simple howto for selling stocks

Charles Day cedayiv at gmail.com
Tue May 13 14:42:47 EDT 2008


On Tue, May 13, 2008 at 10:34 AM, Callum E Murdoch <cem22b at gmail.com> wrote:

> Hi Charles,
> Sorry for delay in reply i'm in a remote location in Africa and comms
> have been down for days.
> Anyway I guess i'm still missing somthing here i dont see how my
> accounts wont balance since the original entry in gnucash i did manually
> using Equity:Opening balance shares. Whats the difference of entering
> the proceeds of the sale into my Bestinvest broker account and then the
> new funds being purchased out of this account using all the cash.
>  i have done this
> Step 1 under fund A sold all units for 1000 which is entered as a
> transfer to Bestinvest account.
> Step 2 In bestInvest set up new sub account Fund C, which is purchased
> using the 1000 from the sale of Fund A
>
> Using this method is very straight forward am i missing somthing ?
>

Assuming that you bought those units of Fund A for less than 1000, then you
have a capital gain from the sale, which constitutes income. The simple
transfer you suggest in Step 1 doesn't capture this and will throw your
books out of balance. Quicken hid this complication from you.

Please read sections 2.2 and 2.3 of this tutorial. The examples are in terms
of foreign currency, but apply equally to stocks or investment funds:
http://www.mathstat.dal.ca/~selinger/accounting/tutorial.html#1.

Cheers,
Charles


> regards
> Callum
>
> On Sat, 2008-05-10 at 22:48 -0700, Charles Day wrote:
> > On Sat, May 10, 2008 at 2:03 PM, Callum Murdoch <cem22b at gmail.com>
> > wrote:
> >         Hi,
> >         I guess i did'nt explain properly, I have an ISA with 4
> >         seperate fund
> >         holdings within it. I am transfering several of them to
> >         different funds.
> >         This is handled by the broker (Co-funds) by selling the ones i
> >         want to get
> >         rid of and buying the new funds i have chosen with the
> >         proceeds. This all
> >         under one account. These are also tax free investments.my
> >         structure is as
> >         follows
> >         Bestinvest (broker account)
> >         --Fund A
> >         -- Fund B
> >         -- Fund C
> >
> >         selling B & C and buying D & E  all under Bestinvest.
> >
> >
> >
> > I would do this as:
> > 1. Sell B using the method described in the documentation.
> > 2. Sell C using the method described in the documentation.
> > 3. Buy D using the method described in the documentation.
> > 4. Buy E using the method described in the documentation.
> >
> > Except for the need to manually account for the capital gains, this is
> > the same as you would do in Quicken. Your broker should provide you
> > with the basis and capital gains figures.
> >
> > Since you've said that the capital gains income is not taxable, I'd
> > recommend creating a specific income account for this, named something
> > like "Income:Tax-Free Capital Gains".
> >
> > -Charles
> >
> >
> >
> >         On Sat, May 10, 2008 at 9:30 PM, Derek Atkins
> >         <warlord at mit.edu> wrote:
> >
> >         > Hi,
> >         >
> >         > Quoting corkscrew60 <cem22b at gmail.com>:
> >         >
> >         > I am a new user to gnucash i have swapped over from quicken.
> >         On the whole i
> >         >> like it better except for selling stock. I just cant get my
> >         head round the
> >         >> instructions given in the help file. Does anyone know of a
> >         simple howto
> >         >> giving a step by step on how to do this.
> >         >> I have an investment account set up with a number of funds
> >         within it. I
> >         >> have
> >         >> sold a complete subset and bought another all under the
> >         same investment
> >         >> account. The instructions in the help file mentioning
> >         setting up a capital
> >         >> gains account I dont see why i need this when the money
> >         from the sale
> >         >> satys
> >         >> within the investment account to make the new purchase of
> >         the different
> >         >> funds
> >         >>
> >         >
> >         > Are you buying the same funds/stocks from the other broker?
> >          Or are
> >         > you selling FundA and buying FundB?  In the latter case then
> >         yes,
> >         > this IS a capital gain and you should account for it.  The
> >         basis of
> >         > FundB will be the ending value of FundA, but you still have
> >         a capital
> >         > gain on FundA from when you purchased it to when you sold
> >         it.
> >         >
> >         > See for example
> >         http://cvs.gnucash.org/docs/guide/capgain_example1.html
> >         >
> >         > Please remember to CC this list on all your replies.
> >         >> You can do this by using Reply-To-List or Reply-All.
> >         >>
> >         >
> >         > -derek
> >         >
> >         > --
> >         >      Derek Atkins, SB '93 MIT EE, SM '95 MIT Media
> >         Laboratory
> >         >      Member, MIT Student Information Processing Board
> >          (SIPB)
> >         >      URL: http://web.mit.edu/warlord/    PP-ASEL-IA
> >         N1NWH
> >         >      warlord at MIT.EDU                        PGP key
> >         available
> >         >
> >         >
> >         _______________________________________________
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> >         -----
> >         Please remember to CC this list on all your replies.
> >         You can do this by using Reply-To-List or Reply-All.
> >
> >
>
>


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