[GNC] how to record tax credit for capital loss

[Geoff]

Hi Mattia

Please see attached a screenshot showing my suggestion - I am not an 
accountant.  For simplicity I have not split the Tax Credit accounts by 
Broker and Year, but you already have this in hand.  I have also 
included the transaction for writing off a lapsed tax credit after 4 years.

In words:
(1) Book the tax credit as an asset at the time of sale.
(2) Transfer the relevant tax credits to offset your income at tax time.
(3) Book any expired tax credits as an expense.


Hope this helps.

Regards

Geoff
=====

On 24/01/2024 8:43 am, Mattia Rizzolo wrote:
> Hello,
> 
> I'd like some input on how to best record a tax credit due to capital
> loss, and possibly the following usage of such credit.
> Disclaimer: I'm not doing this for anything worth, it's a personal book
> that nobody but me sees, so I can take a few liberties and not follow
> whatever regulation to the letter.  Besides, I have no formal education
> on accounting.
> 
> 
> The case is the following:
> 
> 1 buy security A, cost $100
> 2 buy security B, cost $100
> 3 sell security A, get $90
> 3a → record $10 loss
> 3b → get a $10 tax credit on following capital gains
> 4 sell security B, get $120
> 4a → record $20 gain
> 4b → offset $10 from 3b
> 4c → pay tax on the remaining $10 (26%, $2.6 over here)
> 
> I reckon all jurisdictions have something similar in concept, all with
> their differences in details.
> 
> This is a tad further complicated by the fact that each broker has its
> own "bucket" of credits (can't comingle losses and gains across
> different brokers).  Also the credits expire after 4 years, so I should
> record under which year they matured.  As such, I expect an addition to
> my CoA, such as:
>      Assets
>        |- Credits
>              |- Capital Loss credits
>                      |- broker 1
>                           |- 2020
>                           |- 2021
>                           |- 2022
>                           |- 2023
>                           |- 2024
>                      |- broker 2
>                           |- 2022
>                           .....
> 
> 
> 
> I've been using gnucash for ~3 years now, but I always procrastinated on
> figuring out the 3b/4b steps, just posting the resulting net tax
> transaction as computed by the broker.
> For me it's really not obvious what's the opposing account from where
> the money should come/go...
> How do people do it here? :)
> 
> 
> Thank you for all the hints!
> 
> 
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