[GNC] Recommended Method of Entry for IRA Distributions

[Stan Brown]

On 2023-01-12 20:19, R Losey wrote:
> Let me write through a couple of cases.  In the first one, I'm selling
> $1000 worth (10 shares) of security A and having it go directly to my
> checking account with no income tax withholding. (some of these may be
> USA-centric terms; I apologize for that).
> 
> If I can create a "Sell" transaction that sells 10 shares at $1000; the
> other entry would be to increase my taxable distribution category by $1000.
> But what next? My checking account doesn't have the $1000 increase, but
> then what is the "other" category to use for that transaction??

Please forget the notion of "category". Some accounting packages have
that, but it seems to be basically a confusing synonym for "expense-type
account" and maybe "income-type account).

GnuCash has _accounts_. You have an asset-type account for your checking
account, and another asset0type account for your security(ies).

When you sell shares for cash, you increase the balance in your checking
account and decrease the balance in your security account, like this:

Debit (left-hand number column) to Assets:Checking Account
Credit (right-hand column) to Assets:Security(ies).

Taxable distribution is not an account, and the distribution is _not_
_income_. Your net worth is the same after the sale and distribution as
it was before the sale.

Yes,I know that the amount of an IRA distribution must be reported as
taxable income on your form 1040, but in an accounting sense it is not
income.

And speaking of distributions, did you miss the note I posted at 11:33
this morning (Pacific time)? I really don't know why you have no choice
about having withholding taken from an IRA distribution. You can
_choose_ to do it, or you can file estimated taxes, or maybe your income
is low enough that you don't even need to do that. But -- unless the
money is going outside the United States -- you have a _choice_ about
whether to have withholding. I gave citations and quotes from the IRS
website.

Stan Brown
Tehachapi, CA, USA
https://BrownMath.com