[GNC] Fwd: Tips for maintining different accounting for different countries?

[James Cook]

Hi gnucash-user list,

Background:

I'm thinking of starting to use GnuCash. I need to file both Canada
and US taxes, which require different accounting. For example, if I
sell a stock, the realized gains for Canada are based on adjusted cost
base, but for the US I can decide which instance of the stock I'm
selling. I have an idea for how I will handle this, but I'm curious if
others have suggestions. (Also I'm learning about accounting for the
first time, so maybe I'm just excited and wanted to talk.)

Questions:

1. Any problems with the below idea, or ways it could be improved?
2. Are there other ways people handle this sort of thing?

Details:

I haven't used GnuCash yet, but I just read the Getting Started
section and Peter Selinger's tutorial on multiple currency accounting
at https://www.mathstat.dal.ca/~selinger/accounting/tutorial.html . I
don't really know how well the below examples would work with
GnuCash's UI.

I need to report all my income to both US and Canadian tax authorities
(and in some cases, separately, California, but that's beyond the
scope of this email), and they have incompatible rules about how my
accounting should work.

I could maintain two separate accounting files and enter all the
relevant transactions in both, but I think I can make it work with
one.

The plan: have three sets of accounts:

1. a "main" set that records things in a reasonable way (but that
might not agree with the US's or Canada's point of view)

2. a set of "Canada adjustment" accounts, and

3. a set of "US adjustment" accounts

Then every transaction will have a balanced set of splits in the
"main" account, and then possibly more independently balanced splits
in the adjustment accounts, showing how the numbers should change when
it comes time to report taxes for that country. I might create the
transactions in the "main" account at first, and then go back and fill
in the adjustments when tax time is approaching each year

I plan to use currency trading accounts as described in Peter
Selinger's tutorial, except with realized gain/loss only appearing in
the "adjustment" accounts, as in example 2 below.

Any amount reported to Canada will be the "main" amount plus the
"Canada adjustment" amount, and similarly for US.

Examples:

1. I receive a gift of 100 USD to my bank account, worth 110 CAD. This
becomes a single transaction with the following splits:

in "main" set:
* 100 USD debit to bank account
* 100 USD credit to income account
in "Canada adjustment" set:
* 100 USD debit to income account (I should report all my income in CAD)
* 110 CAD credit to income account
* 110 CAD debit and 100 USD debit to trading account
in "US adjustment" set: nothing; the "main" set matches the US point of view

My income for my Canada return is then the sum of the two income
amounts: (100 USD) + (110 CAD - 100 USD) = 110 CAD.

2. I buy stock X for 100 USD (worth 110 CAD) then sell it later for
200 USD (worth 180 CAD). Here, I'll compute the realized gains
separately for Canada and US purposes.

Transaction 1:
in "main" set:
* 100 USD credit from bank account
* 1 X debit to X asset account
* 100 USD debit and 1 X credit to "X trading" account
in "Canada adjustments" set:
* 110 CAD credit and 100 USD credit to "X trading" account (from
Canada's point of view, I spent CAD on the stock)
* 100 USD credit and 110 CAD debit to "USD trading" account. (From
Canada's point of view, I sold some USD to get the CAD I spent on the
stock. I'm ignoring realized gain on USD in this example.)
in "US adjustments" set: nothing; the "main" set is already correct

Transaction 2:
in "main" set:
* 200 USD debit to bank account
* 1 X credit from X asset account
* 200 USD credit and 1 X debit to "X trading" account
in "Canada adjustments" set:
* 110 CAD credit and 200 USD debit to "X trading" account
* 70 CAD credit to "realized gains" account
* 200 USD credit and 180 CAD debit to "USD trading" account
in "US adjustments" set:
* 100 USD debit from "X trading" account
* 100 USD credit to "realized gains" account

3. If I do several buys and sells, with different cost bases for the
sells from the Canada and US points of view, I would compute the
realized gains separately for Canada and the US as in example 2 above.

James