Stock trades and realized gains/losses

[Matthew Vanecek]

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Sorry, I was gone all weekend and could not contribute earlier.  Friend
had a baby...

On Sat, 2003-01-11 at 10:29, Derek Atkins wrote:
> linas@linas.org (Linas Vepstas) writes:
>=20
> > > You started to give an example with Enron, but you never finished it.
> > > Could you, please?  To me, the fact that Enron stock went from
> > > $100/share to $1/share does not change the basis of your stock
> >=20
> > It doesn't change the cost basis, but it is needed when preparing
> > a formal balance sheet for a business.  You don't want to cavalerly
> > say 'gee, todays price for enron is x', you want to say 'we have=20
> > adjusted the book value of our enron holdings to reflect the reality
> > of the marketplace, and this adjustment is shown in the 'unrealized
> > losses' line'.
>=20

YES YES YES!!!! That's what I was referring to with the adjusting
transactions, and putting a Split into the unrealized gains account.  I
think there are situations where you may be able to apply it to taxes,
but US tax law is quite a PITA, and there's no way I'd swear to it.


> So what you are saying is that if you ever DO realize the loss, you
> have to recapture that gain/loss and, in effect, "re-point" all those
> "unrealized loss" transactions to your realized-loss account...
> Meaning you need to know whether an "adjustment transaction" is for
> realized or unrealized gains/losses....  How, "special".
>=20
> Obviously you cannot just change the account of the un-realized
> gains/losses, right?  So, you would need to add a new txn from
> unrealizedGL to realizedGL.  That's what I mean by "special".
>=20

This is true.  All must balance, and worship the god of 0.  This
transaction, however, is quite simple to create, and doesn't require
anything (that I can think of) from the development staff.  I could
actually post an example double-entry, tomorrow, if anyone's
interested...

> > The formality of creating an auditable transaction like this has
> > some real reporting advantages.  Especially if we had some juicy
> > profits because enron later went up ;->  Ahh, yes, accounting ....
>=20
> Sigh.  Can I go shoot someone now?

I think the double balance thing may work OK.  Would the stock register
have to be able to accept entries with 0 shares but non-0 buy/sell
amounts to make that work?  I would think so, but if there's a better
way...

That was a great summary from Linas.  Could there be a check for=20

--=20
Matthew Vanecek
perl -e 'print $i=3Dpack(c5,(41*2),sqrt(7056),(unpack(c,H)-2),oct(115),10);'
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*****
For 93 million miles, there is nothing between the sun and my shadow except=
 me.
I'm always getting in the way of something...

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