Report to locate Unrealized Gains

[David T.]

> On Feb 14, 2017, at 8:55 AM, John Ralls <jralls at ceridwen.us> wrote:
> 
> I'm pretty sure we're dealing with personal taxes here and that there aren't separate capital gains taxes for a trading business unless it's a pass-through.
> 
> In the US on personal returns capital gains are taxed at a lower rate if the investment has been held for more than 1 year and the ordinary income rate otherwise. The actual rates for both long term capital gains and ordinary income depend on the so-called "adjusted gross income". 
> On individual taxes one reports both the basis and proceeds net of commissions and fees (adding them to the basis and subtracting them from sales) and the difference is the reported income (or loss; if one has a net loss for the year one can deduct the first $3000, the rest are carried forward to offset future net gains.
> 
> The bit that's messing up David T and apparently a bunch of others here is that they want to both book the commission and fees as expenses and use the netted-out income amount. David T is having trouble understanding how both expensing and reducing the income by the commission and fee amounts is double-counting them. Perhaps you can explain it more clearly than I have.
> 
> Regards,
> John Ralls

John,

I know I said I was going to drop this thread, but I feel I owe it particularly to you to add one final comment, especially as it will corroborate what you’ve been saying all along.

I think I finally see how it is that my accounting is double-booking. 

I realize that part of my problem has been that brokers list out the fees on sell statements, but they display only the net gain on capital gains reports. That contributed to my confusion. I think they show the fees in the sale transaction for the same reason I want to include them in the transaction: to allow the share price to match the market share price and have the math work out.

I am not sure how I want to handle this going forward; I know that I prefer seeing the actual share price on the sale transaction—but I know I also want to see the net gain on the Tax Report, which I find a very useful report (especially at this time of year).

I believe that you made a suggestion to create a subaccount under the Gain income accounts for these fees and commissions, in essence having commissions reduce the gain. This may work out for me, but would be somewhat messy because I have separate LT and ST gains accounts for each brokerage account I hold; this means an additional n*2 commissions accounts (where n=the number of brokerage accounts). 

I wonder whether it would be possible to place a commissions account on the Equity side of the hierarchy, thus having commissions add to the basis of the stocks. My hierarchy on that side is quite rudimentary.

I am not sure how any of this will play out on the Tax report, the portfolio reports, or how it might work with Lots, but I will see what I can figure out. Then, I will report back my results. Just don’t anyone hold their breath!

My apologies to you and others who have attempted to knock sense into me.

Cheers,
David T.