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Experienced Member

Tracking capital gains

OK, I am an engineer not an accounting professional so my question is, my company buys stock as an investment.  Example, I sell $10,000 and it is clear that $3,000 of it is capital gains.  The investments is an account, how do I enter this type of situation so I can track the capital gains, please be gentle. 

4 Comments
Frequent Explorer *

Re: Tracking capital gains

Good day

debit cash or account receivable and loss if it exist 

credit investment and gain if it exist 

Established Community Backer ***

Re: Tracking capital gains

To track the gain you must first have the cost or basis entered as an asset. Then when you sell what cost you $7000 for $10000 you post a sales receipt of 10k, and for the items sold you will post 7k to an item that directly affects the asdet and 3k to an income account called something like Gain on Asset Sales.

 

Long or short, capital or ordinary is not specifically accounting but is a tax issue after the fact. Usually Schedule D although there may be a different form for businesses.

 

If you do this regularly and it is your business model you could consider tracking the stock as inventory except QB won't easily let you choose which units of stock to record the gain on if you have batches at different basis

Established Community Backer ***

Re: Tracking capital gains

 


@nb_se wrote:

Example, I sell $10,000 and it is clear that $3,000 of it is capital gains.  The investments is an account,


The investments account s/be an Asset type account

When you buy stock you put it into this account, using an Expense transaction

When you sell it, use a Deposit transaction for the proceeds and split it into 2 lines; 1st line is the cost $7k to zero out the asset account, 2nd line is the profit $3k, to an Other Income-type account called "Gain on sale of stock" or similar. 

Established Community Backer ***

Re: Tracking capital gains

OMG, this is why QB is not the right tool for this. You are going to need to learn manual data management.

 

You have the initial purchase as a new Asset.

 

And during the holding period, you need to enter the earnings that would need to be broken into Cap Gains, or Interest, or Reinvested Dividends.

 

Then, You "disposed" of the asset basis as Sale minus Basis = reportable gain (long term or short term). I would offset this difference to an Other Income/Expense account.

 

And I use Quicken for this; I teach QB and handle all my own investments and taxes, and I know this stuff inside and out, and I would Never Use QB for this.