Capital Gains Documentation

DaveC49 davidcousens at
Fri Oct 28 03:36:53 EDT 2016

Hi John,

Maybe a simple example based on an investment property just looking at the
capital gains/loss aspect in isolation might work. A lot of people in Oz use
investment properties as a retirement savings option because we have fairly
generous negative gearing provisions and I presume, maybe wrongly, that is
also the case in other parts of the world. 

Capital gains/losses is in many ways a separate issue from depreciation
which is really a straight business issue associated with the economic
lifetime of an asset.

The income/expense vs equity is not a huge issue for personal accounting as
unrealized income is not taxable and is not recognized as income in
accounting until actually realized and even then is not usually included in
taxable income for income tax purposes. Income and expense accounts in
accounting terms are just temporary equity accounts for recording profit and
loss over a given period. I realize inGnucash this is to some extent altered
by the reporting functionality and most people wouldn't close accounts to
equity for personal financial accounting. Recording in equity for the
unrealised gain and the realised gain on sale is valid enough as  a
procedure and provides the base figure for any CGT liability calulation.  

I didn't find the Degas  painting example too obscure in any case (my wife
is an artist but alas her paintings don't appreciate as much as Degas'). If
you do decide to keep something under a capital gains heading I'm happy to
help preparing an example.

(The Masters wasn't totally useless. i help my step son a little with some
of his business ventures.)



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