Cost basis differ for Mutual Funds and Shares RRS feed

  • Question

  • Hi guys,<o:p></o:p>

    I hope this forum is still active. I've been using MS Money Plus Home & Business for the last 16 years and current version is and have a lot of data in it, which I heavily relay on when it comes to Tax returns so the data shall be accurate. After transferring my investments from one broker to another I've used the combination of Remove/Add shares to move the investments as oppose to Transfer Out/In since I read that there may be some problem with that feature. However I released there may be some issues with the cost basis and I will try to show a simplified example below. The discrepancies are much bigger in reality where I have multiple investments of different types (Shares and MF) in multiple account.<o:p></o:p>

    The problem occurs only if you have the sequence of Add Shares/Buy/Sell transactions and in that case the Individual investment Cost basis differ and the Total account Value Cost Basis does not add up to the sum of the individual investment cost basis.

    I have setup 2 Test investments SH as a Share type and MF as a Mutual Fund type. Both of them have exactly the same transactions Add Shares/Buy/Sell with no commissions but the cost basis are not the same. This only occurs if I use the sequence of Add Shares/Buy/Sell.

    Also the sum of the individual investments cost basis do not add up to the Total account Value Cost Basis.

    Are you aware of any solution or a work around for that?

    Many thanks in advance.

    Once my account is verified I will post an screenshot

    Friday, May 1, 2020 3:19 PM

All replies

  • If the cost basis calculated by Money is greater than the correct basis, I use the following work-around:
         Create a Return of Capital transaction for the investment specifying the desired correction amount.
         In the corresponding cash account, create a withdrawal transaction of the same amount and assign the distribution to a dummy account (mine is called Miscellaneous:Bookkeeping).
         (It occurred to me after I did this for multiple investments and accounts that I could have simplified the process by initially specifying the dummy account in the Return of Capital transaction.)

    I have not found a way to deal with Money undervaluing the basis.  For those investments, I have altered the investment name by adding asterisks to warn me that Money's values are wrong.

    A word of caution: in the US you cannot use average cost basis when selling stocks (you can for mutual funds and ETFs).  If the shares you add were originally purchased at different prices, Money will calculate the basis of each share as the Total divided by the Quantity (the average price).  Unless you sell all the shares, Money will compute the wrong capital gain and also the wrong remaining basis.  I get around this by using a spreadsheet.

    Friday, May 1, 2020 7:45 PM
  • Thanks for your reply Barry. After I played with this for a while I think I found a work around that seems to fix the problem for now. Solution below:

    On the Return of Capital I use that as well but I don't credit the amount to any Cash account just leave the "Transfer to" account filed blank.


    I had a Mutual Fund (let's say LTGE) that after I used the following sequence Add Shares/Buy/Sell it messes up the Total cost basis of the accounts like the sum of the individual investments cost basis do not add up to the Total account Value Cost Basis.

    The solution I found is that:

    1. I create a fake investment say Test with no or 0 value of transactions and set it up as a Stock Type not Mutual Fund and Log out of MS Money.
    2. Login and change the Test investment type from Stock to Mutual Fund and Log out of MS Money.
    3. Login and got to Investment details of the corrupted investment in my case LTGE
    4. Copy the name of the investment so it can be paste at the later step and then click Combine With button and select newly created investment called Test from the list. Now all of your transaction will be renamed as Test but no worries since it will be renamed in the next step
    5. Right click on the Test investment and then rename it to your original investment in my case LTGE
    6. This did the trick to me now the Total account value Cost Basis is correct even if I you encounter further Buy/Sell transaction.

    I hope that helps.

    Saturday, May 2, 2020 5:02 PM