Non-taxable distribution (return of capital)

[Jimmy Kaplowitz]

(Please CC me on replies since I'm not subscribed to the list, though if
you forget I will try to remember to look at the archives.)

Hi,

I'm trying to properly account for a so-called non-taxable distribution,
or return of capital, that some mutual funds of mine give to me
periodically. They consist of, as I said, a return of capital I put into
the mutual fund, reducing my cost basis in the fund and lowering the
price per share but without reducing the number of shares I own or (in
most cases) giving me any taxable income.

In the gnucash-user archives from January 2005, I found instructions
saying to credit the mutual fund account for the amount of the
distribution in a 0-share transaction, and to debit the relevant cash
amount for the same amount. This is accepted, however it causes my books
not to balance for all dates on or after such a transaction. The assets
no longer equal the liabilities plus equity; they grow on a daily basis,
while the liabilities plus equity do not. In the trial balance, the
debits also do not equal the credits. When I temporarily void those
transactions, the books balance again. Something is wrong here.

This isn't the usual stock sale split example in the FAQ, since no stock
was sold. I have no idea how to fix this; please provide pointers.
Thanks.

- Jimmy Kaplowitz
jimmy at kaplowitz.org

P.S. - I'm using Gnucash 2.0.2, and am happy to upgrade to 2.0.5 if my
problems are due to a bug that was fixed between the two versions.