[GNC] Gnucash-created "closing" entries

[Stan Brown]

David, you're opening up several cans of worms! I started replying to
each point, but an adequate reply would be very long indeed. (I stopped
at the third page, when I realized no one could possibly want to know
than much about my finances, and I wasn't comfortable sharing that much.)

Let's just say that I had already considered the points you raised. I've
researched my tax situation, and I'm confident I understand it
correctly. Regarding accounting practice, I may or may not be conforming
to GAAP, but I'm doing what makes sense in my situation. (That's if we
overlook the fact that most people would scoff at my using an accrual
basis for my books but a cash basis for computing taxes.)

> Date: Fri, 28 Dec 2018 22:12:36 -0600 (CST)
> From: David Cousens <davidcousens at bigpond.com>
> Subject: Re: [GNC] Gnucash-created "closing" entries
> 
> ... I am assuming the gains
> and losses you are referring to are realized gains or losses and not
> unrealized gains or losses.  If they are, should they not be reporting in an
> Income:Investment account rather than directly into Equity. ...

> If they are unrealized gains or losses, it is a common procedure to record
> them under Equity where you need to track them, but these should not
> normally be part of any closing procedure (not usually taxable) as they are
> part of the permanent accounts. ...

If I were a business, I'd agree with you. But as an individual, I like
to start each year with Net Worth showing my net worth at the start of
that year, which means all other equity accounts have been zeroed.

> Usually any taxation calculations for the closed period will produce a
> taxation liability in the next period but would not normally involve
> unrealized gains/losses.
> 
> See
> https://smallbusiness.chron.com/journal-entry-record-realized-loss-investment-36486.html.

I read your reference, and I'm already marking to market, just as it
suggests. I do it quarterly, since that's when I get statements. But I
don't see a need to keep a multi-year account of unrealized gains and
losses, because for all my accounts the amount I contributed to them
isn't relevant to my tax situation. The market value _is_ relevant,
again even if unrealized, because that will determine the amount I am
required to take as RMD (required minimum distributions).

Under US law, gains and losses, realized or unrealized, in my retirement
accounts are not taxes as such -- only the amount I actually withdraw
from an IRA or 401(k) account is taxed, and that's without
distinguishing between what I invested and what I gained or lost.

In my non-retirement account, capital gains and dividends are taxable
even if unrealized. And it's retroactive -- I won't learn until the end
of February 2019 how much of those I must report on my 2018 tax return.

This is getting awfully long, again, so I think I'd better stop here.
But I appreciate your raising the points you did.

-- 
Regards,
Stan Brown
Tompkins County, New York, USA
http://BrownMath.com
http://OakRoadSystems.com