By: Stephen L. Nelson
Money displays several other investment activities when you open the Activity list box. Most of these other activities, or transaction types, don't come into play in the case of a mutual fund. Because some mutual funds generate unusual transactions, however, each of the other investment activities listed are briefly described.
Using Other Income
The Other Income investment activity lets you record income that is not interest income, not dividend income, and not any form of capital gain. In general, you don't need to worry about determining whether some income amount recorded on a mu- tual fund statement is other income. The mutual fund statement should show you plainly and clearly that this is the case.
Using Other Expense
The Other Expense activity lets you record expenses for a mutual fund investment that need to be used for calculating your taxable income. In some cases, for example, a mutual fund may produce expenses that you will want to know about and track for your tax return. If a mutual fund is a taxable investment, and it is investing in shares of foreign companies, the mutual fund company may pay foreign income taxes. Foreign income taxes may be recorded on your tax return as a credit.
Using Return of Capital
Return of capital transactions occurs when a mutual fund company returns part of the sales price you paid earlier. This sounds funny, but it occurs automatically in several types of mutual funds. For example, if you buy shares in a mutual fund that invests in amortizing bond amortizing bonds are those in which the borrower automatically pays some of the principal back to the lender the mutual fund company returns the principal payments to the mutual fund shareholders. This is a return of capital transaction. In general, however, the Return Of Capital activity is something you don't need to worry about. If a mutual fund transaction includes a return of capital, the mutual fund statement will clearly identify this case.
Using Add Shares and Remove Shares
The Add Shares investment activity lets you add shares to an investment account without affecting a transfer account. You use this investment activity only if you set up a new mutual fund account and don't describe your past purchases as part of the new account setup.
The Remove Shares investment activity lets you remove shares from an investment account without affecting other accounts, such as the Transfer To account. You typically don't use this investment activity to record current share sale or purchase activity.
Using Sale Short and Cover Short
The Sale Short investment activity don't apply to the case of mutual fund transactions, unless for some reason you were shorting shares of mutual funds. The Cover Short investment activity lets you describe the option of covering a short position you have created by previously selling short shares.
Using Transfer In and Transfer Out
The Transfer In investment activity lets you move money into the cash account associated with an investment account. Typically, mutual fund investment accounts don't have an associated cash account. Associated cash accounts come into play in the case of brokerage accounts in which you are buying and selling securities and then moving the money into or out of a cash, or holding, account.
The Transfer Out investment activity lets you move money out of an associated cash account. Again, predictably, mutual fund investment accounts don't need associated cash accounts, so this wouldn't apply to mutual fund record keeping.
Using Transfer In Short and Transfer Out Short
The Transfer In Short investment activity relates to short sale transactionsī typically for regular brokerage investment accounts. This investment activity usually don't come into play for mutual fund investment accounts. The Transfer Out Short investment activity, predictably, relates to the case in which you are moving money out of an associate cash account as part of the short sale trans- action. Again, it don't come into play in the case of a mutual fund investment account.
