[GNC] Dealing with mutual funds

[R Losey]

I stand corrected (well, really, I'm sitting corrected)


On Wed, Nov 6, 2024 at 3:03 PM sunfish62 at yahoo.com <sunfish62 at yahoo.com>
wrote:

> According to H&R Block, determining your basis involves "generally the
> purchase price plus any commissions or fees paid."
>
> So, unless I'm missing something, no, your brokerage *won't* report a gain
> in this example, since gains are calculated against your basis, and not the
> price. And basis includes fees.
>
> David T.
> On Nov 5, 2024, at 11:13 PM, R Losey <rlosey at gmail.com> wrote:
>>
>> A very interesting way to look at it; I agree that many exchange services
>> have a "worse" rate because it includes their fee; others show a "good"
>> rate, but tack on fees. And clearly, if there is no fee shown in a receipt,
>> one cannot enter calculate it.
>>
>> Although your statements about the stock are true as far as they go, I
>> would have thought that if you purchase a stock at $9.50/share, that is the
>> "price".  Your "cost" is actually $10/share.  My understanding is that if
>> you sell it for $9.75/share, the brokerage will report that you have a gain
>> of $0.25/share, and one will be liable for applicable taxes on capital
>> gains.  "Price" and "cost" are not the same thing.
>>
>>
>> On Mon, Nov 4, 2024 at 10:23 PM sunfish62 at yahoo.com <sunfish62 at yahoo.com>
>> wrote:
>>
>>> Note: I am not an accountant, and am based in the US, whose laws will
>>> differ from Switzerland's.
>>>
>>> I agree that the Dividends account belongs under Income.
>>>
>>> As an overview, Richard, I'd point out that if you buy something for
>>> 1000, and 10 of the cost is for tax (or delivery, or service charges, or
>>> whatever), your cost is still 1000. While it may be interesting to identify
>>> those specifics, for personal books, it is a lot of work that has little
>>> benefit.
>>>
>>> In specific:
>>>
>>> Many forex outfits I encounter don't even tell you their fees. They
>>> simply tell you the final exchange rate you receive. To track the fees,
>>> you'd have to know the inner workings of each firm and calculate them
>>> yourself (or know the rate they are getting, and calculate the difference)
>>> . Personally, it's not important information for the amount of work
>>> involved. (This is similar to the recurring discussion about mortgage
>>> payments that do not match)
>>>
>>> Similarly, with the stock, you can say that you bought that stock at
>>> 9.50 a share, but if you don't recoup the service charge, you'll still lose
>>> money when you sell at 9.75 a share. Moreover, in GnuCash, if you use the
>>> lot feature to manage capital gains, it will mis-calculate the gains if you
>>> track the service fees separately. At least, that was my experience when I
>>> used the lot feature some years back.  (I stopped using it for various
>>> reasons)
>>>
>>> And a final note: GnuCash never stores the exchange rate. It calculates
>>> it from the two (actual) amounts include in the transaction. Focusing on
>>> the number there (and whether it matches what the broker says the share
>>> price is) will result in dissatisfied experiences since it never matches.
>>>
>>> David T.
>>> On Nov 5, 2024, at 3:59 AM, R Losey <rlosey at gmail.com> wrote:
>>>>
>>>> Hello.
>>>>
>>>> I don't think that the "USD Dividends" would be under IBKR - that should be
>>>> somewhere else, probably under "Income" somewhere. When you are paid a
>>>> dividend, it either goes into the "Cash" fund, or else it is reinvested and
>>>> more stock is purchased.  If the dividends are invested, you'd have a
>>>> "purchase" of that stock.  For example, if you received $100 in dividends
>>>> and it purchased 5 shares of VT stock (using simple numbers to keep it
>>>> easy), you have a transaction in IBKR-VT that purchased 5 shares for $100
>>>> and the "other" account would be an income account -- for me, it goes in
>>>> "Income:Investment Income:Taxable:Dividends".
>>>>
>>>> Other comments -- see below, but I do want to note (as others have) that I
>>>> am not an accountant.
>>>>
>>>>
>>>> On Sun, Nov 3, 2024 at 4:25 AM Boniforti Flavio <boniforti.f at gmail.com>
>>>> wrote:
>>>>
>>>>  Hi Richard.
>>>>>  I think I was already going that route -->
>>>>>  [image: image.png]
>>>>>
>>>>>  As of now, I have just put all the CHF Cash in that account.
>>>>>  As I've added CHF in 5-6 different transactions and in between those I
>>>>>  have also converted to USD and bought VT stocks, would I need to zero the
>>>>>  "CHF Cash" account, then add each CHF wire transfer transaction
>>>>>  individually?
>>>>
>>>>
>>>>
>>>> If each wire transaction is separate, there is the chance that the exchange
>>>> rate would be different, so I would enter them as different transactions.
>>>>
>>>> But unless you take all of the funds from the CHF Cash account, it doesn't
>>>> need to be zeroed.  Assuming that there is $1000 in CHF Cash and $1000 in
>>>> USD Cash, you could remove any or all of the CHF Cash, and then add the
>>>> appropriate USD amount to the USD Cash account.
>>>>
>>>> Next, you would have a transaction for the purchase of VT stock, with the
>>>> funds comes from the USD Cash account.
>>>>
>>>>
>>>>
>>>>  And then for each currency conversion I did, create the according
>>>>>  transaction between "CHF Cash" and "USD Cash" accounts, after which I would
>>>>>  add the VT purchase transactions - right?
>>>>
>>>>
>>>>
>>>> That sounds right to me.
>>>>
>>>>
>>>>
>>>>  If I do it like that, I could "hide" the ForEx trading fees by simply
>>>>>  adjusting the conversion rate (like if I had converted CHF 1'000.- and I
>>>>>  got USD 1'140.- and paid 1 USD fees, I could just "ignore" the fee and
>>>>>  adjust the conversion rate so that it gives CHF 1000 --> USD 1140). Would
>>>>>  that work?
>>>>
>>>>
>>>>
>>>> It may "work" but it would probably be more accurate to have a split
>>>> transaction with that shows the CHF 1'000 decreasing by 1'000 and then the
>>>> USD account going up by 1'141 with a USD 1 decrease assigned to the account
>>>> where you track the exchange fees. That way the CHF-to-USD rate would be
>>>> correct, and you could see what you are paying for exchange rates.
>>>>
>>>>
>>>>
>>>> | Would this process also work when buying VT stocks? In that case, I buy a
>>>> fixed amount of VT stocks at the VT price, and I could
>>>> | "hide" the fees by adjusting the stock unit price?!
>>>>
>>>> Again, I suppose you **could** do that, but I usually put the fees in
>>>> separately. If I spend $1000 purchasing a stock that is worth $998, the
>>>> other $2 is assigned to my account for Investment Fees
>>>> ("Expenses:Investment:Fees")
>>>>
>>>>
>>>>
>>>>  What's not clear to me at this point is: if I will have 1000 VT stocks,
>>>>>  where will the actual value be reflected/calculated? Is it depending on
>>>>>  manual retrieving the VT quotes via Finance::Quote?
>>>>
>>>>
>>>>
>>>> Yes, if you are getting quotes via the stock quote your VT value will
>>>> reflect the last price update you retrieve. It will NOT change your
>>>> transaction.  However, by "hiding" the fee as you propose, it will look
>>>> like you've lost money when you have not. See the following example:
>>>>
>>>> You spend $100 to purchase 10 shares of VT, but there is a fee of $5.  The
>>>> reality is that you paid $95 for those 10 shares, or $9.50 a share...
>>>> however, by "hiding" the fee in the price, it looks as if you paid
>>>> $10/share.  The next day, the price goes up to $9.75 -- you have actually
>>>> gained $2.50 ($0.25 gain on 10 shares); however, in GnuCash, it will look
>>>> like the price has "dropped" from $10 to $9.75 and that you have lost $0.25
>>>> per share).
>>>>
>>>>
>>>>
>>>>  Thanks,
>>>>>  F.
>>>>
>>>>
>>>>
>>>> I hope this is helpful...
>>>>
>>>>
>>>>
>>>>
>>>>>  Am Mo., 21. Okt. 2024 um 19:32 Uhr schrieb R Losey <rlosey at gmail.com>:
>>>>>
>>>>>
>>>>>>  --
>>>>>> ------------------------------
>>>>>>
>>>>>>  Richard Losey
>>>>>>  rlosey at gmail.com
>>>>>>  Micah 6:8
>>>>>
>>>>>
>>>>>
>>>>>
>>
>> --
>> _________________________________
>> Richard Losey
>> rlosey at gmail.com
>> Micah 6:8
>>
>

-- 
_________________________________
Richard Losey
rlosey at gmail.com
Micah 6:8