Mutual Funds Cap Gains or Dividend Reinvestment

rwshep2000.3129421 at bloglines.com rwshep2000.3129421 at bloglines.com
Sat Sep 11 11:10:38 EDT 2004


Boris,

Wow!  Finally some progress on this question.  I'm happy to know
that there is some way to get this report to work.  Taxes are something I
worry about at the end of the year; I've never tried to estimate them with
my accounting software.  But I am a simple home-user.

>From what I could
tell from my MS Money import, MS does it this way:

Asset: Mutual Fund X

Dividend Income: Mutual Fund X
Capital Gains: Mutual Fund X
...
and so
one, one account per each type of gain (loss) per fund. Since it sets up (in
the background, as needed) appropriate accounts, per fund, it is able to track
everything that happens on a per-fund basis.  When you do a reinvestment in
Money, you select the appropriate action, eg., "Reinvest Dividend," and apparently
it makes all the entries necessary.  I don't think it simply flags the reinvestment
purchases to exclude them from the basis cost.  If it did, I don't think you'd
get all the subaccounts in the export.

Bob Shepherd

--- Boris Goldowsky
<boris at alum.mit.edu wrote:
On Thu, 2004-09-02 at 08:01 -0400, Aaron Gaudio
wrote: 
> > On Wed, 2004-09-01 at 22:09 -0400, Derek Atkins wrote:
> > >
I have no idea...  I've never played with the report.  Have you
> > > checked
the Report Options?  It's quite possible the report doesn't
> > > report
ROI.  Is there a label for ROI on the report?
> > > 
> > > -derek
> > 

> > I'm using gnucash 1.8.9 and the report has a "Total Return" column.
> > Technically, I think what we have been talking about is "Total
> > Return"
(total return would be the appreciation plus dividend/capital
> > gains income
divided by the cost, but the report does not appear to take
> > into consideration
dividend/capital gains income). I believe "ROI" would
> > really be just
the dividend/capital gains cashflow divided by the cost. 
> 
> There is
a patch at this URL which is intended to fix this problem:
>   http://bugzilla.gnome.org/show_bug.cgi?id=143722

> so in the next version of Gnucash, you should be able to have capital
> gains and dividends included as part of the calculated total return.
>

> However, in testing this patch I've found that it requires what seems
to
> me an unusual method of data entry in order to work.  I would love to

> hear from others if this is the right thing to do (I would have a lot of

> old data to convert to this new system if so, and I don't want to do
>
that if I've understood things wrong).
> 
> The Gnucash concepts guide at

> http://www.gnucash.org/docs/v1.8/C/gnucash-guide/invest_dividends1.html

> suggests entering dividends as transfers from an income account such as

> Income:Dividends:STOCKSYMBOL to a bank account (or wherever the dividend

> actually goes).  For reinvested dividends, it suggests entering the
>
transfer from that Income account matched to a Buy in the stock account
>
(eg, Investments:Brokerage:STOCKSYMBOL).
> 
> However, this method of entry
will not get the dividends included in the
> advanced portfolio report as
part of the total return.  To get them in
> the report, you seem to have
to enter cash dividends directly in the
> stock's register (dispensing with
the Income account altogether), as
> transfers from the stock account itself
with shares and price set to
> zero (or blank):
> 
> NUM  ACCOUNT     
                      SHARES  PRICE   BUY  SELL
> Div  Investments:Brokerage:STOCKSYMBOL
      0      0     0  5.00
>      Bank                                  
 0      0   5.00    0
> 
> And a dividend reinvested would be a transfer
from the stock account
> (share and price = 0) to a buy in the same stock
account (with actual
> share and price for the purchase):
> 
> NUM  ACCOUNT
                           SHARES  PRICE   BUY  SELL
> Div  Investments:Brokerage:STOCKSYMBOL
      0      0     0  5.00
>      Investments:Brokerage:STOCKSYMBOL     0.5
 10.00     1     0
> 
> which results in two lines in the register attached
to the same set of
> splits - one for the dividend, and one for the reinvestment.

> 
> This method does seem to work as far as this report goes, and despite

> the strange look of it (selling 0 shares at a price of 0 results in
>
$5?!) it doesn't raise any red flags with Gnucash's double-entry
> enforcement.
 But is it the Right Thing To Do?  Will it appear correctly
> in income/expense
and tax reports?  And if so, should the concepts guide
> be updated on this
point?
> 
> Bng
> -- 
> Boris Goldowsky <boris at alum.mit.edu>
> 
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