[GNC] Tracking Unrealized Capital Gains

sunfish62 at yahoo.com sunfish62 at yahoo.com
Wed Jul 24 00:07:31 EDT 2024


That's a very interesting approach, and one that I'll be looking into. The crux for me will be whether the return on time invested will be worth it.

Others have made their points on the topic already, so I'll just focus on your second question. Personally, I'd go with the single account approach and enter the asset as the description. I've been using this approach for dividends for a long while now, and it's pretty useful. Each dividend uses the same "[ticker] dividend" description, which makes it quick to enter and quick to report on. (I'll note that I use separate income accounts for separate brokerage accounts, since I'll receive tax forms for each of these accounts.) Although it's not an exact match to your situation, it's pretty close. 

⁣David T. ​

On Jul 24, 2024, 12:59 AM, at 12:59 AM, David Warren <david at warren1.net> wrote:
>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
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