the price/shares would have to be adjusted to account for this. If you look in the transaction retrieve log, how is this transaction reported? See "Help / Logs / Transaction Retrieve (Parsed)...".
Thanks,
Mark
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Postby dlevy » Sat Feb 20, 2021 8:20 am

It appears Schwab records the increase in market value due to inflation as accrued interest. FM does not pick this up and I had to edit the transaction by hand. My understanding is that the increase is treated as part of principal.

Code: Select all
- SELLDEBT
- INVSELL
- INVTRAN
- DTTRADE (20200831120000)
- MEMO (UST INFL IDX 2.375%01/27INFL INDEX  DUE 01/15/27)
- SECID
- UNIQUEID (912810PS1)
- UNIQUEIDTYPE (CUSIP)
- UNITS (-1000.0000)
- UNITPRICE (124.3515)
- TOTAL (1243.51)
- SUBACCTSEC (CASH)
- SUBACCTFUND (CASH)
- SELLREASON (SELL)
- ACCRDINT (350.09)


When I originally downloaded the transaction on 2020-08-31, I did not need to intervene manually.
dlevy
 
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Joined: Tue May 13, 2014 4:42 pm

Postby Mark » Sat Feb 20, 2021 11:15 am

Hi David,

Thanks. I looked into this more, and you are right. This is something that we inadvertently changed (broke) in FM with version 2020.16.5 as part of our changes to support multiple retrieves per broker to get more historical data. It is skipping over the ACCRDINT entry. We will have to release an update to correct this.
Thanks,
Mark
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Postby Mark » Sun Feb 21, 2021 6:11 am

Hi David,

We've released version 2020.16.8 to fix this issue. It is available now from the Download page.
Thanks,
Mark
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Postby dlevy » Sun Feb 21, 2021 5:51 pm

Hi Mark,

I quickly tried the new version. It brought in the price and quantity and did a separate transaction for the "accrued interest". Two questions:

First, is what Schwab is putting in the accrued interest field really accrued interest? It's the adjustment for inflation and is not (as I understand it) taxed as interest, but is part of the principal to be considered in calculating the capital gain.

Second, there is a penny rounding issue the came up in two of the four sold TIPS. Here is an example:

From the retrieve log:

Code: Select all
- SELLDEBT
- INVSELL
- INVTRAN
- DTTRADE (20200831120000)
- MEMO (UST INFL IDX 0.125%01/30INFL INDEX  DUE 01/15/30)
- SECID
- UNIQUEID (912828Z37)
- UNIQUEIDTYPE (CUSIP)
- UNITS (-25000.0000)
- UNITPRICE (111.4459)
- TOTAL (27861.48)
- SUBACCTSEC (CASH)
- SUBACCTFUND (CASH)
- SELLREASON (SELL)
- ACCRDINT (59.83)


So you multiply units by price and get 27,861.48 and add the accrued interest to get 27,921.31.

The Schwab transaction posts as follows:

Code: Select all
Trade Details for Sell on 08/31/2020
912828Z37
UST INFL IDX 0.125%01/30INFL INDEX DUE 01/15/30
qty=25,000
price=$111.4459
amt=$27,921.30


...and is a penny less.

I'm thinking the right way to record the transaction is to treat it as a sale with price (including inflation adjustment) of 111.6852 and a value of 27921.30 so that things multiply out correctly and tax reporting is correct.

These "factored" investments are awkward. Thoughts?
dlevy
 
Posts: 64
Joined: Tue May 13, 2014 4:42 pm

Postby dlevy » Sun Feb 21, 2021 6:57 pm

To check things out, I looked at the Schwab 1099. They report sale proceeds of 27,917.22 and accrued interest from sale of 4.08. The total is 27,921.30 as I mentioned earlier, but the numbers differ from what's in the OFX file. Hmmm...
dlevy
 
Posts: 64
Joined: Tue May 13, 2014 4:42 pm

Postby Mark » Mon Feb 22, 2021 8:16 am

Hi dlevy,

I'm not sure what to say about these, or why Schwab is reporting them this way. I do see the penny difference you're mentioning. FM is going to import the numbers as reported by the broker in the OFX file. Recording a payment of accrued interest as a negative valued distribution will not be reflected in the taxable cost basis. I would probably suggest recording things to be consistent with the statement/1099 form, and not necessarily how it was reported in OFX.
Thanks,
Mark
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Postby dlevy » Mon Feb 22, 2021 12:44 pm

The latest twist--I just got an email from Schwab that they're going to be sending corrected 1099s in early March because of issues on TIPS. I'll update the board when I get the new 1099s just in case others are having the same issue.
dlevy
 
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Joined: Tue May 13, 2014 4:42 pm

Postby dlevy » Thu Mar 04, 2021 3:55 pm

And just to close the loop on this, the corrected 1099 did not change the numbers from the 1099 I discussed earlier. As Mark recommended, I'm changing the numbers downloaded in the OFX file to match the 1099.
dlevy
 
Posts: 64
Joined: Tue May 13, 2014 4:42 pm


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