How do I track the tax implications of a bond sale or maturation?


Use a negative return of capital to cancel out the sale proceeds of any tax free bonds (so there’s no overall realized gain).

Entering a negative amount in the Return of Capital dialog, raises the cost basis and decreases the cash balance in your account.

A return of capital is money paid to you as total or partial repayment of the money you invested. Return of capital differs from a sale because 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 principal, which is passed on to you.

  • Ginnie Mae - A mortgage-based investment, issued and guaranteed by the Government National Mortgage Association (GNMA, hence the name). As homeowners with government-insured mortgages make monthly payments, their lending institutions deduct a service charge and forward the remaining principal and interest to Ginnie Mae investment owners. GNMA guarantees timely payments to investors, even if homeowners fall behind in their mortgages.

1. Open the account you want to use.

2. Click Enter Transactions.

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

4. In the Security name field, select the bond.

5. Enter the amount as a negative number. 

Notes

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 multiplied by the factor (which is supplied in your statement).

A return of capital can be downloaded into Quicken from your financial institution, but note you may need to adjust the downloaded transaction to correctly reflect a negative return status.

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