Tracking realized gains/losses with mutual funds

[Errol Siegel]

> Message: 12
> Subject: Re: Tracking realized gains/losses with
> mutual funds
> From: Matthew Vanecek <mevanecek@yahoo.com>
> To: David Hampton <hampton@employees.org>
> Cc: errol@bitterkitten.com,
> gnucash-user@lists.gnucash.org
> Organization: 
> Date: 09 Dec 2002 18:51:03 -0600
> 
> 
> --=-1p0R9D54Q6fzzpWogmAE
> Content-Type: text/plain
> Content-Transfer-Encoding: quoted-printable
> 
> I must have misunderstood.  I didn't realize you
> were selling shares--I
> thought you were trading one fund for another.
> 
> You would still need a realized loss/gain account as
> a separate account.
> 
> This is what I would do.  I've changed the
> debit/credit labels, because
> in some places Gnucash has them backwards and that
> confuses me (I'm
> strictly left/right column, really...).  I think
> "Loss" would be an
> Expense account.
> 
> Anyhow, try this scenario and see if the reports
> balance.  They should.=20
> You can always delete the account/trans if you want.
> 
> Transaction #2 - sell 5 shares of MF @ $3
>       shares  price   decrease  increase 
> share-balance
> MF    5      3        15                  25
> cash                            15
> Loss                            10
> 
> And what Dave said below.  He's been putting in a
> *bunch* of work, and
> if the above doesn't get you fixed up, I'm sure his
> future efforts will.
> :) (butter butter...).

I initially DID talk about trading shares, but I
simplified the example to make it easier to discuss. 
In reality, trading shares is two separate
transactions - selling shares of one fund for cash
which is deposited into a core account and then used
to purchase shares of another fund.

Anyhow, you are on the mark with your suggestion
EXCEPT for the fact that your sample transaction does
not balance.  You debited the loss expense account,
but do not show a balancing credit.

The best workaround I've been able to come up with
today is to fudge the selling price of the shares. 
This maintains the correct share balance in the
account, but inflates the credit side of the
transaction to balance the debit to loss expense.  I
would enter the transaction as though I sold the
shares for the original $5/share instead of the actual
$3/share.  It looks like this:

Transaction #2 - sell 5 shares of MF @ $3
     shares  price   credit  debit share-balance
MF    5       5        25           25
cash                          15
Loss                          10

Kind of wonky to manually calculate the loss/gain
(especially considering that in reality it will never
be this simple), but for the moment it seems to work. 
Of course, I have to figure out what impact this will
have on other calculations.  For example, I haven't
yet looked at what this does to the built-in
calculation for unrealized gain/loss.

I welcome any additional input anybody may have on
this topic.  It seems like an area that could use
attention.  I'd gladly enter a feature request, but
first I want to be more certain that I understand how
this is supposed to work (and make sure I'm not
missing a better way to do this).

I know this post is already quite long, but I'd like
to add my 2 cents on the ongoing flame war.  First of
all, I think gnucash is a very impressive package and 
both the quality and responsiveness of support I've
received on this list (as well as the irc channel)
exceeds that of many very expensive commercial
packages I use on a daily basis at my company (I won't
name names).  I might add that these expensive
packages also require hefty yearly maintenance fees to
get any kind of support at all.

However, that still misses the point: this (and any
software developed in this manner) is not for people
like Mr. Larsen.  I use linux, gnucash, gimp, etc. for
the simple reason that it's satisfying to be
adventurous and go against the grain.  It's cool to be
involved with something growing up out of the desire
to create something new and different.  Everybody has
the option to stick with the tried-and-true if that's
what they want to do.  I personally have more fun
going the other way.  Along the way I've found some
great apps that outperform their commercial
counterparts.  It seems that gnucash is well on its
way to doing this also.  Ok, enough of this novel...

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