Both the Receipt/Transfer and Credit/Debit transactions move securities into and out of an account. Why do you need both and when should you use a credit versus a receipt and/or a debit verses a transfer?
The key is understanding how the two transaction types affect performance. In that respect, they are very different.
What’s the difference?
Receipt/Transfer transactions are counted as capital flows. For performance purposes, they function like a cash deposit/withdrawal.
Credits/Debits are NOT counted as capital flows. For performance purposes, they function like a journal or a gain/loss.
Use Credits/Debits for movement of securities that should not create a capital flow:
- tax-free exchanges
- cost basis resets
Use Receipts/Transfers for movement of securities that should create a capital flow:
- shares transferred to/from another account and/or another broker
- shares moved from one account type to another (eg from an IRA to a Roth)
- opening/closing a brand new account
- charitable gifting
- cost basis step-up after a death
- splitting assets after a divorce
- adding a new positions to an existing account