[GNC] Capital Gain Calculations on Split Stocks

[Geoff]

P.S.  The reason for David's difficulty is that the Stock Split 
Assistant creates a zero value lot - see attached screenshot.

What it *should* do in these circumstances, IMHO, is:
(1) Scrub all the existing non-zero lots to zero.
(2) Create one new lot for every one of those lots with the post-split 
number of units and the original cost base.

Verbose, yes, but it does leave a clear audit trail and facilitates 
subsequent lot by lot sales and capital gains/loss calculations.

Maybe I am missing something, but as far as I can see the Stock Split 
Assistant just creates one additional zero value lot for the 
addition/reduction of units, leaving all existing lots unaltered. 
Whilst the ledger itself looks correct on screen (number of units has 
changed and value has not), it breaks Lot Accounting.

Geoff
=====

On 25/08/2020 4:04 pm, Geoff wrote:
> David, this problem is caused by the stock split transaction.
> 
> I always do my stock splits the old fashioned way - manually reverse out 
> the old and re-enter the new.  See screenshot 01.  Notice how the 
> original lot is now closed and a new one is created (with the correct 
> cost basis).
> 
> Once you have done this, just enter the sale and scrub the account to 
> automatically calculate the correct capital gain of $16.55 - screenshot 02.
> 
> Hope this helps.
> 
> Geoff
> =====
> 
> On 25/08/2020 1:13 pm, D. via gnucash-user wrote:
>> Peter,
>>
>> I thought the same about partial sales, but have found now that almost 
>> all my scenarios can be addressed in the lots tool. In my case, 
>> matching the broker's sales record up to the correct lot yields 
>> accurate results, except in this situation with a split stock. I agree 
>> with you generally about making sure I'm tracking it all the same as 
>> the broker, since that's where the tax folks are going.
>>
>> David
>>
>>
>> -------- Original Message --------
>> From: peterb <peterb at gmail.com>
>> Sent: Mon Aug 24 22:52:23 EDT 2020
>> To: "David T." <sunfish62 at yahoo.com>
>> Cc: Gnucash Users <gnucash-user at gnucash.org>
>> Subject: Re: [GNC] Capital Gain Calculations on Split Stocks
>>
>> My experience is that the View Lots cap gain method is tractable right up
>> to the point where you have partial lots, and is not really usable 
>> (or, at
>> least, I don't find it usable) afterwards.  When I have a partial sale 
>> of a
>> lot, I don't even try to use it.  Just add a gain/loss transaction by 
>> hand
>> with the numbers that you know are correct (since these numbers are 
>> coming
>> from your broker and will be *what is reported to your tax authority, 
>> *they're
>> the best source of truth; if your trial balance is off after that,
>> double-check that your cost basis in GnuCash agrees with your broker's
>> records).
>>
>> On Mon, Aug 24, 2020 at 9:41 PM David T. via gnucash-user <
>> gnucash-user at gnucash.org> wrote:
>>
>>> Hi,
>>>
>>> In the last couple of days, I have learned TONS about how to manage
>>> capital gains with assorted lots in the GnuCash realm. The financial
>>> institution I use has algorithms that adjust my accounts to minimize tax
>>> implications. This results in sales against specific lots within
>>> GnuCash, and I've been able to match sales with specific lots and
>>> achieve numbers in GnuCash which match the institution's calculations.
>>> All good!
>>>
>>> However, I have one account with a single purchase, followed by a two
>>> for one split, followed by a partial sale. Using the lots in this case,
>>> however, yields wildly variant and incorrect results. In the attached
>>> image, you can see the full transaction history, along with the lots
>>> window indicating the assignment of the February sale to Lot 0 with a
>>> loss of $169.96.
>>>
>>> This happens because 7*53.29 (the original share price) = $373.03, and
>>> 203.07 - 373.03 = -169.96
>>>
>>> If I choose to use Lot 2 for the match, the result is $203.07 gain
>>> (7*0=$0 cost). This also is wrong.
>>>
>>> The correct calculation is: $203.07 - (7 * 53.29 / 2) = $16.55, which is
>>> what the institution is reporting. I am hesitant to adjust the gain
>>> value to match this amount, as I suspect that GnuCash will then report
>>> the account as out of balance. I have seen in the past that incorrect
>>> gains calculations can throw off the balance sheet, with painful
>>> remedies and memories. My questions here are:
>>>
>>> 1) Is there a way to have GnuCash properly track cost basis in an
>>> account with a stock split?
>>>
>>> 2) If I arbitrarily change the gains transaction, will subsequent
>>> balance sheet numbers be in balance?
>>>
>>> 3) What is the proper way to handle a stock split?
>>>
>>> TIA,
>>>
>>> David T.
>>>
>>> _______________________________________________
>>> gnucash-user mailing list
>>> gnucash-user at gnucash.org
>>> To update your subscription preferences or to unsubscribe:
>>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>>> If you are using Nabble or Gmane, please see
>>> https://wiki.gnucash.org/wiki/Mailing_Lists for more information.
>>> -----
>>> Please remember to CC this list on all your replies.
>>> You can do this by using Reply-To-List or Reply-All.
>>>
>>
>> _______________________________________________
>> gnucash-user mailing list
>> gnucash-user at gnucash.org
>> To update your subscription preferences or to unsubscribe:
>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>> If you are using Nabble or Gmane, please see 
>> https://wiki.gnucash.org/wiki/Mailing_Lists for more information.
>> -----
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
>>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: gnucash_split_sale03.jpg
Type: image/jpeg
Size: 170100 bytes
Desc: not available
URL: <http://lists.gnucash.org/pipermail/gnucash-user/attachments/20200825/b90c027d/attachment-0001.jpg>