Investment anomalies?

[aga]

Extracted from mymoneyqifreader.cpp, and probably been there for many 
years, so I'm afraid you probably have to work around this.
Another alternative would be to open a wish-list item on Bugzilla. 
However, particularly at the moment, developer time is extremely scarce.
Perhaps someone with a particular interest and knowledge may happen 
along one day.
"
   */
 
/*************************************************************************
    *
    * These transactions deal with short positions and options, which are
    * not supported at all by KMyMoney.  They will be ignored for now.
    * There may be a way to hack around this, by creating a new security
    * "IBM_Short".
    *
 
*************************************************************************/"

On 19/01/16 21:04, Jeff Barlow wrote:
> On 01/19/2016 04:16 AM, aga wrote:
>> On 19/01/16 02:41, Jeff Barlow wrote:
>>> First let me concur that the category amount on a reinvested
>>> dividend should never be zero. If it was then there is no
>>> transaction to record. As Jack says it's exactly a dividend and a
>>> buy rolled into one. The dividend is income and must be accounted
>>> for as such.
>>
>> But some transactions involve no money, add or remove shares for
>> instance.
>
> It not really important if they involve "money" (cash flow) or not. The
> important question is whether they involve a net change in ones net
> worth. If a transaction changes ones net worth it may well constitute a
> taxable gain or loss. This must be tracked with some income category.
>>
>> The snag is that any dividend gets added into the transaction total,
>>  together with the share cost.  That dividend/category payment will
>> add to your total income, and really is a duplication as it will also
>> appear in the value of the involved shares.  At least that's how it
>> appears to my simple non-accountant's brain.
>
> I think you have the sign reversed on one of the values. They don't add
> they cancel (balance) each other.
>
Sorry, not me.  I had been checking a fix for a different problem and, I 
suspect I had been looking at a Sell and had added an interest category 
to it.  That does result in the total amount being the sum, but is not 
relevant to your use case.  With a Buy, however, the total does show as 
zero, which is what you indicated.

>> I don't see how the income can purchase shares and also appear as an
>> apparent dividend payment. Perhaps someone can put me right on this.
>
> The income is in fact what is used to purchase the shares. It's somewhat
> like a currency conversion.
>>
>>> I receive dividends from several mutual funds. Some are reinvested
>>> in shares of the same fund. Some are used to buy shares in a
>>> different fund from the same institution (The Vanguard Group). Some
>>> are paid as a cash transfer to my checking account (an ACH
>>> transfer). No broker is involved. There is no actual brokerage
>>> account. Vanguard does not allow cash accounts. Most of these
>>> transactions represent taxable income and need to categorized as
>>> such even though many involve no cash flow.
>>>
>> It's not unusual for 'virtual' accounts to be employed, sometimes to
>>  allow for delays between, say, a cheque being raised and the bank's
>>  clearing of it.  Superficially, from the KMM point of view,
>> everything is simple and straight forward, but the users are far more
>> creative than that.
>
> I don't see it quite that way. It's true that from the POV of KMM
> everything seems "simple and straightforward" I see that as rather
> naive. The problem is it fails to accurately model the rather more
> complex reality of these transactions. This forces us users to manually
> enter two or three KMM virtual transactions involving fictitious
> brokerage accounts in order to book what is really a single transaction.
>>
>>> The only way I've found to record all these transactions in KMM is
>>> to employ a fictional brokerage account within KMM. I have to
>>> record these single transactions as two separate transactions into
>>> and out of this fictional brokerage account.
>>>
>>> Since this fictional brokerage account does not indeed exist in the
>>> real world one would at least expect it to maintain a zero balance.
>>> Alas, due to KMM rounding errors that is not even true.
>>
>> Rounding errors in what parameter?  Presumably not in the monetary
>> side, as generally a fixed two decimal places is the norm, except in
>> a few(?) countries.
>
> Ah yes. If we were only dealing with monetary numbers there might not be
> an issue. Alas, my mutual funds operate with fractional shares that run
> to four decimal places.
>
> A reinvested dividend transaction (for example) that I download from
> Vanguard contains three important numbers: the dividend amount in
> dollars (two decimal places), the number of shares (four decimal
> places), and the share price (two decimal places). If KMM would just
> accept all three of those as is there wouldn't be a problem. Instead KMM
> insists on doing the math itself and comes up with a slightly different
> answer for one of the three.
>
> My understanding is that US banking and security regulations include
> some "interesting" rules for how rounding is to be done. I wouldn't be
> at all surprised to learn that other countries have slightly different
> rules. I don't claim to understand that.
>
> I'm left with a choice of inaccurate share balances, inaccurate dividend
> income amounts, or inaccurate share basis values. The only work around
> for this that I've found is to break up these transactions into two or
> three parts and carry these "balances" of plus or minus a few cents in
> these fictitious brokerage accounts in order to fudge the important
> numbers to match reality. This causes KMM's idea of my net worth to
> always be a bit off. I currently see no way around this.

This may also be worth a wish-list entry, and in fact, more so than the 
support of options.  If you do do that, it would be helpful to show an 
example of your case.

Allan