How do I record a return of capital?


Use the Return of Capital dialog to record cash received from return of capital. A return of capital is usually money paid to you as total or partial repayment of the money you invested.

1. Open the account you want to use.

2. Click Enter Transactions.

3. In the Enter Transaction list, select Return of Capital.

Notes

  • Return of capital is not the same as capital gains distribution.
    • Capital gains distribution
      Money paid to shareholders by a mutual fund. It comes from sales by the fund of some of its underlying securities for more than their cost. The distributions you receive are a distribution of the capital gains from the fund. To record capital gains in Quicken, in the transaction list, click the Enter Transaction button and select Income.
  • Return of capital generally differs from a sale in that you're not the one who initiates the return of capital. For example, a mortgage-backed security (such as a Ginnie Mae) returns capital when the underlying mortgages pay off the principal, which is passed on to you.
  • Recording a return of capital lowers your cost basis.
    • Cost basis
      Cost basis equals the total cost to you of a security you purchased. It includes commissions, fees, and mutual fund loads. It also includes all purchases, even reinvestments of dividends and capital gains distributions. However, it excludes the cost of any shares you have sold or given away. Also, it is reduced in a return-of-capital transaction.
  • To ensure that the market value also declines with a return of capital, you must update the price of the security. This new price equals the current price times the factor (which is supplied in your statement).
    • Factor
      This is a percentage, expressed as a decimal value, used to calculate the current outstanding principal balance of a Ginnie Mae security. To calculate the current principal balance of a Ginnie Mae security, multiply the factor by the original face value of the security.

 

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