[GNC] Capital gain with Return of Capital

[Chris Good]

Message: 10
Date: Mon, 20 Sep 2021 08:55:41 -0700
From: Fred Tydeman <tydeman.fred at gmail.com>
To: Jean-David Beyer <jeandavid8 at verizon.net>
Cc: gnucash-user at gnucash.org
Subject: Re: [GNC] Capital gain with Return of Capital
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On Mon, Sep 20, 2021 at 8:26 AM Jean-David Beyer via gnucash-user <
gnucash-user at gnucash.org> wrote:

> > was return of capital.  I have not yet learned how to enter a return of
> > capital in GnuCash....
>
> Do you not just subtract the capital returned from the cost basis?
>

Correct.

Linux
  Gnucash
    Help
      Tutorial
         Investments
            Return of Capital

This refers to a transaction where an investment returns capital to the
investor and doesn't have any accounting implications other than reducing
the cost basis. The number of shares held is not changed.

A Return of Capital transaction can be entered in the stock register by
entering the stock split with
Shares 0
Price 0
Sell Return of Capital value

The other side of the double entry would usually be a debit to the
brokerage bank account.

Attached is a screen shot of the account with the buy, rtn of cap, sell.
The capital gain shown is what Quicken calculated (not Gnucash).
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Hi Fred,

This is a known problem. Please see
https://bugs.gnucash.org/show_bug.cgi?id=797166
	Stock scrubbing does not handle Return of Capital Transactions

I suggest instead of doing a Return of Capital, do 2 dummy transactions:
1. sell all the stock at the cost that was paid so there is no capital gain
from this transaction
2. Buy the same qty at the new reduced cost (ie less capital returned)
Then when you subsequently sell, scrubbing should work.

Guide 9.7.2.8. Considerations:
Says
5. The automatic capital gains calculations can handle straightforward buy,
sell, and return of capital transactions but any transaction that affect the
number of shares, even simple splits, will cause it to produce wrong answers
so those cases must be handled manually.

But I think this means: return of capital transactions (with a reduction in
stock qty) are handled.

Regards, Chris Good