Scrub Lots and Capital Gains

David T. sunfish62 at yahoo.com
Sat Dec 10 13:38:41 EST 2011


Actually, John, the *sales* commission is NOT being included, resulting in the errors I saw. I apparently have used the term "net" incorrectly; I thought "net" meant the amount of a transaction minus any cost associated with the transaction ($1500-$50=$1450). However, Mike confirmed that there is an error in capital gains calculation, so there's not much to say about it, except to say that Gnucash gets it wrong.


As for your workaround, it feels a little too kludgey for my comfort. I'll consider it, although I'm not keen on it.


Ultimately, Mike's reply raises the question of how useful it is to have a scrub lots feature that doesn't calculate gains that mirror what the IRS calculates. Incorrectly entering capital gains can have implications down the road, and what is the point of using this feature if it isn't accurate? Moreover, the transactions I have worked on are pretty straightforward (buy some shares of stock, sell them a little later); if there actually *are* lots to manage, sorting out how to adjust the resulting (inaccurate) gains transactions gets hairy very quickly.


At this point, I believe I will go back to my old way of doing this, which is to wait for my broker's statement and use the information there to manually enter gains. It's not the ideal, but it will at least mean that my accounts will match what is getting reported to the IRS.

David


________________________________
 From: John Ralls <jralls at ceridwen.us>
To: David T. <sunfish62 at yahoo.com> 
Cc: Mike Alexander <mta at umich.edu>; "gnucash-user at gnucash.org" <gnucash-user at gnucash.org> 
Sent: Saturday, December 10, 2011 9:06 AM
Subject: Re: Scrub Lots and Capital Gains
 

On Dec 9, 2011, at 10:08 PM, David T. wrote:

> 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.
> 

No, the problem you have is that Gnucash *is* calculating on net (at least on one side: 1500 sell - 950 buy is a gain of 550. Did you enter both commission splits the same way?). Under US tax law, commissions and fees are rolled up into the transaction price, so it's the *gross* (the amount that gets posted to the cash account split) that you calculate the cap gains on.

I handle it by posting the number of shares and the total amount and let Gnucash calculate the price. I don't see any point in tracking commission expense, never mind SEC and clearinghouse fees. Make the lots scrub produce the right answer, and makes it easier for me if I want to not use lots scrub (like if I don't want to use FIFO).

Regards,
John Ralls


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