Chris, It has been several years since I had a similar situation, but I see that GnuCash still has a stock split assistant (Chapter 11, I think of the tutorial) which helps to mash all of the parts of a split into a single transaction. Did you try that?
David C On Thu, May 18, 2017 at 3:18 AM, Chris Good <chris.g...@ozemail.com.au> wrote: > From: John Ralls [mailto:jra...@ceridwen.fremont.ca.us] > Sent: Tuesday, 16 May 2017 2:05 PM > To: Chris Good <chris.g...@ozemail.com.au> > Cc: GnuCash User Mailing List <gnucash-user@gnucash.org> > Subject: Re: Trial Balance does not include amount of Return of Capital > Investment splits > > > > > > On May 15, 2017, at 8:42 PM, John Ralls <jra...@ceridwen.fremont.ca.us > <mailto:jra...@ceridwen.fremont.ca.us> > wrote: > > > > > On May 15, 2017, at 7:41 PM, Chris Good <chris.g...@ozemail.com.au > <mailto:chris.g...@ozemail.com.au> > wrote: > > Hi, > > > > I'm airing this before I raise a bug. > > > > I've noticed that if you do a Return of Capital transaction [1] > > I.e. Stock split with Shares=0, Price=0, Sell=Return of Capital value, > > the Trial Balance no longer balances by the value of the Return of Capital. > > > > The stock line value in the report does not include the Sell value of the > RoT split. > > > > Can anyone throw any light on this? > > > > The Balance sheet also shows the incorrect asset value of the stock, but it > still balances > > because it (incorrectly?) also shows Unrealised Gains in Equity with the > value of the RoT. > > > > [1] https://www.gnucash.org/docs/v2.6/C/gnucash-guide/invest-retofcap.html > > > > Regards, Chris Good > > > A return of capital when booked that way creates an unrealized capital > gain: > You have the same number of shares but a lower basis. You can either > recognize the capital gain or find a different way to record the RoC. > > > > It occurred to me that I should explain that a bit more fully. > > > > The original buy transaction sets the basis, and any transaction that > changes the balance of money<->shares will affect the trial balance, so you > need another pair of splits that adjusts Equity to compensate, just as you > do when you sell a security. > > > > Under US tax law (the only flavor I know anything about) RoC reduces the > basis so that taxes on it are deferred until one sells the asset > > and furthermore are at the (much lower) capital gains rate. There may be > other benefits as well depending on the industry the company is in; those > companies generally issue special tax documents (called "K-1s" in the US) > that are a serious PITA to deal with. Most of the tax advantages other than > the deferment are useful only to people in high tax brackets, so that sort > of investment generally makes sense only to that sort of investor and makes > no sense at all (except maybe diversification) in tax-deferred accounts > like > retirement accounts. The rules are likely different in other jurisdictions, > so investors should study up and seriously consider consulting an > accountant > before investing. > > > > Anyway, if your jurisdiction allows you to reduce the basis of the > investment instead of immediately recognizing the income then you'll want > to > set up a non-taxable income hierarchy with a "returned capital" account in > which to recognize the income and to get your trial balance to balance. > You'd otherwise treat it like any other capital gain/loss. > > If your jurisdiction doesn't allow you to defer recognizing the income by > reducing the basis then an RoC is just a dividend with a funny name and you > should book it accordingly. > > > > Regards, > > John Ralls > > > > Hi John, > > > > (Sorry about wrong abbreviation RoT I used previously when I meant RoC) > > > > Thanks very much for your input. Interesting to hear about US tax law. > Australian tax law seems similar, at least as far as recording in GnuCash > is > concerned, but not as complicated thankfully. > > My RoC transactions are actually to do with a stock split where the value > of > one stock is reduced, but not the no of shares, and a no of a different > stock are created for the same value. In my very limited, inexpert > investment experience, the Aust Tax Office has made a ruling shortly after > the split, detailing what the cost of the shares involved should be. > > > > Using the RoC transaction to reduce the original shares works fine with the > Advanced Portfolio Rpt, but not with the Trial Balance, which makes using > the TB to validate the correct capital gain/loss value of other sales more > complicated than it should be. > > > > I tried everything I could think of to add another pair of splits that > adjusts Equity as you suggested, but could not find anything that ends up > with the right figures in all accounts and a balancing Trial Balance. Could > you please give more detail? > > > > As the RoC transaction seems to be a problem, I thought that instead of > doing a ROC, I would sell all the stock at cost (so there is zero > gain/loss) > and then buy all for the new cost but this comes up with a TB I don't > understand at all. E.g. > > > > (Trading Accounts not on, and only 1 currency used, GnuCash 2.6.16, Windows > 10) > > > > Tx 1 01/07/2016 Opening Balance > > $1000 DR Assets:Current Assets:Bank1 > > $1000 CR Equity:Opening Balances > > > > Tx 2 01/08/2016 Tfr Bank to Brokerage > > $500 DR Assets:Investments:Brokerage1 > > $500 CR Assets:Current Assets:Bank1 > > > > Tx 3 02/08/2016 Buy 500 Stock1 for $1 Ea > > $500 DR Assets:Investments:Brokerage1:Stock1 (Shares 500, Price $1) > > $500 CR Assets:Investments:Brokerage1 > > > > Tx 4 03/08/2016 Dummy Return of Capital - Sell all at Cost > > $500 DR Assets:Current Assets:Bank1 > > $500 CR Assets:Investments:Brokerage1:Stock1 (Shares -500, Price $1) > > > > Tx 5 03/08/2016 Dummy Buy all shares at reduced cost > > $400 DR Assets:Investments:Brokerage1:Stock1 (Shares 500, Price $0.80) > > $400 DR Assets:Current Assets:Bank1 > > > > The Trial Balance as at 3/8/2016 (Commodities Price Source: Nearest in > Time) > shows: > > > > $600 DR Assets:Current Assets:Bank1 > > $500 DR Assets:Investments:Brokerage1:Stock1 Expected $400 > > $1000 CR Equity:Opening Balances > > $50 CR Unrealized Gains > Expected $0 > > > > DR Total $1,100 > > CR Total $1,050 > > > > Am I misunderstanding? > > > > Regards, Chris Good > > > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > https://lists.gnucash.org/mailman/listinfo/gnucash-user > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. > _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. 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