Return of Capital Distribution Headache

[nagorak]

I would like to make a suggestion regarding return of capital distributions. Right now I have a problem in that although dividends are paid and reported in my account at the time they occur, return of capital information is not supplied until I receive my tax information the next year. At that time, I then have to go back and basically change all of the entries since the distribution amounts are changed (smaller dividend, plus another return of capital entry). This is even more troublesome if the dividend was reinvested because I then have to take the added step of calculating how many shares were purchased by each piece of the distribution.

It would be nice if there were some way to adjust the value of an overall distribution, without having to completely remove it and then reenter it as two new distributions (dividend+roc). One way this could possibly be accomplished is to include a return of capital box in the distribution entry window. This could be sort of like the extra box allowed for commissions, though obviously it would be treated differently (as return of capital, which would be subtracted from the remaining distribution which would still be treated as a dividend).

As an example, if a dividend of $50 was paid in January, but $5 was return of capital, then the dividend net amount would be $45, while RoC would be $5.

Another option would be simply some easy way to edit distribution data without losing the whole thing. Like maybe allowing a right click option to modify/specify distribution traits. In this case in a $50 distribution, you could right click it and then specify $45 being dividend, and $5 being RoC, which would then split the distribution into two entries but maintain any reinvested shares split proportionally between the two entries.

It doesn't seem like something along these lines would be that difficult to implement, but I understand this probably would not be a high priority since I suppose the number of people dealing with RoC is probably a minority.

Anyway, I am just throwing this out there. It would really save me a lot of time, and I am sure a few others would benefit as well. As it is, I often just resort to adding RoC distributions on top of the original dividend amount, which results in it being reflected properly in the cost basis (which is the most important thing), but also inflates the distribution amount (and OOP current gain, etc).

Thanks for your time to consider this request.

[nagorak]

You know, after posting this it occurred to me that one way I can solve this problem myself is to enter a negative dividend distribution at the same time as the RoC distribution. That way I can just keep the original entry and subtract the amount that was not really a dividend and then add it back in as RoC. Although that is a little messy, it should result in the proper values for distribution and gains. Now that I figured that out, this is probably less of a concern, although it would still be a nice feature.

Possibly just allowing for a check box on a RoC entry to generate a corresponding negative dividend along with it could be another way of solving this problem.

[Mark]

Hi nagorak,

Thanks for the feedback. I've not run into this issue before. Why are you not learning about RofC until the end of the year? What type of investment is this?

You probably already know this, but I wanted to make sure you knew you can edit existing distribution transactions. In the Data Register, go to "Distributions (all)", find the one you want to change, and press "Edit...". There is no feature to edit 1 distribution into 2 distributions of different types though, which is what you're describing.

[nagorak]

Yes, I know you can edit the distributions. It's just time consuming to have to go back and edit each distribution, but it is probably unavoidable.

The investments I have the problem with are some Canadian Royalty Trusts I own. They pay dividends monthly, but it is only reported as a dividend. Each year at tax time some of the dividends are changed to be return of capital. Actually, usually I end up getting 1 or 2 corrected 1099s because the figures keep changing after the original 1099 is issued. I've even received a corrected 1099 on April 13, 2 days before taxes are due.

I admit, this is probably a very unusual situation.

With the dividends that pay out there isn't much trouble changing them. The only reason I mention entering a negative dividend is so I don't have to mess with the entries of those that were reinvested.

[Mark]

Hi nagorak,

Interesting, thanks for the information. Sounds like a difficult investment to keep track of...