How can a managed fund negative cash balance be fixed when CGT Concession distributed?

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My managed fund distributes capital gains and capital gains concessions which are then included as part of the re-investment in new units. I though these should use the Fund/Trust reinvestment category. It correctly calculates the re-investment values and the number/value of units purchased, but the cash balance in the fund (which should end up as zero) ends up negative by the amount entered in the Fund/Trust category. How do I get around this bug?

I have tried setting up a liability account (as has been suggested previously) and making a balance adjustment against the Managed Fund account, but it doesn't change the cash balance.
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Paul Blake

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Posted 3 years ago

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gavin.nicholson.au

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If I understand your problem correctly it is a known bug (which Reckon don't care to fix) but you can solve it by doing two entries. Record an income transaction which will result in the balance increasing. Then do a BUY for the units and use the cash in your investment account. 
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Paul Blake

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Thanks. After spending hours and hours with every other possible combination (thinking it was something I was doing wrong) I was just about to head down that path. Here goes!
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Paul Blake

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Mmmm. How do I enter an income transaction directly into the cash balance? Reckon keeps telling me that I need to allocate a transfer account.  If I use the Managed Fund account itself, it accepts the transaction but doesn't increase the cash balance. If I try entering an income transaction via the Multiple Income/Expense option, Reckon crashes if I don't specify a transfer account.
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gavin.nicholson.au

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RECORD AN INCOME EVENT. That is what I use and no transfer account needs to be specified. If yours insists then select the account you are working in.
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Paul Blake

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I tried entering something simple (an interest amount) using Record Income Transaction.
First I tried every category without a transfer account. It generated the error: "Transfer account required for Managed Fund" every time.
I then used the Managed Fund account as the transfer account. It accepted the transaction, but did not change the fund cash balance. It did generate a transaction against _IntInc, but appears to have done nothing else. It did not change the total Managed Fund account balance, nor its cash balance.
Any suggestions would be appreciated!
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gavin.nicholson.au

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Firstly I assume your "Managed Fund account" is an INVESTING account. If so do you see the following dialog box when you go to record and income event? If not, then there is something else wrong. (Note that account name "Australian Shares" is the name of my investing account so yours should be whatever your account name is. I am assuming "Managed Fund")

 
(Edited)
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Paul Blake

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Yes, it's an investment account. Mine is a Fund/Trust. Yours is Stock? Not sure if that's significant. 

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Paul Blake

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More fiddling after looking at your screen shot!

I changed the Investment account from Single Managed Fund:Yes to Single Managed Fund:No.
The transaction entry is identical except for having to enter a Security (whereas before it defaulted to the single Security). Now however the "Transfer account required for Managed Fund" error does not occur, and the cash balance updates!

Possibly another bug with a Single Managed Fund? Anyway, looking a bit more hopeful now. Thanks! 
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gavin.nicholson.au

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Glad it worked out. Yes I don't have an account per fund. I group mine by type but you should not be having that problem. I am glad you were able to sort it out via the good ol' Reckon workaround!
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gavin.nicholson.au

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Actually I just tried to create another account to see the way you set it up and the fine print under single managed fund is "A single fund or trust that has no cash balance" so it might be working as it is supposed to by not allowing you to transfer cash into it but you have to do that to get it to work correctly due to the bug in the reinvest option. So you will need to have them all set up as multiple fund or stock accounts.
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Paul Blake

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Thanks. I really appreciated your help. I certainly didn't read that fine print! Multiple works fine so all should be ok. Shame the bug is taking so long to fix.
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John Campbell

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I would not call this a bug. It is more related to Reckon assuming the type of account or product selected can not receive a cash distribution.

Before reading this thread, I was not aware that so many different types of investment products were provided in Reckon. After reading, I wonder how useful they are, as a more general investment account can probably support most securities. It is not unusual for providers of these specialist funds to change the rules !

I have an aversion to securities that provide unusual or capital or non-taxable returns, as when it is time to sell, it is a nightmare to resolve the capital base for capital gains calculations, assuming you did make a profit. The extra fees the tax accountant will charge probably erodes any capital gains that occurred !

John

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Paul Blake

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I agree. Unusual distributions can cause problems with the standard Reckon transaction types and be confusing to enter. Return of Capital will however change the cost base without altering the cash balance, so it should assist when selling. I've used these for tax deferred distributions. I've found (after the above discussion) that by using the Multiple Income/Expense entry type and specifying my own categories, the standard _xxx Reckon categories can be easily bypassed (hence avoiding additional journal adjustments later). You do have to understand a lot of taxation stuff however do get all the transactions correct.