Fixed Income Again

Dawning Sky at
Tue May 1 13:45:36 EDT 2007

On 5/1/07, John K. Taber <jktaber at> wrote:
> It was suggested that I use "asset" as TYPE for Treasury notes. I tried
> "asset" but I was not able to change present value with the Price
> Editor!
> I'm going to repeat myself: GnuCash really needs more fixed income work
> done on it. The fact that I'm not a bond trader has nothing to do with
> it.
> Here is the situation: I buy Treasury notes from Treasury Direct, an
> unadvertised office of the US Treasury. I recommend Treasury Direct,
> btw, for no-cost purchase of Treasuries.
> My purchase is actually a non-competitive tender in Treasury lingo. The
> practical effect is that Treasury sets the interest rate for me as the
> average of the competitive bids.
> Thus,  the price I pay is a premium or discount to par, usually a
> discount. For example, if I buy 10,000 USD worth at auction, I may
> actually pay 9,994. But the note is worth 10,000 at maturity, and since
> I hold to maturity I want to carry it on my books at 10,000 because
> Treasury does. It's nice if my books agree with Treasury's statements!
> IOW, I need to show the 6 USD refunded to me, and the value of the note
> to agree with Treasury's statement. The Price Editor lets me change the
> price but it does not show in the Accounts, or anyplace else for that
> matter. I suppose the change will show once sold as realized gain?!?!
> It is NOT realized gain! It is accrued interest, or so I understand, and
> is taxable as accrued interest, not capital gain.
> As a stopgap I am listing Treasuries as type "stock." I give them the
> last 3 characters of the CUSIP for ticker symbol, for shares I divide
> the total by 100. For purchase price I use the price listed by
> Treasury's Auction Results.
> Then I update the price to 100/share.
> It works, but it's just plain ugly seeing "stock" for "note".
> GnuCash should allow for premiums and discounts against par, and for
> type bond and note.
> John

Excuse my straightforwardness, I don't get what you're complaining about.

I hold Treasury Bills too.  Through Treasury Direct too.  I find no
difficulty in tracking them in GnuCash.

Here's what I do.

Establish an account under Asset, say named Treasury Direct.  Whenever
you buy a note, bill, bond, whatever, transfer the amount you actually
pay from whatever the funding account is, in my case, a savings
account I have in another bank.  The split looks like this

Asset:Treasury Direct               9950.00
Asset:Savings                                                 9950.00

At maturity, the transaction looks like this:

Asset:Savings                      10000.00
Asset:Treasury Direct                                     9950.00
Income:Interst:Treasury                                      50.00

And this is exactly what happened in the reality.  Treasury and IRS
doesn't treat your income from T-Bills as Capital Gain.  It's an
interest.  And what Treasury Direct tells you on how much you have in
their account doesn't matter until reaching maturity.  You T-Bills
don't worth $10000 until they reach maturity.


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