On 2016.01.18 19:59, aga wrote:
On 19/01/16 00:41, Jack wrote:
On 2016.01.18 18:07, aga wrote:
A few months ago I committed a fix to correct absence or
mis-labelling of the Price field in investment transactions. While
doing some checking, I noticed that a Sell transaction still is
incorrect and I shall be submitting a fix for this.
Also, I've noticed that a Reinvest Income transaction appears to
require an income category to be specified, although the amount may
be zero. This doesn't seem right to me, but before I 'fix it', I'd
appreciate views from other users, who have an opinion on this, as
I know some have their own particular use of some of the fields,
which might not be what I would expect. And, the user is always
right...
Allan
It actually is important. A dividend reinvestment is a dividend,
where you immediately use the proceeds to buy more shares. Although
you don't have any cash income (so don't need a brokerage account)
the dividend is income, and reported as such to the tax authority
(at least in the US) so it is important to know what type of income
it is - short or long term capital gains, simple dividends, .....
Also, depending on the type of account it is in, the income may be
taxed this year, or tax deferred (for example in an appropriate
retirement account).
Also note, the income amount is NOT really zero - if it were zero,
then you wouldn't be able to reinvest in more shares. It's only
that there is zero cash coming in. Dividend reinvestment is just
shorthand for a dividend and a buy shares. (As I've complained
before, Merrill Lynch actually finds a way to report it as three
transactions in my monthly statement. One doesn't import, I delete
one, and convert the dividend to a dividend reinvestment.)
Jack
OK, Jack, I understand that use. So far as the category amount is
concerned, then, as I see it, that should only ever be zero?
Otherwise, it will be added to the value of the extra shares in the
total. Or, can you see a possible need for a non-zero dividend
amount?
Don't you have that strangeness with ML where they just add whole
shares, and retain any monetary remainder towards future purchases?
Do you account for that, or just leave it to ML? I suppose you can't
really, as you don't get to receive it until it is used to fund the
later extra share/s.
Allan
Two separate issues. First, I'm not sure we're using the same
terminology. They pay a dividend, which needs an assigned income
category, so it can be properly allocated for tax reasons. Most
commonly, all of that amount is used to buy shares, so some number of
shares get added to the holdings, and there is no cash to be
transferred to a brokerage account. I think it's reasonable for a
Dividend Reinvestment to always be that way - but....
If you have stock options, there are lots of ways of exercising them.
Assuming the options themselves are not actually tracked in KMM, then I
see three possibilties: (I'm thinking of how these would optimally be
recorded in KMM, not how it is done now)
- buy hold - this is really just a buy shares, where the buy price is
fixed by the option, and is not the actual share value on the day of
purchase (This actually needs cash from a brokerage account.)
- cash sale - where you get the income from selling the shares. This
should really be a combined "buy shares" as above, and then "sell
shares" at the current market price. (This puts cash into the brokerage
account.)
- combinations - where you buy all the shares (at the option price),
but then sell some of them at market price. Most commonly, you sell
exactly enough to pay for the purchase - in which case there is zero
cash to/from the brokerage account, but some shares actually added.
However, you could buy more or less - leading to cash out or in from
the brokerage account.
I don't know whether these are really relevant to the current
conversation - since they can always be handled as a combination of buy
and sell, in the same way a Dividend Reinvestment could be handled buy
the combination of two transactions. The advantage of a single
transaction just simplifies the bookkeeping. (for the human, not
necessarily for the program.)
Second issue - on the surface, ML does pretend to track whole shares
only, with the occasional transaction (I've forgotten the term they
use, and don't have time to go digging into a statement right now)
where they add or remove a single share. I used to try to do it that
way in KMM. However, there really is enough information in all the
buy/sell/div-reinvest transactions to track shares at fractional
amounts (often to four decimal places) and they actually do report that
partial amount in the holdings list in the monthly statement. The
month I converted to actually tracking too some "creative"
transactions, but now it's much easier to know what I actually have.
Jack
