[GNC] Return of capital, lots & accurate gains

[Alton Brantley]

Here’s how I handle this:
During the year, these are mostly recorded as Income:Dividends. Occasionally they are explicitly listed as Assets:Return of Capital. 
When dividends are reclassified, I reduce Income:Dividends and increase Assets:ROC.
 Since the only time the ROC comes into play is upon sale of the stock, I just reduce outstanding ROC by the percentage of shares sold and add that amount as a Capital Gain for the transaction. 

Example for Company A:

Dividend increases cash asset

Dividend payment
Cash:           50
Dividend:A.         50

Reclassification to ROC of 50% of Dividends converts that to an Unrealized Capital Gain
Dividend:A. 25
A:ROC                  25

So now, net dividend from A is 25 and I have an unrealized asset of 25

Assuming I have 200 shares of A and I sell 100 shares
The sale produces a Realized Gain transaction for the lot which doesn’t capture the ROC, I add a transaction that takes 50% of the ROC and credits it as a Gain. 

Recapture of ROC
A:ROC.           12.50
RealizedGain.         12.5

Leaving the remaining A:ROC to be applied when the other shares are sold.
For different lots acquired at different times, I prorate the ROC over lots, so I have accounts like
A:ROC:Lot 0
A.ROC:Lot 1
A.ROC:Lot 2
etc.


--Alton Brantley