Adv Port Report - Capitalization of Commissions

[David Carlson]

CDB-Man

I am happy to see that there is interest in this problem and that you have
even proposed a solution.

However, I think that because GnuCash currently uses a zero share line in
the security account to define realized capital gains, that needs to be
addressed in whatever final solution might be chosen.  I think that
realized gains still need to be recognized separately from expenses such as
commissions and taxes.  Using an identifier in the "Action" column sounds
like a good place to make these distinctions.  If such a concept is
developed, it probably should also allow for a distinction between short
term gains and long term gains.

Would it be possible for such identifiers to be recognized by other reports
as well for jurisdictions such as the US that effectively require that
expenses be capitalized in these transactions?  It may be possible to omit
the zero share lines if the "Action" identifier is used in the respective
income or expense lines.

David C

On Sat, Dec 26, 2015 at 11:03 PM, CDB-Man <cdbman.online at gmail.com> wrote:

> Hey everyone,
>
> I was talking to jralls over on IRC, and he suggested posing the question
> to the group here, and more specifically to *Mike Alexander* as well, the
> maintainer of the Adv. Portfolio Report if he's listening.
>
> The conversation is recorded in the #gnucash IRC logs, starting at 13:47:26
> time stamp.
> http://lists.gnucash.org/logs/2015/11/2015-11-21.html#T13:47:26
> Most of the issue and my suggested possible solution is detailed in the
> conversation.
>
> *To put it into paragraph form instead:*
> Essentially, the issue at hand is how the advanced portfolio report handles
> commissions on purchase of securities.  Current behaviour is to only
> consider an amount as commissions, if the amount is a debit to an expense
> account.
>
> The advanced portfolio report itself will capitalize the commissions into
> the cost basis if you tell it to do so in the options.  However, it means
> that in my actual account and on my balance sheet (B/S), it won't be
> capitalized there, as it's been debited to an expense account.  It would
> also mean the commissions are flowing through profit and loss (P&L) via the
> income statement (I/S), so not correctly reflecting the capitalization of
> the commissions.
>
> My suggestion is to make use of the activity flags in the "Action" column
> of the stock/commodity register (the one with buy/sell/dividend/fee/etc),
> specifically the "fee" option.  My general idea is to make a split for the
> commissions that debits the stock account, so that the commissions are
> capitalized into the asset.  Using the :fee: activity option, the Adv Port.
> Report would then pick up on it, and capitalize it as well into the cost
> basis in the report + summarize it in the "brokerage fees" column too.
>
> I'm aware that not all countries have tax laws that require commissions to
> be capitalized, so perhaps have a separate option in the advanced portfolio
> report?  For example, some sort of toggle that would allow it to recognize
> all 0 share debit splits to the stock account to be counted as commissions,
> to reflect commission capitalization.
>
> I took a brief look at the Scheme file for the advanced portfolio report...
> and it's most likely beyond me.  I haven't worked on code since 2010; I'm
> now in accounting at a CPA firm.
>
> Well, thank you all for listening to my rant, and I'd appreciate if anyone
> could help out, or could make some updates to the Adv. Port. report.
>
> Thanks!
> CDB-Man
>
> *CDB-Man*
> *Email:* cdbman.online at gmail.com
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