[GNC] When income is not income

[Stan Brown (using GC 4.14)]

On 2025-07-02 13:32, David Cousens wrote:
> Stan,
> 
> You seem to be thinking of basis as in "tax basis", but there is a more
> general accounting meaning.  
> 
> The basis of an asset as Michael pointed out will initially be its cost
> of purchase together with any additions to its value. 

It's those additions I'm not clear on.  Here's a reprint of the
questions I asked Michael; on that point:

> So initially I show the account balance for that annuity asset as what I
> paid for it in June 2024. Does it stay that way, or do I adjust based on
> annual statements?
> 
> Say in January 2025 I get my annual statement showing that a Fair Market
> Value (FMV) that is more than I paid. Do I debit my annuity asset with
> the difference and credit Accumulated Unrealized Gains/Losses?
> 
> Payments start in June 2025, so each month I debit Checking Account and
> credit Annuity Income as you suggested.
> 
> In January 2026, let's say my annual statement shows an FMV that is
> $7000 higher than (FMV a year earlier) minus (7 × monthly payments).
> Again, do I debit the annuity asset $7,000 and credit Accumulated
> Unrealized Gains/Losses. Or does the annuity asset just stay at the
> amount I paid, until my death wipes it out?


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