Capital gains

[Jean-David Beyer]

Eric Angell wrote:
> On Tue, Jan 24, 2006 at  6:41:23 -0500, Jean-David Beyer wrote:
> 
>> Derek Atkins replied (in part)
>>
>>> Yes, you could do this manually for now.  An "Income:Capital Gains"
>>> account would probably be best. 
> 
> Yes, I found that thread and I'm trying to understand how to use
> said I:CapGain account.
> 
>> And the sell transaction looks like this (liberties taken to fit columns):
>>
>> 2006-01-04 Sell                                            -1.00
>>                        Assets:Investments:Ameritrade:Margin          2989.00
>>            Commission  Expenses:Investment Expenses:Ameritrade Margin   8.00
>>       Sell             Assets:Inv:Amer. Marg:Berks Hatha   -1.00  1487.12
>>                        Income:Capital Gains:Ameritrade Margin        1509.88
> 
> I'm afraid I don't quite follow all of those splits - let's do
> some abbreviation and realignment; is this correct?
> 
This is in A:I:AmM:BHB account that originally held 5 shares
> A:Inv:AmMargin                              $2989.00
> E:InvExp:AmMargin                              $8.00
> A:Inv:AmMargin:BRKb    -1.00      $1487.12            $1487.12 <---<<<
> I:CapGain:AmMargin                                    $1509.88
> 
> But doesn't that say that you sold one share of BRKb for
> $1487.12?  Wasn't the price actually $2997?  It seems
> disingenuous to misrepresent the sale price in that fashion.

The selling price was $1487.12 (return of capital) _plus_ 1509.88 (capital
gain) for the total selling price of $2997 (from which $8.00 commission was
charged into the appropriate expense account). The line indicated by the
<---<<< was automatically generated by GnuCash and I saw no reason to tamper
with it. In fact, were I to raise the dollar amount in that line, I am a
little afraid that GnuCash would arrange to sell 2 and a fraction shares and
then my share balance would be wrong. The number here was, in fact, the
price paid when purchasing the original shares. I had to add the capital
gains manually because I did not want to upgrade my version of GnuCash (in
part because it was so traumatic to get Gnucash to work under Red Hat
Enterprise Linux 3 that I am a little afraid to touch it).

In my (real) example, the debits add up to the selling price; the credits
add up to the selling price. You want it that way.
> 
> My previous proposal applied to this transaction would look like
> the following:
> 
> A:Inv:AmMargin                              $2989.00
> E:InvExp:AmMargin                              $8.00
> A:Inv:AmMargin:BRKb    -1.00      $2997.00            $2997.00
> I:CapGain:AmMargin                                    $1509.88
> A:Inv:AmMargin:BRKb     0.00         $0.00  $1509.88

In your example, the debits add up to much more than the selling price, and
the credits add up to much more than the selling price. To what reality in
your example does the number $4506.88 correspond?
> 
> At least in this case, the sale price of the asset is clearly
> indicated, even though it requires an additional disingenuous
> split to make it balance.  I don't really like either way.
> 
> Derek, when you suggested using I:CapGains, how did you imagine
> the split fitting into the sell transaction?

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