Stocks & Capital Gains

[Mark Johnson]

I've been puzzled by a few questions regarding using gnucash to track 
stock investments.

The help file shows how to track the purchase, sale, and value of 
stocks.  When recording the sale of the stock, one has to include an 
amount from Income:Capital Gains representing the profit on the sale.  
In order to know this amount, I need to track the cost of the shares.  
For stocks, Gnucash seems to track the cost and unrealized gains 
internally so that one does not need an account hierarchy like that 
shown in the help file for the Degas painting.

How do I use gnucash to determine (possibly years and many individual 
purchases later) what my cost was for the stock?

If I make a subaccount called cost, and use it in the purchase of the 
stock, it shows a negative value.  Is this reasonable?

The cash shows as still being in the parent investment account.  In 
fact, the amount of cash in just the parent investment account would 
show the total cost of all stocks and cash in the account.  This does 
not seem right, as I need to track the amount of actual cash in the 
investment account, too.

In Canada, the commision to buy and sell the stock is added to the 
"adjusted cost base".  So I don't wish to show commisions as simply an 
expense account.  Should I record it as an expense and then record 
another transaction from Income:capital gains to reduce the gains by the 
amount of the commision?  This would certainly work for the sell 
commision.  I would need a way to track the buy commision as part of the 
cost of the stock without altering the price per share.

How does one handle consolidations and splits of the number of shares of 
stock?  We have a number of exchange traded funds in Canada which do odd 
things with their capital gains.  So that the fund is not liable for 
capital gains taxes, they distribute their capital gains to the share 
holders.  The shareholders then pay the capital gains (and the amount of 
the gain is added to the "adjusted cost base" of the shares due to the 
following).  The distributed capital gains are reinvested in shares of 
the fund.  Immediately, a consolidation is done so that the ending 
number of shares is identical to the number of shares prior to the 
capital gains distribution.  The price of the shares and number 
consolidated is not known, only the amount of the capital gains 
distribution.  (I have previously recorded these in Quicken using 
arbitrary numbers of shares since the important part is how this affects 
my cost of the shares, rather than the exact number of shares.)  This 
produces odd numbers in a consolidation, such as 101 shares consolidated 
into 100. 

Clearly, it is important (and nontrivial) to track the cost of these 
shares for tax purposes.  (I note that Quicken and my brokerage do not 
agree on the cost basis of these shares in my RSP.  For nonregistered 
accounts, the broker does not calculate the cost basis, and I must do it 
myself.)

Mark