Cash Flow

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:

  • mergers
  • acquisitions
  • spin-offs
  • 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

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