accounting for managed investment accounts

[gnucash.133518b at telus.net]

On 2014-04-30 7:19 AM, John Ralls wrote:
 > * Does the manager report that you have n shares or units, or
 >   do they report the currency value?

He reports share/unit quantities for individual holdings, but currency 
value for the account as a whole. This is not a mutual fund. See below.

 > * How do they report fluctuations in value? Do you have to
 >   report those fluctuations for taxes?

Values for the account as a whole are reported in Canadian dollars at 
end of month. Gains realized within the account are summarized for the 
year for tax reporting purposes. More below.

 > * Do they pay dividends?

Individual assets within the account may generate dividends, but such 
dividend payments remain inside the managed account as part of its cash 
position.

 > * When you add to or subtract from the account, how is that
 >   reflected in the statement? How is redemption handled for
 >   taxes?

Amongst the month's account activity I will find line items for any cash 
in/out transactions.

My original message was poorly written. I'll try to be clearer.

I do have visibility into the managed account and I do get monthly 
statements that detail the account's current holdings and its activity, 
the latter including both internal and external transaction. Holdings 
include Canadian and US stocks, bonds, and cash. Those holdings are 
directly owned by me. I am not consulted on what to buy or sell and the 
lengthy list of assets varies. All dividends, interest payments, and 
asset sale proceeds remain inside the account. Manual entry to GnuCash 
is the only option as there is no importable file available.

Despite the available internal visibility, my external perspective is a 
single account with which I make very infrequent cash transactions and 
no stock or bond transactions. At the end of the year the manager 
provides me with four tax statements (Canada Revenue Agency T3 and T5 
forms) that summarize my tax consequences for aggregate realized capital 
gains and dividends for Canadian and US holdings. It is important to 
understand that those gains/dividends are still going to be inside the 
managed account, except as they might contribute to any cash withdrawal 
I may have made during the year.

While it would be technically possible for me to figure out at the end 
of each month what changes the manager has made inside the account and 
try to follow all of his machinations, the GnuCash data entry and 
individual transaction profit calculations would be very tedious, error 
prone, and somewhat defeats the purpose of having outsourced the 
management of this account. Nonetheless, I do want at least my external 
perspective represented in my GnuCash book. The end of month statements 
include Canadian dollar account values for each of cash, fixed income, 
equities, and mutual funds.

On 2014-04-30 3:39 PM, David T. wrote:
 > If the account truly is a black box, then treat it just like a
 > mutual fund--or even a savings account, where the fund manager
 > or banker decides what investments to make, and pays you money
 > in the form of interest or dividends. You record only those
 > transactions that affect the overall balance of your account.

I cannot treat it as a mutual fund because the external view sees dollar 
value, not fund shares. The manager does not pay me interest or 
dividends. Money comes out only if I make a cash withdrawal.

My tenuous grasp of accounting tells me that I need to somehow account 
for the (hopefully) increasing value of this managed account between 
external transactions.

 > I have no idea what the multiple currency point is, and I don't
 > know how or whether trading accounts will affect things, as I
 > don't use either.

Despite the name of Peter's tutorial, he gets into handling gains/losses 
of non-monetary asset accounting as well:

   http://www.mscs.dal.ca/~selinger/accounting/tutorial.html

The GnuCash "trading accounts" feature is very poorly documented and I'm 
not knowledgeable enough yet to understand how it assists or displaces 
the gains/losses problem.

I hope I've been clearer this time.

Carl