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Level 4

How to record specific tax event

I invested money in an online project
I managed to recoup back roughly about the same amount of investment before the project shut down.
How do I record both the money invested and recouped.
It was invested by sending PayPal to the other party and receiving incoming payments via Payoneer.

2 Comments
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Level 15

How to record specific tax event


@EBFinancials wrote:

I invested money in an online project
I managed to recoup back roughly about the same amount of investment before the project shut down.
How do I record both the money invested and recouped.
It was invested by sending PayPal to the other party and receiving incoming payments via Payoneer.


the investment should be set up as an asset account, and you use that account on the paypal payments

 

income you receive, it depends

IF, if the payment is designated as return of capital, then you deposit the funds using that same asset account as the source account for the deposit.

 

If income you receive is not designated as return of capital then it should post to an income account, investment income.

 

since the investment is done and it was income you posted, do a journal entry

debit investment income for the full amount of the investment, and credit the investment asset account

 

Whether this should be reported on schedule D as part of your 1040 is something only a tax accountant can determine, you need to get with a tax accountant.

Highlighted
Level 4

How to record specific tax event

I misunderstand the part of:

since the investment is done and it was income you posted, do a journal entry

debit investment income for the full amount of the investment, and credit the investment asset account
How the investment was income if it is money going out?

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