Mutual Funds and Realized Capital Gains question

[Frank Murphy]

--- Matthew Vanecek <mevanecek@yahoo.com> wrote:
> On Tue, 2002-09-17 at 11:20, Frank Murphy wrote:
> > 
> > About a month ago, I asked this question about
> > tracking Capital gains. I got no response. Is no one
> > here using GnuCash to track Mutual Funds?
> > 
> > Frank
> > 
> > --- Frank Murphy <fjm_maillists@yahoo.com> wrote:
> > > 
> > > In the US, Mutual Funds (or Unit Trusts in Britain)
> > > will pay out income once a year. This income is
> > > divided into Short- and Long-Term Capital Gains for
> > > US Federal tax purposes. How should I track this
> > > information?
> > > 
> > > I imagine that the income should be recorded under
> > > Income:Capital Gains:Short and :Long. Then, because
> > > it's reinvested, that income should be recorded as
> > > going into the Assets:Mutual Fund:foo account as a
> > > buy transaction.
> > > 
> > > Does this make sense? Will I be able to report these
> > > transactions properly come tax time? Anyone else do
> > > this kind of thing? Looking at the GnuCash manual,
> > > it seems to talk more about non-tradeable assets like
> > > paintings more than stocks or mutual funds.
> > > 
> > > Thanks for any tips on how you do this kind of
> > > thing.
> > > 
> > > Frank
> 
> I'm not an accountant, but technically you should have a "Realized
> Capital Gains" account and an "Unrealized Capital Gains" account,
> which would reflect change in the value of the asset.  Dividends, I
> believe, would count as investment income, and not as capital gains.

I'm more interested in how Realized Capital Gains are tracked. But it
would also be nice to know how my funds are performing now, that's
true.

> You may wish to invest in an accounting book, or talk to a CPA, about
> how to treat the dividend income.  Capital Gains are not taxed in the
> US until they are realized (i.e., you sell the asset).

I'm more interested in getting the GnuCash totals to add up to the
totals on my 1099 forms I get from the bank and brokerage, but doing it
the "right" way. So for that, the "Realized" account would be good.

To check the status of my mutual funds before having sold anything
would require the "Unrealized" account. I'll have to play with that to
see how it would work. (Just for moving transactions from Unrealized to
Realized when they're sold. Hmm.)

Thanks for your response.

I'll have to re-read the painting capital gains stuff again.

Frank

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