Re: [GNC] how to record tax credit for capital loss
Thank you Geoff! Yours is probably closer to what I had in mind when I started the thread. Thank you in particular for your precise screenshot, that's very helpful. I'll try to decide what's effectively best for me now, since it's not so obviously clear. On Thu, Jan 25, 2024 at 6:36 AM Geoff wrote: > Hi Mattia > > Please see attached a screenshot showing my suggestion - I am not an > accountant. For simplicity I have not split the Tax Credit accounts by > Broker and Year, but you already have this in hand. I have also > included the transaction for writing off a lapsed tax credit after 4 years. > > In words: > (1) Book the tax credit as an asset at the time of sale. > (2) Transfer the relevant tax credits to offset your income at tax time. > (3) Book any expired tax credits as an expense. > > > Hope this helps. > > Regards > > Geoff > = > > On 24/01/2024 8:43 am, Mattia Rizzolo wrote: > > Hello, > > > > I'd like some input on how to best record a tax credit due to capital > > loss, and possibly the following usage of such credit. > > Disclaimer: I'm not doing this for anything worth, it's a personal book > > that nobody but me sees, so I can take a few liberties and not follow > > whatever regulation to the letter. Besides, I have no formal education > > on accounting. > > > > > > The case is the following: > > > > 1 buy security A, cost $100 > > 2 buy security B, cost $100 > > 3 sell security A, get $90 > > 3a → record $10 loss > > 3b → get a $10 tax credit on following capital gains > > 4 sell security B, get $120 > > 4a → record $20 gain > > 4b → offset $10 from 3b > > 4c → pay tax on the remaining $10 (26%, $2.6 over here) > > > > I reckon all jurisdictions have something similar in concept, all with > > their differences in details. > > > > This is a tad further complicated by the fact that each broker has its > > own "bucket" of credits (can't comingle losses and gains across > > different brokers). Also the credits expire after 4 years, so I should > > record under which year they matured. As such, I expect an addition to > > my CoA, such as: > > Assets > >|- Credits > > |- Capital Loss credits > > |- broker 1 > > |- 2020 > > |- 2021 > > |- 2022 > > |- 2023 > > |- 2024 > > |- broker 2 > > |- 2022 > > . > > > > > > > > I've been using gnucash for ~3 years now, but I always procrastinated on > > figuring out the 3b/4b steps, just posting the resulting net tax > > transaction as computed by the broker. > > For me it's really not obvious what's the opposing account from where > > the money should come/go... > > How do people do it here? :) > > > > > > Thank you for all the hints! > > > > > > ___ > > gnucash-user mailing list > > gnucash-user@gnucash.org > > To update your subscription preferences or to unsubscribe: > > 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. -- regards, Mattia Rizzolo GPG Key: 66AE 2B4A FCCF 3F52 DA18 4D18 4B04 3FCD B944 4540 .''`. more about me: https://mapreri.org : :' : Launchpad user: https://launchpad.net/~mapreri `. `'` Debian QA page: https://qa.debian.org/developer.php?login=mattia `- ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: 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.
Re: [GNC] how to record tax credit for capital loss
> If I run out of past credits then that's a final gain, that's taxable > the moment it's realized (and some brokers straightly withold it from > the selling price!), it's not possible to offset with a future loss > within the same year. It should be total obvious that to minimize taxes if you were selling two different positions for a net of no gain or loss, then you'd better sell the loss on day 1 and the gain on day 2. I would not want to risk my broker trading the gain a few seconds before the loss. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: 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.
Re: [GNC] how to record tax credit for capital loss
On Wed, Jan 24, 2024 at 08:26:02AM -0800, Patrick James wrote: > So if you have a DR balance in your Brokerage 1 2020 account, then > you'd credit that account if you sold for a gain today, until the > account balance is zero, and then you'd credit 2021 for the leftover > CR amount, up to the 2021 DR balance, and so on and so forth. Exactly. > Eventually you'll run out of gain, or you'll have to credit the remaining CR > balance to the current year account (Brokerage 1 2024), which you might be > able to offset with a future DR, if you sold something for a loss, and that > future transaction meets the right windows of time. If I run out of past credits then that's a final gain, that's taxable the moment it's realized (and some brokers straightly withold it from the selling price!), it's not possible to offset with a future loss within the same year. For a bit of background: here in Italy there are 2 main tax regimes for securities: this one I'm having, where brokers do all the work, where load prices is the average of the buys, and it has its quirks; and then the other where the owner does all the work, and the prices are accounted with a LIFO, and it has its quirks; in this letter regime indeed I could offset gains and losses as you expect them to, just summing up all the gains and losses in a year, and pay tax on the difference, but it's usually not really as convinient as it seems due to additional reporting requirements. -- regards, Mattia Rizzolo GPG Key: 66AE 2B4A FCCF 3F52 DA18 4D18 4B04 3FCD B944 4540 .''`. More about me: https://mapreri.org : :' : Launchpad user: https://launchpad.net/~mapreri `. `'` Debian QA page: https://qa.debian.org/developer.php?login=mattia `- signature.asc Description: PGP signature ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: 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.
Re: [GNC] how to record tax credit for capital loss
Ah. I missed the carryover part. That does complicate things. Sorry for the noise. David T. On Jan 24, 2024, 6:55 PM, at 6:55 PM, Mattia Rizzolo wrote: >Here we don't do LT/ST, but it's only possible to offset losses up to >the end of the 4th year after the loss was realized. Meaning that 2019 >losses are now in stone. Besides, one offests losses by fist pickin >the >furtherst year first, so it's good to know how much is left to offset >from each given year for each broker (it's common practice in Q4 to >look >at what's left over from 3-4 years before and evaluate what to do to >not >lose the credit). > >See the screenshot of what I got right now, for example. >Wouldn't obtaining these numbers, by putting both losses and gains in >the same bucket and then using the standard-provided reports, be >unnecessarily hard? > > >Again, note that I'm not using this to compute my own taxes, that's >done >by the brokers already (I'm nowhere near the volume where it would make >sense for me to take over that "job" - which I could fwiw), but I do >want my data to match theirs. > > >On Wed, Jan 24, 2024 at 06:32:08PM +0300, David T. via gnucash-user >wrote: >> Likewise not an accountant. >> >> In the US (my tax authority), gains are taxed at two rates (long term >and short term), and gains and losses offset each other. I maintain >separate income accounts for short term and long term gains/losses >(income accounts because I'm an optimist!). These are placed in parent >accounts for the brokerage (since each broker sends its own tax >reports). There's no need to separate by year, since a saved report >gives me last year's data instantly. >> >> To summarize: >> >> Income >> - Realized gains >> - - Broker 1 >> - - - LT gains >> - - - ST gains >> - - Broker 2 >> - - - LT gains >> - - - ST gains >> >> David T. >> >> On Jan 24, 2024, 5:22 PM, at 5:22 PM, Patrick James > wrote: >> >Again keeping in mind that I am NOT a tax authority. >> > >> >Now that we're on the equity side, let's move forward with your >> >tracking. >> > >> >I very much doubt that you need two separate accounts for the losses >> >and gains; from what you're suggesting, you need to match some gains >> >with some losses. I would match these in a single account " >Capital >> >Gains" where it is known that CR is "gain" (the expected/desired >> >'normal' balance) and DR is "loss." Just labeling an account >"Capital" >> >is difficult when looking back/keeping track of what is what. And >one >> >need not label it "Capital Gain or Loss," as the "or loss" part is >> >understood based on the balance in the account. >> > >> >Given what you are requesting, I'd have something like this: >> > >> >Capital Gain >> >2017 Broker 1 >> >2017 Broker 2 >> >2018 Broker 1 >> >2018 Broker 2 >> > >> >You would know what is best in terms of subaccounts. >> > >> >Then run reports if you need some specific information, which could >> >include separating the losses from the gains based on the debits and >> >credits. >> > >> >Keep in mind that I'm providing some ideas about how to use GNUCash >as >> >a tool, and I have no idea about your tax requirements. >> > >> > >> >> On 01/24/2024 3:11 AM PST Mattia Rizzolo >wrote: >> >> >> >> >> >> Thank you Patrick for your suggestion! >> >> >> >> I see what you are suggesting here… Mh. >> >> >> >> It could easily become very messy as the rules for offsetting >gains >> >is >> >> fairly annoying here: gains some financial instruments can offset >> >losses >> >> only from some other particular financial instruments (i.e., >"gains" >> >> from the dividends can *never* be offeset, or losses from stocks >> >can't >> >> be offset by gain on ETFs, etc)… Plus the fact that I'd need to >> >split >> >> losses by years and brokers… it's going to be annoying to have an >> >> account clearly state the "correct" credit I'm due this way. >> >> >> >> >> >> But I think you may have pointed me to the right direction, of >> >keeping >> >> everything within the equities, here is what I've done: >> >> (yes, I realize that income/expenses are "the same thing") >> >> >> >> Expenses >> >> |- Capital Loss >> >> |- Broker 1 >> >> |- 2017 >> >> |- 2020 >> >> |- 2021 >> >> |- 2023 >> >> Income >> >> |- Capital Gain >> >> >> >> So, I changed my losses to be posted against the proper "capital >> >loss" >> >> account instead of being a negative gain, and then I'm posting the >> >> future gains as compensation of that loss (and only for the part >that >> >> can be compensated). >> >> This way indeed the balance of the Broker1 account does match with >> >what >> >> the broker is showing me. >> >> >> >> >> >> Do anybody believe I may be missing something out when recording >> >capital >> >> gains/losses this way? >> >> >> >> >> >> On Tue, Jan 23, 2024 at 03:43:03PM -0800, Patrick James wrote: >> >> > Let's start with your best bet is to work with your tax >> >professional as to
Re: [GNC] how to record tax credit for capital loss
You mention picking the earliest year to minimize the tax liability (i.e. maximize the loss matching), but within a window of time. > On 01/24/2024 7:53 AM PST Mattia Rizzolo wrote: > > Besides, one offests losses by fist pickin the > furtherst year first, so it's good to know how much is left to offset > from each given year for each broker (it's common practice in Q4 to look > at what's left over from 3-4 years before and evaluate what to do to not > lose the credit). The normal balance is CR in the equity account, but for tax purposes you're looking for a zero/DR balance. According to what you're suggesting, you can match current CRs (gains) to past DRs (losses), but you can only offset the DR balance within a given window of time (and there are some tax reporting periods in this discussion). So if you have a DR balance in your Brokerage 1 2020 account, then you'd credit that account if you sold for a gain today, until the account balance is zero, and then you'd credit 2021 for the leftover CR amount, up to the 2021 DR balance, and so on and so forth. Eventually you'll run out of gain, or you'll have to credit the remaining CR balance to the current year account (Brokerage 1 2024), which you might be able to offset with a future DR, if you sold something for a loss, and that future transaction meets the right windows of time. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: 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.
Re: [GNC] how to record tax credit for capital loss
I also should add that I am not an accountant. Having said that... I'd do like David said... since the category is called Capital "Gains", I'd make it an Income category, with sub-categories for each broker (hopefully there aren't too many), and maybe every year. I say "maybe" because if you just record the gains/losses as they occur by broker, you can see where you stand by the balance at the end of each year, and there would be no need to. But I'm puzzled at what you wrote: You wrote that the 2019 losses are "now set in stone", but surely, the losses for 2019 are set in stone when 2019 ended, weren't they? Don't you mean that now that it's 2024, you can no longer use losses from 2019 to offset new gains? Anyway, using your example, you'd record a $10 loss on security A against Capital Gains. It would show a negative balance. Then you'd record the sale of security B with a $20 gain... that would make the Capital Gains show a $10 balance. In the following year, if you sold security C for a $15 loss, the Capital Gains balance would now by negative $5. One the capital gains / losses can no longer be used, you can zero out that year by transferring the gain or loss to Equity... suppose 2019 shows a loss that you never got to use of $20... you'd make an entry on 31 Dec 2023, with a credit of $20 to Capital Gain and a debit of $20 to Equity (because it's a loss). That way your current state will show in the charts list, and you can open up the Capital Gains account and check at the last entry for a year to see where that year stands. The online GnuCash document has examples of selling stock and recording the gain/loss. On Wed, Jan 24, 2024 at 9:54 AM Mattia Rizzolo wrote: > Here we don't do LT/ST, but it's only possible to offset losses up to > the end of the 4th year after the loss was realized. Meaning that 2019 > losses are now in stone. Besides, one offests losses by fist pickin the > furtherst year first, so it's good to know how much is left to offset > from each given year for each broker (it's common practice in Q4 to look > at what's left over from 3-4 years before and evaluate what to do to not > lose the credit). > > See the screenshot of what I got right now, for example. > Wouldn't obtaining these numbers, by putting both losses and gains in > the same bucket and then using the standard-provided reports, be > unnecessarily hard? > > > Again, note that I'm not using this to compute my own taxes, that's done > by the brokers already (I'm nowhere near the volume where it would make > sense for me to take over that "job" - which I could fwiw), but I do > want my data to match theirs. > > > On Wed, Jan 24, 2024 at 06:32:08PM +0300, David T. via gnucash-user wrote: > > Likewise not an accountant. > > > > In the US (my tax authority), gains are taxed at two rates (long term > and short term), and gains and losses offset each other. I maintain > separate income accounts for short term and long term gains/losses (income > accounts because I'm an optimist!). These are placed in parent accounts for > the brokerage (since each broker sends its own tax reports). There's no > need to separate by year, since a saved report gives me last year's data > instantly. > > > > To summarize: > > > > Income > > - Realized gains > > - - Broker 1 > > - - - LT gains > > - - - ST gains > > - - Broker 2 > > - - - LT gains > > - - - ST gains > > > > David T. > > > > On Jan 24, 2024, 5:22 PM, at 5:22 PM, Patrick James < > patrickjame...@comcast.net> wrote: > > >Again keeping in mind that I am NOT a tax authority. > > > > > >Now that we're on the equity side, let's move forward with your > > >tracking. > > > > > >I very much doubt that you need two separate accounts for the losses > > >and gains; from what you're suggesting, you need to match some gains > > >with some losses. I would match these in a single account " Capital > > >Gains" where it is known that CR is "gain" (the expected/desired > > >'normal' balance) and DR is "loss." Just labeling an account "Capital" > > >is difficult when looking back/keeping track of what is what. And one > > >need not label it "Capital Gain or Loss," as the "or loss" part is > > >understood based on the balance in the account. > > > > > >Given what you are requesting, I'd have something like this: > > > > > >Capital Gain > > >2017 Broker 1 > > >2017 Broker 2 > > >2018 Broker 1 > > >2018 Broker 2 > > > > > >You would know what is best in terms of subaccounts. > > > > > >Then run reports if you need some specific information, which could > > >include separating the losses from the gains based on the debits and > > >credits. > > > > > >Keep in mind that I'm providing some ideas about how to use GNUCash as > > >a tool, and I have no idea about your tax requirements. > > > > > > > > >> On 01/24/2024 3:11 AM PST Mattia Rizzolo wrote: > > >> > > >> > > >> Thank you Patrick for your suggestion! > > >> > > >> I see what you are suggesting here… Mh. > >
Re: [GNC] how to record tax credit for capital loss
(and the attachemnt) On Wed, Jan 24, 2024 at 04:53:57PM +0100, Mattia Rizzolo wrote: > Here we don't do LT/ST, but it's only possible to offset losses up to > the end of the 4th year after the loss was realized. Meaning that 2019 > losses are now in stone. Besides, one offests losses by fist pickin the > furtherst year first, so it's good to know how much is left to offset > from each given year for each broker (it's common practice in Q4 to look > at what's left over from 3-4 years before and evaluate what to do to not > lose the credit). > > See the screenshot of what I got right now, for example. > Wouldn't obtaining these numbers, by putting both losses and gains in > the same bucket and then using the standard-provided reports, be > unnecessarily hard? > > > Again, note that I'm not using this to compute my own taxes, that's done > by the brokers already (I'm nowhere near the volume where it would make > sense for me to take over that "job" - which I could fwiw), but I do > want my data to match theirs. > > > On Wed, Jan 24, 2024 at 06:32:08PM +0300, David T. via gnucash-user wrote: > > Likewise not an accountant. > > > > In the US (my tax authority), gains are taxed at two rates (long term and > > short term), and gains and losses offset each other. I maintain separate > > income accounts for short term and long term gains/losses (income accounts > > because I'm an optimist!). These are placed in parent accounts for the > > brokerage (since each broker sends its own tax reports). There's no need to > > separate by year, since a saved report gives me last year's data instantly. > > > > To summarize: > > > > Income > > - Realized gains > > - - Broker 1 > > - - - LT gains > > - - - ST gains > > - - Broker 2 > > - - - LT gains > > - - - ST gains > > > > David T. > > > > On Jan 24, 2024, 5:22 PM, at 5:22 PM, Patrick James > > wrote: > > >Again keeping in mind that I am NOT a tax authority. > > > > > >Now that we're on the equity side, let's move forward with your > > >tracking. > > > > > >I very much doubt that you need two separate accounts for the losses > > >and gains; from what you're suggesting, you need to match some gains > > >with some losses. I would match these in a single account " Capital > > >Gains" where it is known that CR is "gain" (the expected/desired > > >'normal' balance) and DR is "loss." Just labeling an account "Capital" > > >is difficult when looking back/keeping track of what is what. And one > > >need not label it "Capital Gain or Loss," as the "or loss" part is > > >understood based on the balance in the account. > > > > > >Given what you are requesting, I'd have something like this: > > > > > >Capital Gain > > >2017 Broker 1 > > >2017 Broker 2 > > >2018 Broker 1 > > >2018 Broker 2 > > > > > >You would know what is best in terms of subaccounts. > > > > > >Then run reports if you need some specific information, which could > > >include separating the losses from the gains based on the debits and > > >credits. > > > > > >Keep in mind that I'm providing some ideas about how to use GNUCash as > > >a tool, and I have no idea about your tax requirements. > > > > > > > > >> On 01/24/2024 3:11 AM PST Mattia Rizzolo wrote: > > >> > > >> > > >> Thank you Patrick for your suggestion! > > >> > > >> I see what you are suggesting here… Mh. > > >> > > >> It could easily become very messy as the rules for offsetting gains > > >is > > >> fairly annoying here: gains some financial instruments can offset > > >losses > > >> only from some other particular financial instruments (i.e., "gains" > > >> from the dividends can *never* be offeset, or losses from stocks > > >can't > > >> be offset by gain on ETFs, etc)… Plus the fact that I'd need to > > >split > > >> losses by years and brokers… it's going to be annoying to have an > > >> account clearly state the "correct" credit I'm due this way. > > >> > > >> > > >> But I think you may have pointed me to the right direction, of > > >keeping > > >> everything within the equities, here is what I've done: > > >> (yes, I realize that income/expenses are "the same thing") > > >> > > >> Expenses > > >> |- Capital Loss > > >> |- Broker 1 > > >> |- 2017 > > >> |- 2020 > > >> |- 2021 > > >> |- 2023 > > >> Income > > >> |- Capital Gain > > >> > > >> So, I changed my losses to be posted against the proper "capital > > >loss" > > >> account instead of being a negative gain, and then I'm posting the > > >> future gains as compensation of that loss (and only for the part that > > >> can be compensated). > > >> This way indeed the balance of the Broker1 account does match with > > >what > > >> the broker is showing me. > > >> > > >> > > >> Do anybody believe I may be missing something out when recording > > >capital > > >> gains/losses this way? > > >> > > >> > > >> On Tue, Jan 23, 2024 at 03:43:03PM -0800, Patrick James wrote: > > >> > Let's start with
Re: [GNC] how to record tax credit for capital loss
Here we don't do LT/ST, but it's only possible to offset losses up to the end of the 4th year after the loss was realized. Meaning that 2019 losses are now in stone. Besides, one offests losses by fist pickin the furtherst year first, so it's good to know how much is left to offset from each given year for each broker (it's common practice in Q4 to look at what's left over from 3-4 years before and evaluate what to do to not lose the credit). See the screenshot of what I got right now, for example. Wouldn't obtaining these numbers, by putting both losses and gains in the same bucket and then using the standard-provided reports, be unnecessarily hard? Again, note that I'm not using this to compute my own taxes, that's done by the brokers already (I'm nowhere near the volume where it would make sense for me to take over that "job" - which I could fwiw), but I do want my data to match theirs. On Wed, Jan 24, 2024 at 06:32:08PM +0300, David T. via gnucash-user wrote: > Likewise not an accountant. > > In the US (my tax authority), gains are taxed at two rates (long term and > short term), and gains and losses offset each other. I maintain separate > income accounts for short term and long term gains/losses (income accounts > because I'm an optimist!). These are placed in parent accounts for the > brokerage (since each broker sends its own tax reports). There's no need to > separate by year, since a saved report gives me last year's data instantly. > > To summarize: > > Income > - Realized gains > - - Broker 1 > - - - LT gains > - - - ST gains > - - Broker 2 > - - - LT gains > - - - ST gains > > David T. > > On Jan 24, 2024, 5:22 PM, at 5:22 PM, Patrick James > wrote: > >Again keeping in mind that I am NOT a tax authority. > > > >Now that we're on the equity side, let's move forward with your > >tracking. > > > >I very much doubt that you need two separate accounts for the losses > >and gains; from what you're suggesting, you need to match some gains > >with some losses. I would match these in a single account " Capital > >Gains" where it is known that CR is "gain" (the expected/desired > >'normal' balance) and DR is "loss." Just labeling an account "Capital" > >is difficult when looking back/keeping track of what is what. And one > >need not label it "Capital Gain or Loss," as the "or loss" part is > >understood based on the balance in the account. > > > >Given what you are requesting, I'd have something like this: > > > >Capital Gain > >2017 Broker 1 > >2017 Broker 2 > >2018 Broker 1 > >2018 Broker 2 > > > >You would know what is best in terms of subaccounts. > > > >Then run reports if you need some specific information, which could > >include separating the losses from the gains based on the debits and > >credits. > > > >Keep in mind that I'm providing some ideas about how to use GNUCash as > >a tool, and I have no idea about your tax requirements. > > > > > >> On 01/24/2024 3:11 AM PST Mattia Rizzolo wrote: > >> > >> > >> Thank you Patrick for your suggestion! > >> > >> I see what you are suggesting here… Mh. > >> > >> It could easily become very messy as the rules for offsetting gains > >is > >> fairly annoying here: gains some financial instruments can offset > >losses > >> only from some other particular financial instruments (i.e., "gains" > >> from the dividends can *never* be offeset, or losses from stocks > >can't > >> be offset by gain on ETFs, etc)… Plus the fact that I'd need to > >split > >> losses by years and brokers… it's going to be annoying to have an > >> account clearly state the "correct" credit I'm due this way. > >> > >> > >> But I think you may have pointed me to the right direction, of > >keeping > >> everything within the equities, here is what I've done: > >> (yes, I realize that income/expenses are "the same thing") > >> > >> Expenses > >> |- Capital Loss > >> |- Broker 1 > >> |- 2017 > >> |- 2020 > >> |- 2021 > >> |- 2023 > >> Income > >> |- Capital Gain > >> > >> So, I changed my losses to be posted against the proper "capital > >loss" > >> account instead of being a negative gain, and then I'm posting the > >> future gains as compensation of that loss (and only for the part that > >> can be compensated). > >> This way indeed the balance of the Broker1 account does match with > >what > >> the broker is showing me. > >> > >> > >> Do anybody believe I may be missing something out when recording > >capital > >> gains/losses this way? > >> > >> > >> On Tue, Jan 23, 2024 at 03:43:03PM -0800, Patrick James wrote: > >> > Let's start with your best bet is to work with your tax > >professional as to how best to keep track of what's needed for taxes. > >> > > >> > In the US, what you call a "credit" generally would not be an asset > >account. The "credit" would be a potential offset to some future gain, > >if there is any future gain, so I would leave all this over on the >
Re: [GNC] how to record tax credit for capital loss
Likewise not an accountant. In the US (my tax authority), gains are taxed at two rates (long term and short term), and gains and losses offset each other. I maintain separate income accounts for short term and long term gains/losses (income accounts because I'm an optimist!). These are placed in parent accounts for the brokerage (since each broker sends its own tax reports). There's no need to separate by year, since a saved report gives me last year's data instantly. To summarize: Income - Realized gains - - Broker 1 - - - LT gains - - - ST gains - - Broker 2 - - - LT gains - - - ST gains David T. On Jan 24, 2024, 5:22 PM, at 5:22 PM, Patrick James wrote: >Again keeping in mind that I am NOT a tax authority. > >Now that we're on the equity side, let's move forward with your >tracking. > >I very much doubt that you need two separate accounts for the losses >and gains; from what you're suggesting, you need to match some gains >with some losses. I would match these in a single account " Capital >Gains" where it is known that CR is "gain" (the expected/desired >'normal' balance) and DR is "loss." Just labeling an account "Capital" >is difficult when looking back/keeping track of what is what. And one >need not label it "Capital Gain or Loss," as the "or loss" part is >understood based on the balance in the account. > >Given what you are requesting, I'd have something like this: > >Capital Gain >2017 Broker 1 >2017 Broker 2 >2018 Broker 1 >2018 Broker 2 > >You would know what is best in terms of subaccounts. > >Then run reports if you need some specific information, which could >include separating the losses from the gains based on the debits and >credits. > >Keep in mind that I'm providing some ideas about how to use GNUCash as >a tool, and I have no idea about your tax requirements. > > >> On 01/24/2024 3:11 AM PST Mattia Rizzolo wrote: >> >> >> Thank you Patrick for your suggestion! >> >> I see what you are suggesting here… Mh. >> >> It could easily become very messy as the rules for offsetting gains >is >> fairly annoying here: gains some financial instruments can offset >losses >> only from some other particular financial instruments (i.e., "gains" >> from the dividends can *never* be offeset, or losses from stocks >can't >> be offset by gain on ETFs, etc)… Plus the fact that I'd need to >split >> losses by years and brokers… it's going to be annoying to have an >> account clearly state the "correct" credit I'm due this way. >> >> >> But I think you may have pointed me to the right direction, of >keeping >> everything within the equities, here is what I've done: >> (yes, I realize that income/expenses are "the same thing") >> >> Expenses >> |- Capital Loss >> |- Broker 1 >> |- 2017 >> |- 2020 >> |- 2021 >> |- 2023 >> Income >> |- Capital Gain >> >> So, I changed my losses to be posted against the proper "capital >loss" >> account instead of being a negative gain, and then I'm posting the >> future gains as compensation of that loss (and only for the part that >> can be compensated). >> This way indeed the balance of the Broker1 account does match with >what >> the broker is showing me. >> >> >> Do anybody believe I may be missing something out when recording >capital >> gains/losses this way? >> >> >> On Tue, Jan 23, 2024 at 03:43:03PM -0800, Patrick James wrote: >> > Let's start with your best bet is to work with your tax >professional as to how best to keep track of what's needed for taxes. >> > >> > In the US, what you call a "credit" generally would not be an asset >account. The "credit" would be a potential offset to some future gain, >if there is any future gain, so I would leave all this over on the >equity side. >> > >> > Day 0 Purchase: >> > >> > Stock (asset) $100DR >> > Cash $100CR >> > Purchase of 100 shares of Stock Y for $1 per share >> > >> > Day 365 Sale: >> > >> > Cash $90DR >> > Capital Gain $10DR >> > Stock (asset) $100CR >> > Sale of 100 shares of Day 0 Stock Y for $0.90 per share. >> > >> > NOTE: One hopes that capital gains has a CR (gain) balance, rather >than the DR balance above (loss). >> > >> > Later, if there was some sale for a gain, then the CR recorded to >Capital Gain would offset some or all of the DR. >> > >> > Also note that matching the shares as I have done above is not >always as simple as this single stock sale where all shares are >purchased on a single day and the entire holding is sold a year later. >> > >> > Again, talk to your tax professional about how to best keep the >records necessary for tax compliance. >> > >> > >> > > On 01/23/2024 1:43 PM PST Mattia Rizzolo >wrote: >> > > >> > > >> > > Hello, >> > > >> > > I'd like some input on how to best record a tax credit due to >capital >> > > loss, and possibly the following usage of such credit. >> > > Disclaimer: I'm not doing this for anything worth, it's a >personal book >> > > that nobody
Re: [GNC] how to record tax credit for capital loss
Again keeping in mind that I am NOT a tax authority. Now that we're on the equity side, let's move forward with your tracking. I very much doubt that you need two separate accounts for the losses and gains; from what you're suggesting, you need to match some gains with some losses. I would match these in a single account " Capital Gains" where it is known that CR is "gain" (the expected/desired 'normal' balance) and DR is "loss." Just labeling an account "Capital" is difficult when looking back/keeping track of what is what. And one need not label it "Capital Gain or Loss," as the "or loss" part is understood based on the balance in the account. Given what you are requesting, I'd have something like this: Capital Gain 2017 Broker 1 2017 Broker 2 2018 Broker 1 2018 Broker 2 You would know what is best in terms of subaccounts. Then run reports if you need some specific information, which could include separating the losses from the gains based on the debits and credits. Keep in mind that I'm providing some ideas about how to use GNUCash as a tool, and I have no idea about your tax requirements. > On 01/24/2024 3:11 AM PST Mattia Rizzolo wrote: > > > Thank you Patrick for your suggestion! > > I see what you are suggesting here… Mh. > > It could easily become very messy as the rules for offsetting gains is > fairly annoying here: gains some financial instruments can offset losses > only from some other particular financial instruments (i.e., "gains" > from the dividends can *never* be offeset, or losses from stocks can't > be offset by gain on ETFs, etc)… Plus the fact that I'd need to split > losses by years and brokers… it's going to be annoying to have an > account clearly state the "correct" credit I'm due this way. > > > But I think you may have pointed me to the right direction, of keeping > everything within the equities, here is what I've done: > (yes, I realize that income/expenses are "the same thing") > > Expenses > |- Capital Loss > |- Broker 1 > |- 2017 > |- 2020 > |- 2021 > |- 2023 > Income > |- Capital Gain > > So, I changed my losses to be posted against the proper "capital loss" > account instead of being a negative gain, and then I'm posting the > future gains as compensation of that loss (and only for the part that > can be compensated). > This way indeed the balance of the Broker1 account does match with what > the broker is showing me. > > > Do anybody believe I may be missing something out when recording capital > gains/losses this way? > > > On Tue, Jan 23, 2024 at 03:43:03PM -0800, Patrick James wrote: > > Let's start with your best bet is to work with your tax professional as to > > how best to keep track of what's needed for taxes. > > > > In the US, what you call a "credit" generally would not be an asset > > account. The "credit" would be a potential offset to some future gain, if > > there is any future gain, so I would leave all this over on the equity side. > > > > Day 0 Purchase: > > > > Stock (asset) $100DR > > Cash $100CR > > Purchase of 100 shares of Stock Y for $1 per share > > > > Day 365 Sale: > > > > Cash $90DR > > Capital Gain $10DR > > Stock (asset) $100CR > > Sale of 100 shares of Day 0 Stock Y for $0.90 per share. > > > > NOTE: One hopes that capital gains has a CR (gain) balance, rather than the > > DR balance above (loss). > > > > Later, if there was some sale for a gain, then the CR recorded to Capital > > Gain would offset some or all of the DR. > > > > Also note that matching the shares as I have done above is not always as > > simple as this single stock sale where all shares are purchased on a single > > day and the entire holding is sold a year later. > > > > Again, talk to your tax professional about how to best keep the records > > necessary for tax compliance. > > > > > > > On 01/23/2024 1:43 PM PST Mattia Rizzolo wrote: > > > > > > > > > Hello, > > > > > > I'd like some input on how to best record a tax credit due to capital > > > loss, and possibly the following usage of such credit. > > > Disclaimer: I'm not doing this for anything worth, it's a personal book > > > that nobody but me sees, so I can take a few liberties and not follow > > > whatever regulation to the letter. Besides, I have no formal education > > > on accounting. > > > > > > > > > The case is the following: > > > > > > 1 buy security A, cost $100 > > > 2 buy security B, cost $100 > > > 3 sell security A, get $90 > > > 3a → record $10 loss > > > 3b → get a $10 tax credit on following capital gains > > > 4 sell security B, get $120 > > > 4a → record $20 gain > > > 4b → offset $10 from 3b > > > 4c → pay tax on the remaining $10 (26%, $2.6 over here) > > > > > > I reckon all jurisdictions have something similar in concept, all with > > > their differences in details. > > > > > > This is a tad further complicated by the fact that each broker has its > > > own "bucket" of
Re: [GNC] how to record tax credit for capital loss
Thank you Patrick for your suggestion! I see what you are suggesting here… Mh. It could easily become very messy as the rules for offsetting gains is fairly annoying here: gains some financial instruments can offset losses only from some other particular financial instruments (i.e., "gains" from the dividends can *never* be offeset, or losses from stocks can't be offset by gain on ETFs, etc)… Plus the fact that I'd need to split losses by years and brokers… it's going to be annoying to have an account clearly state the "correct" credit I'm due this way. But I think you may have pointed me to the right direction, of keeping everything within the equities, here is what I've done: (yes, I realize that income/expenses are "the same thing") Expenses |- Capital Loss |- Broker 1 |- 2017 |- 2020 |- 2021 |- 2023 Income |- Capital Gain So, I changed my losses to be posted against the proper "capital loss" account instead of being a negative gain, and then I'm posting the future gains as compensation of that loss (and only for the part that can be compensated). This way indeed the balance of the Broker1 account does match with what the broker is showing me. Do anybody believe I may be missing something out when recording capital gains/losses this way? On Tue, Jan 23, 2024 at 03:43:03PM -0800, Patrick James wrote: > Let's start with your best bet is to work with your tax professional as to > how best to keep track of what's needed for taxes. > > In the US, what you call a "credit" generally would not be an asset account. > The "credit" would be a potential offset to some future gain, if there is any > future gain, so I would leave all this over on the equity side. > > Day 0 Purchase: > > Stock (asset) $100DR > Cash $100CR > Purchase of 100 shares of Stock Y for $1 per share > > Day 365 Sale: > > Cash $90DR > Capital Gain $10DR > Stock (asset) $100CR > Sale of 100 shares of Day 0 Stock Y for $0.90 per share. > > NOTE: One hopes that capital gains has a CR (gain) balance, rather than the > DR balance above (loss). > > Later, if there was some sale for a gain, then the CR recorded to Capital > Gain would offset some or all of the DR. > > Also note that matching the shares as I have done above is not always as > simple as this single stock sale where all shares are purchased on a single > day and the entire holding is sold a year later. > > Again, talk to your tax professional about how to best keep the records > necessary for tax compliance. > > > > On 01/23/2024 1:43 PM PST Mattia Rizzolo wrote: > > > > > > Hello, > > > > I'd like some input on how to best record a tax credit due to capital > > loss, and possibly the following usage of such credit. > > Disclaimer: I'm not doing this for anything worth, it's a personal book > > that nobody but me sees, so I can take a few liberties and not follow > > whatever regulation to the letter. Besides, I have no formal education > > on accounting. > > > > > > The case is the following: > > > > 1 buy security A, cost $100 > > 2 buy security B, cost $100 > > 3 sell security A, get $90 > > 3a → record $10 loss > > 3b → get a $10 tax credit on following capital gains > > 4 sell security B, get $120 > > 4a → record $20 gain > > 4b → offset $10 from 3b > > 4c → pay tax on the remaining $10 (26%, $2.6 over here) > > > > I reckon all jurisdictions have something similar in concept, all with > > their differences in details. > > > > This is a tad further complicated by the fact that each broker has its > > own "bucket" of credits (can't comingle losses and gains across > > different brokers). Also the credits expire after 4 years, so I should > > record under which year they matured. As such, I expect an addition to > > my CoA, such as: > > Assets > > |- Credits > > |- Capital Loss credits > > |- broker 1 > > |- 2020 > > |- 2021 > > |- 2022 > > |- 2023 > > |- 2024 > > |- broker 2 > > |- 2022 > > . > > > > > > > > I've been using gnucash for ~3 years now, but I always procrastinated on > > figuring out the 3b/4b steps, just posting the resulting net tax > > transaction as computed by the broker. > > For me it's really not obvious what's the opposing account from where > > the money should come/go... > > How do people do it here? :) > > > > > > Thank you for all the hints! > > > > -- > > regards, > > Mattia Rizzolo > > > > GPG Key: 66AE 2B4A FCCF 3F52 DA18 4D18 4B04 3FCD B944 4540 .''`. > > More about me: https://mapreri.org : :' : > > Launchpad user: https://launchpad.net/~mapreri `. `'` > > Debian QA page: https://qa.debian.org/developer.php?login=mattia `- > >
Re: [GNC] how to record tax credit for capital loss
Let's start with your best bet is to work with your tax professional as to how best to keep track of what's needed for taxes. In the US, what you call a "credit" generally would not be an asset account. The "credit" would be a potential offset to some future gain, if there is any future gain, so I would leave all this over on the equity side. Day 0 Purchase: Stock (asset) $100DR Cash $100CR Purchase of 100 shares of Stock Y for $1 per share Day 365 Sale: Cash $90DR Capital Gain $10DR Stock (asset) $100CR Sale of 100 shares of Day 0 Stock Y for $0.90 per share. NOTE: One hopes that capital gains has a CR (gain) balance, rather than the DR balance above (loss). Later, if there was some sale for a gain, then the CR recorded to Capital Gain would offset some or all of the DR. Also note that matching the shares as I have done above is not always as simple as this single stock sale where all shares are purchased on a single day and the entire holding is sold a year later. Again, talk to your tax professional about how to best keep the records necessary for tax compliance. > On 01/23/2024 1:43 PM PST Mattia Rizzolo wrote: > > > Hello, > > I'd like some input on how to best record a tax credit due to capital > loss, and possibly the following usage of such credit. > Disclaimer: I'm not doing this for anything worth, it's a personal book > that nobody but me sees, so I can take a few liberties and not follow > whatever regulation to the letter. Besides, I have no formal education > on accounting. > > > The case is the following: > > 1 buy security A, cost $100 > 2 buy security B, cost $100 > 3 sell security A, get $90 > 3a → record $10 loss > 3b → get a $10 tax credit on following capital gains > 4 sell security B, get $120 > 4a → record $20 gain > 4b → offset $10 from 3b > 4c → pay tax on the remaining $10 (26%, $2.6 over here) > > I reckon all jurisdictions have something similar in concept, all with > their differences in details. > > This is a tad further complicated by the fact that each broker has its > own "bucket" of credits (can't comingle losses and gains across > different brokers). Also the credits expire after 4 years, so I should > record under which year they matured. As such, I expect an addition to > my CoA, such as: > Assets > |- Credits > |- Capital Loss credits > |- broker 1 > |- 2020 > |- 2021 > |- 2022 > |- 2023 > |- 2024 > |- broker 2 > |- 2022 > . > > > > I've been using gnucash for ~3 years now, but I always procrastinated on > figuring out the 3b/4b steps, just posting the resulting net tax > transaction as computed by the broker. > For me it's really not obvious what's the opposing account from where > the money should come/go... > How do people do it here? :) > > > Thank you for all the hints! > > -- > regards, > Mattia Rizzolo > > GPG Key: 66AE 2B4A FCCF 3F52 DA18 4D18 4B04 3FCD B944 4540 .''`. > More about me: https://mapreri.org : :' : > Launchpad user: https://launchpad.net/~mapreri `. `'` > Debian QA page: https://qa.debian.org/developer.php?login=mattia `- > ___ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > 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 To update your subscription preferences or to unsubscribe: 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.
[GNC] how to record tax credit for capital loss
Hello, I'd like some input on how to best record a tax credit due to capital loss, and possibly the following usage of such credit. Disclaimer: I'm not doing this for anything worth, it's a personal book that nobody but me sees, so I can take a few liberties and not follow whatever regulation to the letter. Besides, I have no formal education on accounting. The case is the following: 1 buy security A, cost $100 2 buy security B, cost $100 3 sell security A, get $90 3a → record $10 loss 3b → get a $10 tax credit on following capital gains 4 sell security B, get $120 4a → record $20 gain 4b → offset $10 from 3b 4c → pay tax on the remaining $10 (26%, $2.6 over here) I reckon all jurisdictions have something similar in concept, all with their differences in details. This is a tad further complicated by the fact that each broker has its own "bucket" of credits (can't comingle losses and gains across different brokers). Also the credits expire after 4 years, so I should record under which year they matured. As such, I expect an addition to my CoA, such as: Assets |- Credits |- Capital Loss credits |- broker 1 |- 2020 |- 2021 |- 2022 |- 2023 |- 2024 |- broker 2 |- 2022 . I've been using gnucash for ~3 years now, but I always procrastinated on figuring out the 3b/4b steps, just posting the resulting net tax transaction as computed by the broker. For me it's really not obvious what's the opposing account from where the money should come/go... How do people do it here? :) Thank you for all the hints! -- regards, Mattia Rizzolo GPG Key: 66AE 2B4A FCCF 3F52 DA18 4D18 4B04 3FCD B944 4540 .''`. More about me: https://mapreri.org : :' : Launchpad user: https://launchpad.net/~mapreri `. `'` Debian QA page: https://qa.debian.org/developer.php?login=mattia `- signature.asc Description: PGP signature ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: 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.
