[GNC] Capital Gains

[gnu Gord]

Thanks David, you always give me lots to think about. As of right now, the
data is purely for my own consumption so I don't really have any tax
implications to worry about, but I may follow your advice just in case.
Perhaps the example in the documentation could be clarified to include
capital losses (as well as gains) and your suggestions.
BTW, hello from Canada, I'm just across that little bit of water from you
on the west coast of Canada, I'll wave my hand out the window... I'm sure
you'll see it!! 😉😀


On Tue, Mar 2, 2021 at 5:17 PM David Cousens <davidcousens at bigpond.com>
wrote:

> GnuGord
>
> You could use an Income sub-account, after all they are temporary equity
> accounts anyway, but it is likely not the best way of doing it as your
> asset
> may exist gaining (or losing) value over a number of years if you are not a
> speculative investor but taxation only applies (CGT or income) in the year
> of sale.
>
> Recording it under Income then results in it being recorded as income
> distributed over over a number of years when you really only receive ist
> value as actual income when you sell the asset. When you finally do sell it
> you are likely to have to pay tax (Income or CGT depending on the
> circumstances and jurisdictional  legislation) on the amount you receive in
> the year you sell it but you have recorded its losses and gains over a
> number of years- to which of these years do you apply corrections. If you
> put all the correction to the unrealized gain in the current year, it is
> likely you will not report correctly for tax purposes in that tax year and
> if it is appreciable and the tax man gets wind of it, it may open you up to
> penalties for misreporting.
>
> By recording it directly in equity, rather than income you achieve the
> purpose of recording the ongoing changes to your net worth, you are less
> likely to  misreport for any taxation purpose and you can correct it at the
> time of sale with a single entry to zero out the unrealized gains/losses
> and
> record the actual gains and losses in the current year.
>
> Both can be made to work, but recording in unrealized gains/losses in
> equity
> rather than in income is likely to be simpler longer term. Realized
> gains/losses are of course always recorded under income. Dividends are
> taxed
> as normal income and usually the proceeds of sale for stocks as capital
> gains or losses but this can be jurisdictional dependent. Ultimately as
> long
> as it is recorded in a reasonable manner with sufficient detail, your
> accountant can sort it out if necessary, but of course he/she will charge
> you for doing so.
>
> For the record I have a masters in accounting, (but I am not a practising
> accountant) and I live in Australia.
>
> David Cousens.
>
>
>
> -----
> David Cousens
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