Problem creating a "Currency" account.

[Mike or Penny Novack]

>I think Charles made a strong argument that these accounts should be 
>income after all. If we use commodity accounts like Commodity:USD and 
>Commodity:Gold and the parent account "Commodity" is of type income, 
>then capital gains and loses due to changes in the price of gold will be 
>coming from an income account, which makes a lot of sense.
>
>Daniel.
>  
>
We're dealing with "Accounting 101" type questions here, not GnuCash 
questions.

a) Income and Expense type accounts are temporary accounts. Their actual 
fundamental type is equity (at the end of the accounting period they are 
closed to one side or the other of the equity ledger at the close of the 
accounting period). The reason for keeping these temporary accounts open 
during the accounting period is to make analysis of business operations 
easier, and net gain/loss is of particular interest.

b) Income doesn't come FROM an account of type "income". 

c) If paid "in kind" instead of in legal currency, the accounting/tax 
laws of your jurisdiction will determine how that it to be reported. 
There are some significant exceptions (where what you receieved might 
not even be considered income of any sort -- though the fact that you 
got these "precs" might be a major factor in your accepting the job -- 
this is neither the time nor place to discuss these exceptions beyond 
pointing out that generally they are "percs" you are REQUIRED to use and 
which are of significant benefit to your employer*). But in general what 
you receive gets recorded as IF you had received legal tender in the 
amount of the "fair market value" of the goods,r commodity, or services. 
In the case of an asset like gold, sort of as if you had been paid in 
money (income) and then immediately went out and bought gold with that 
(asset). Obviously had you been paid with a side of beef, you wouldn't 
hold that as an asset.

    So with the orinal example (whether that was gold or a stock) you 
record the legally specified value as income and the same amount as the 
basis price of the asset. When you later dispose of the asset, you might 
get more or less for it than this basis and THAT would get recorded as a 
capital gain (long or short term depending on the rules for that asset 
class).

Michael

* Like the "rent free" apartment occupied by the building superintendent 
who is required to not only be on site during working hours but to also 
be available for tennants to knock on his door in the middle of the 
night. Depending on tax laws the value of that free apartment might or 
might not be considered taxable income.