Scrub Lots and Capital Gains

[David T.]

Thanks for the quick reply. I certainly understand the conundrum. 


Since the commissions presumably are coming out of the Expenses hierarchy, while the net is going to assets, perhaps that could be used to determine gain. In other words, the money going to an asset ultimately is the net.


However, to complicate things further, I'll throw out the point that--at least with my brokerage house--the commission for a single sale of multiple lots is distributed proportionally to the various lots, so that if I have sold 150 shares from two lots split 100/50 shares, they assign the commission 2/3 1/3. Maybe that's not a problem, but it bears noting.

David



________________________________
 From: Mike Alexander <mta at umich.edu>
To: David T. <sunfish62 at yahoo.com>; gnucash-user at gnucash.org 
Sent: Friday, December 9, 2011 9:51 PM
Subject: Re: Scrub Lots and Capital Gains
 
--On December 9, 2011 9:24:51 PM -0800 "David T." <sunfish62 at yahoo.com> wrote:

> I was just going over some stock sales in Gnucash, and I think I've
> found an error in how the scrub lots feature calculates gains.
> 
> As far as I can tell, the scrub lots feature fails to take into
> account sales fees and commissions when calculating gains or losses.
> So, for example, if I buy a stock at $950 with a $50 commission and
> then sell the stock for $1500 with a $50 commission, the scrub lots
> will generate a gain transaction for $500, rather than what I believe
> should be $450 ($1000 initial cost, $1500 final sale minus $50
> commission yields $450). At least, when I compare the Gnucash gains
> with my broker's, that's what I see.
> 
> Do I have this right, or is there another explanation?

You have it correct.  Gnucash's capital gains calculations don't agree with what the IRS requires in the US.  I don't know if they agree with taxing authorities anywhere else.  I've thought about changing that in the past, but one of the problems is that it isn't obvious what other splits (in either the purchase or sale transaction(s)) should be included in the basis when computing the gain or loss.  In simple cases it might be possible to make a reasonable guess, but not in general.

          Mike