I use Microsoft Money to track our investment portfolios. For the most part, it works really well but there is a quirk to be aware of (One reader pointed it out in a comment to this earlier post).

The quirk shows up when generating capital gains or losses reports for portfolios denominated in US dollars. For instance, a few years back, I purchased Millenium Pharmaceuticals (MLNM) for $20.18 and sold it at $10.05 (pretty dumb, I know). You would think that my loss is $10.13 but Money reports that it is actually $18.43 (all US dollars). In one way it does make sense, because Money converts the buy and sell transactions to Canadian dollars using the prevailing exchange rate. But the reporting makes it very confusing. Either Money should report the gains in US$ (and use C$ for generating return reports) or it should report it in C$ using the exchange rate on the buy and sell dates.

This article has 6 comments

  1. I reported this quirk. How do you plan on getting around this “limitation”? It is really frustrating as I do a majority of my trading in USD$.

    On a side note, I was recently reading the Globe And Mail, and there is an article comparing online brokers and it looks like E*Trade will be offering $9.99 trading to accounts with assets >50k. Hopefully TD and the other major players will follow suit.

  2. Canadian Capitalist

    Hersh: It is not really a limitation for me as most of my USD holdings are within our RRSPs and the gains/losses reported in C$ are accurate. I guess you’d have to use Excel spreadsheets to keep track of gains/losses in USD.

    Thanks for the heads up. Wow! $9.99 trades is very tempting.

  3. It is really confusing. I bought 8000 USD worth of Bank of America and sold it for 10000 USD. You would think that’s a 2000 USD profit but it isn’t. It would end up being an only 200 USD profit since the Canadian dollar was under 70 cents when I bought the stock. But it doesn’t end there. I’ve seen a website that says you would subtract the 2000 USD (= 2200 CDN approx.) to factor in the exchange rate gain/loss. USING THIS I WOULD END UP WITH A $2000 CDN LOSS! Check out the site. There is a chart with examples. I usually use the results in Column H, but according to the site, you have to go one step further.
    http://www.taxtips.ca/personal_income_tax.htm#InterestExpense
    here is a quote
    ” The adjusted cost base of the foreign shares must be calculated in Canadian dollars. If foreign funds were used to purchase the shares, the exchange rate on the date of the purchase (trading date, not settlement date) is used to convert to Canadian dollars.

    When shares in the foreign corporation are sold, the proceeds are converted to Canadian dollars using the exchange rate on the date of the sale ( trading date). Part of the capital gain or loss will be gain or loss on foreign exchange.”

  4. Canadian Capitalist

    John: I am not sure how you arrive at the $2000 (CAD) loss. Here is my calculation:

    Proceeds = $10,000 USD or $11,494 CAD (1CAD = 0.87 USD)
    Cost = $8,000 USD or $11,428 CAD (1CAD = 0.70 USD)

    Your gain: $66 CAD

    That is exactly what the taxtips.ca website says. How did you get the $2,000 CAD loss?

  5. Pingback: Investing WebLog » Blog Archive » United States dollar: Information from Answers.com

  6. Pingback: Portfolio Performance Analysis