A newbie Q - Buying back liability at a discount

[Suresh Bazaj]

Hello,

 

            This deals with selling a PUT option and then buying it back for
less than the amount received when the option was sold. This can happen if
the underlying stock price goes up significantly and/or as the PUT option
expiry date is near.

 

            The difference between the Option sell and buyback price is
income (Short Term Capital Gain).

 

            I started out the year with several Open PUTs. Per my CPA (who
is not familiar with GNUcash), the cash received for all open options is
considered a Liability. Here is an example:

 

1.     At the beginning of year, there is a $1,500 Liability entry for a PUT
sold for $1,500 in prior year. There is a corresponding entry for $1,500 in
the Checking account where the $1,500 was deposited.

 

2.     I bought back the PUT for $200 in March, thereby getting rid of the
Liability for a net profit of $1,300 (ST Capital Gain).

 

3.     I enter the $200 in the Checking account as a decrease. What do I
enter in the Transfer column, such that the Liability is zeroed and the
$1,300 shows up as ST Capital Gain income?

 

Is this an example of some type of split Transaction?

 

Thanks,

 

Suresh