investment lots

[Chris Good]

> Date: Wed, 11 May 2016 19:39:51 -0500
> From: David Carlson <david.carlson.417 at gmail.com>
> To: gnucash-user at gnucash.org
> Subject: Re: investment lots
> Message-ID: <67514e2d-881e-460c-999d-32c8d8368fbb at gmail.com>
> Content-Type: text/plain; charset=windows-1252; format=flowed
>
> On 5/8/2016 6:03 AM, Chris Good wrote:
> > Hi all,
> > GnuCash 2.6.7 Windows 10
> > I see from [1]:
> > Gains are always calculated using FIFO cost basis
> > This agrees with what I see in the Advanced Portfolio Report after a
> > sale - cost basis and realized/unrealized gain were calculated using
> > the costs of the oldest stock acquisitions.
> >
> > A friend partially sold some stock and elected to sell those lots with
> > the highest cost, not the oldest. (Legal in Australia I think).
> >
> > This seems to mean if one partially sells an investment without
> > selling the oldest first, the Adv Port Rpt (cost basis and gains
> > figures) are now wrong for the residual stock going forward.
> >
> > Is there some way to do a transaction or some lot magic that would
> > allow me to adjust the cost of the sold stock to be from the lots
actually
> sold?
> >
> > I tried adding a dummy stock account transaction to decrease cost of
> > remaining stock:
> >   Shares 0, Price 0, Sell = Cost Adjustment
> > but this made Adv Port Rpt incorrectly overstate the Realized Gain by
> > the value of the Cost Adjustment
> > (and what should the other side of the double entry be?).
> >
> > I have heard about GnuCash 'lots' being used to keep track of which
> > stock lots are unsold.
> >
> > I searched the GnuCash xml data file for stock lots but couldn't find
> > any (I searched for the figures I would expect to find).
> >
> > When I go Actions, View Lots from the Stock account, there is nothing
> > in the 'Lots in this Account' or
> >   'Splits in lot' panes, and just info from the stock transactions
> > splits in the 'Splits free' pane.
> > Nothing to indicate how much of a particular 'lot' is unsold.
> >
> > The signs of the (cost) values in the 'Splits free' pane do not seem
> > to be what I would expect:
> > the opening balance cost value is +ve, DRP's are -ve, and a sale is +ve.
> >
> > Am I perhaps going into the View Lots screen incorrectly?
> >
> > Are the stock lots perhaps only calculated by the report and not
> > persisted to the saved xml file?
> >
> > I know the report has 'Basis calculation method' options Average, FIFO
> > or LIFO but none of these match the correct cost.
> >
> > If anyone can shed some light on this I'd really appreciate it.
> >
> > [1]
> >
https://lists.gnucash.org/pipermail/gnucash-user/2010-February/033668.html
> >
> > Regards,
> > Chris Good
> >

> I think that you should update to GnuCash 2.6.12 then try an experiment on
a
> test data file.  Turn on "Use Lots" preference for that test file, which I

> do not
> remember the exact location for, since I do not use it.
>
> I did test it once and the Scrub Accounts function seemed to allow
selecting
> arbitrary lots for sale transactions, but there was some reason that I did

> not
> decide to do it on my real data.  I do not recall now why I did not like
it 
> but it
> may have not worked very well for me because I track commissions
> separately.
>
> Perhaps others can help you more.
>
> David C
>

Hi David,

Thanks for your suggestion.

I have upgraded to 2.6.12 but cannot find any 'Use Lots' option in 
Preferences, Properties, Adv Port Rpt options,
the guide or the help documentation?

(Note what follows is what I believe is true from my investigations - I'm
happy
 to be corrected).

I have figured out how to use the Actions, View Lots, "Lots in Account"
window 
to sell specific acquisitions in order to calculate the gain/loss based on
the cost
of the actual lots sold, not just take the default model of selling the
oldest 
stock first (FIFO). This seems to work pretty well, with the correct
gain/loss 
calculated.
(I'll document this in the guide later once I'm more certain of what we
should 
be telling people - I don't want to show how to use a feature that will only

cause problems).

Note that stock lots are either manually created in the "Lots in Account" 
Window or created by Scrub'ing using the "Lots in Account" window.
This is why I couldn't see any lots previously as I hadn't scrub'ed then.

However, even though it seems GnuCash now knows:
  which lots were sold (and their gain/loss),
  the number of shares remaining in each lot
 and created corresponding gain/loss transactions, 
the Advanced Portfolio Report still calculates the ongoing cost basis and
gains
based on the 'Basis calculation method' report option (Average, FIFO or
LIFO).
I.e. it does not use any of the lot information, just the stock splits.

Given that the report doesn't use any of the lot info, it is pointless
entering
It, unless you always sell LIFO.
i.e.
If you always sell FIFO, you can use the Scrub account option to scrub the 
oldest stock, and use the FIFO option to report. You only really need to 
scrub if you want GnuCash to create the gain/loss transaction for you.

If you always sell LIFO, create lots for the oldest stock and scrub them and
the report should be correct when you use the LIFO option.

If you use Average, if you scrub, the gain will be calculated using the FIFO
Cost, but the report will use average cost. So do not scrub, manually 
calculate and create the gain/loss transactions.

Hopefully some nice person will sometime modify the Advanced Portfolio 
Report to use the lot info if found, and then use the report option
(FIFO, LIFO or Average) for calculating costs of stock not in lots.

I'll have a look at doing this myself, but so far, 'scheme' is beyond me.

Regards,
Chris Good
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