Chapter 8 - investment accounts

[Chris Good]

> Message: 2
> Date: Sun, 20 Nov 2016 01:17:12 -0800 (PST)
> From: Jamestk <davidjamestk at hotmail.co.uk>
> To: gnucash-user at gnucash.org
> Subject: Re: Chapter 8 - investment accounts
> Message-ID: <1479633432451-4687688.post at n4.nabble.com>
> Content-Type: text/plain; charset=us-ascii
> 
> Thanks David for the comprehensive reply. Having revisited my old stock
> entries with a view to continuing I seem to recall the problem, that is
the
> orphaned amount left in shares after offsetting a partial sale.
> 
> Here's a rough example:
> 
> Lot 1 is for the purchase of 100 shares in eBay, you then sell 50 shares
leaving
> an ongoing balance from Lot 1 of 50 shares - this from memory caused a
> problem further down the line.
> 
> What i can do is start from scratch deleting old capital gain/loss entries
using
> the Lots method to see of any issues still remain, I can of course report
back
> if that would be helpful.
> 
> Is it possible to view the 'Lots' as transactions, i.e a list once they
have been
> scrubbed to see what's has been offset against what, perhaps it's there
just
> need to experiment a bit. Last thing, can the lot numbers be added to the
> register 'num' column, again to help see individual lots - this would be
useful
> where you have multiple purchases of the same amount, say 100 shares
> over and over - Cheers,
> 
> 
> David Carlson-4 wrote
> > As I recall, the lots function was reworked fairly recently, and I
> > believe that it can work well if the user is careful about entering his
data.
> > However, I have not tested it with my data.
> >
> > I hope that it can now facilitate correct cost basis tracking and
> > accurate gain/loss calculations for transactions involving multiple
> > and partial lots.
> >
> > I believe Chris is updating the documentation of the lots function to
> > match the changes, and in his November 15 post to this thread he
> > pointed out that the lots function does not directly resolve the long
> > standing issue of tracking capital gains as defined by US government
> > reporting requirements compared to to simply balancing the value of
> > the security account when there are closing transactions.
> >
> > The government's position that commissions be included in net gain
> > calculations is reasonable and can be accommodated in GnuCash by
> > simply using net values throughout.  However, this does not allow
> > tracking commissions, which, for example, could be useful in a
> > decision whether to use a full service brokerage versus using a discount
> broker.
> >
> > Part of the problem of lot tracking when commissions are separated out
> > is allocating partial expenses along with the gains.  The most
> > difficult part, as I see it, is the need to re-assign costs that were
> > incurred in the opening
> > transaction(s) to a location where they can be found and reported
> > along with the costs incurred in the closing transaction(s) for a tax
> > report.  I think that is the essence of the question that Chris asked
> > in his November
> > 15 post, and I do not have an answer for him.
> >
> > Historically, GnuCash was unable to do this, and that is why many
> > users (myself included) have been tracking capital gains separately
> > for tax purposes.  The question is whether there is a method to
> > accomplish both within GnuCash.
> >
> > I suspect that part of a complete package would be a new report
> > designed specifically to produce a capital gains tax report including
> > appropriate separation of short term vs long term gains.
> >
> > Perhaps another user can address those questions in a way that could
> > work at least in all jurisdictions that have capital gain reporting
> > rules similar to the US.
> >
> > David C
> >
> > On Thu, Nov 17, 2016 at 2:15 AM, Jamestk <
> 
> > davidjamestk at .co
> 
> > > wrote:
> >
> >> Could someone clarify what the exact issue is please. My input method
> >> has been to enter all parts of the purchase/sale transaction as per
> >> tutorial, will this create inaccurate reports due to the following?
> >>
> >> Was this the original problem which surfaced a while back on my
> >> previous visits, it is a while back but I know there  was a reason
> >> for discontinuing using lots. - thanks, David
> >>
> >> > I can imagine the argument that if you are going to include
> >> > commission
> >> in>
> >> > capital gains calculations, then you should enter the net price
> >> > (including> commission), and not record commission as its own
> >> > split, regardless of this> adding an misleading price into the price
> database.
> >> > You could just add the> commission as part of the transaction
> >> description
> >> > if you wish to track it.I include commissions and fees in the buy
> >> > and
> >> sell
> >> > splits because it makes the gain/loss calculations much easier.
> >> > True,
> >> the
> >> > price won't match what the exchange reports, but it's the effective
> >> price
> >> > I paid and immediately reflects the unrealized loss caused by
> >> > having
> >> paid
> >> > those commissions and fees. That approach works only because
> >> commissions
> >> > and fees are deductible in US tax law.
> >>
> View this message in context:
> http://gnucash.1415818.n4.nabble.com/Chapter-8-investment-accounts-
> tp4665181p4687688.html
> Sent from the GnuCash - User mailing list archive at Nabble.com.
> 
> 
> ------------------------------
> 
> Message: 3
> Date: Sun, 20 Nov 2016 03:25:48 -0800 (PST)
> From: Jamestk <davidjamestk at hotmail.co.uk>
> To: gnucash-user at gnucash.org
> Subject: Re: Chapter 8 - investment accounts
> Message-ID: <1479641148667-4687690.post at n4.nabble.com>
> Content-Type: text/plain; charset=us-ascii
> 
> Yep, here's the problem as highlighted above.
> 
> >From the stock account i.e XYZ stock I have a purchase of 75 shares on
> 1/10/14 at $5
> 
> ..then a sale of XYX but only 50 shares say $6 - selecting a new lot then
adding
> in the appropriate purchase lot of 75 shares, hit the 'scrub'
> function which generates a separate sale of 75 shares.
> 
> Doing a partial sale of a larger purchase is very common due to the way
> electronic trading works, sometimes you are unable to sell the full amount
at
> your desired price leaving you with a residual amount.
> 
> It works fins on a straight scrub of one lot against the other of equal
> amounts, all that's needed then is to allocate from the orphaned account
if
> you wish to do so.
> 
> My earlier question on viewing lots might seem a bit daft, but tbh I have
> never really made it that far before this conundrum - David

Hi David (jamestk),

I don't know of any problem with part selling a lot. The reminder can be
sold later. A lot is created if needed for each buy by scrubbing.
Please advise how to duplicate this problem and exactly what the problem is?

You can view the transactions in a lot by going into the Lots in Account
window and selecting a particular lot.
All the transactions (except capital gain/loss transactions) for the
selected lot will show in the 'Splits in Lot' panel.

Have you seen the latest help documentation which is now available in the
unstable (not yet live) PDF document?
You can download the PDF from
http://www.gnucash.org/docs.phtml
See Nightly Documentation Builds, Help Manual, English, then after
downloaded, see
Chapter 8, Tools & Assistants, Lots in Account

Adding the lot no (E.g. Lot 0) to the Num field of the capital gain
transaction split generated by Scrubbing seems like a good idea.
If other people think this is a good idea, I'll raise this as an
enhancement. I guess it would need to be an option.
You can edit the transaction to add this yourself if you wish.

(David Carlson: Thank you for your clear description of my request for info
re commissions! Note that lot scrubbing has been around for many years. It's
just complicated and hasn't been documented until recently.)

David (jamestk):
I don't understand your problem selling 75 shares of XYZ stock.
The 'scrub' button generates lots (if needed) and capital gain/loss
transactions per sale/lot, not sales.
A lot is created for each buy (because usually each buy is on a different
date and therefore may or may not have different taxable rates, say long
term or short term, and therefore need to be recorded in different income
accounts. If you like, you can add multiple buys and sells into the same
lot, but you need to aware of how capital gains are calculated.
I know of no problem with subsequent sales, other than if you have manually
add lots and linked transactions to them, these lots maybe processed before
other automatically created lots, so FIFO allocation of buys to sells may
not do what you expect. If you are doing anything complicated, you should
manually confirm the calculated capital gain/loss is correct.

The only other problem I know about is to do with using the stock split
assistant. Because the extra shares created by splitting stocks have the
date of the stock split rather than the date of the original buy, FIFO
allocation may be incorrect if there were other buys between the original
buy and the stock split.

Regards, Chris Good
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