[GNC] Tracking Unrealized Capital Gains

[David Warren]

I have been using gnucash for almost a year and have a fairly sophisticated
set of personal accounts, with lots of investment (asset) accounts.

Basically, I have settled on two types of investment (asset) accounts:

   1. Ones where I want to adjust values regularly via adjusting the price
   of an underlying security, and hence I create these investment asset
   accounts as Type Stock in gnucash, and then associate each of these Stock
   accounts with a created security, and
   2. Other investment accounts where I manually adjust the valuation,
   either by debiting/crediting actual cash received into or distributed from
   the investment account, or I make manual entries for unrealized gains,
   where I debit the asset account itself (for a gain) and credit an
   Income:Unrealized Gain:Account Name for the unrealized entry.  Later, when
   I experience realized capital gains for such accounts, I credit the
   Income:Unrealized Gain account and debit an Income:Realized Gain:Account
   Name account, which then helps me set up for tax time.  I realize that the
   gnucash documentation suggests creating asset sub-accounts for Cost vs.
   Unrealized Gain, but (so far), it works for me to use the individual asset
   account to handle both initial cost and subsequent gains/losses of various
   types.


I have two initial questions about the above set up:

   1. When I use Asset accounts of type Stock, and when I update prices in
   the Price Database, and see the "Current Value" of these asset accounts
   generally grow, is gnucash creating debit/credit entries somewhere to
   reflect these changes in value?  or no, I can see a "current value" that
   exceeds cost basis, and I can set certain asset reports to see updated
   current values, but there actually are no accessible debit/credit shadow
   entries that I can somehow access / see / visualize / use?
   2. In either scenario, when I update valuations (say once every 3 months
   or so), in addition to seeing new asset values in the asset accounts, I
   would like to track Deferred Capital Gains Taxes liability account(s),
   reflecting the amounts I would owe the government in taxes were I to sell
   investments and monetize capital gains.  I am curious how other people with
   sophisticated investment accounts track deferred capital gains taxes in
   gnucash.  First, do you create an individual Liability:Deferred Taxes
   Unrealized Gains account (as I have so far), and then use the Description
   or other fields to indicate which investments resulted in
   increasing/decreasing this liability account?  Do you blow up your account
   structure by creating Liability:Deferred Taxes:Investment 1, 2, 3, etc.
   accounts for each and every investment account?  When I increase the value
   of an investment asset account, I generally also credit this Deferred Taxes
   liability account and debit an Expenses:Taxes:Deferred account.  But I've
   generally manually entered these unrealized gains entries as separate
   individual entries at quarter end, whereas I think it might make it easier
   for me to audit/track if when I debit the asset account (for unrealized
   gains), I go ahead and credit the income:unrealized Gain account, but in
   that same 'split' entry, also credit the deferred tax liability account and
   debit the Expenses:Taxes:Deferred account.  Do others do these 4-handed
   entries in this manner?   If so, then if no entries are actually created
   for the asset accounts of type Stock, I would just continue to create
   manually the Deferred Tax expense debits and liability account credits as I
   have been doing.  I realize I have an inconsistency in that I currently
   create/track *individual *Income: accounts for Unrealized Gains for each
   investment account, but on the deferred tax Liability side (as well as for
   Expenses:Taxes:Deferred tracking) I am lumping the transactions together
   into single catch-all Tax Liability and Tax Expense accounts.  I'm curious
   how others who have cycled through many tax years handle this.

Everything should have a *reason *for tracking.  My reason is that if there
are gains in certain of my investment accounts, I don't want my net worth
to appear higher than it actually is, and I want to be prepared for large
tax bills (high class problem) where I will need cash to pay the government
when investment gains are ultimately realized.

Thanks in advance for any tips or realized practices...

David