Accounting For Asset Sales

If I sell stocks for a gain this year I would enter the amount received as a special receipt taxable at capital gains rate if held over 1 year. However, the value of these stocks at the begining of the year is already entered in "Assets & Savings/Regular Assets/Individual Stocks" The Question is how do I offset this doublebooking of assets? Do I just delete the Jan 1 2018 value of the stocks I sold from the Assets & Savings tab?
Thanks
James

Comments

dan royer's picture

You are selling out of your regular assets--and I presume you are not simply withdrawing money that is indicated in the model as a dissaving for the year?

I would just do as you suggest: adjust the beginning of the year balance and look at the new model. It's hard to get things perfect in the model since we will never get exactly the interest rate we assume, the inflation we assume, the saving/dissaving we model--even the income we say we get might change as we get an unexpected bonus or we get overtime pay. So if it's significant, I'd just readjust my beginning of year balance. Or you wait til Jan 1, 2019 and re-calibrate then.

Dan

Dan, Thinking about this process, I believe there are more entries to be made to correctly account for the sale of stocks. Please tell me if the following is correct.
1. Enter the total amount received from the asset sale in two parts: Profit as a Special receipt taxable at capital gains rate - assume stock held>1yr and the cost basis of the stock as Special receipt NON taxable. This accounts for the total dollars received from the sale.
2. Reduce the amount entered for stocks in the "Assets and Savings" panel by the value at the end of the previous year of the sold stocks. Also reduce the amount entered in the unrealized capital gains section of "Ecomonic Assumptions/Taxes" panel by the unrealized cap. gains for the sold stock value at the end of the previous year.
I think this properly account for all funds with no double booking.
Can you confirm?
Thanks
James

dan royer's picture

Yes. That sounds right to me. I mean I'm not a tax expert, but that's what I would do. You are separating out the tax treatment for the "special receipt" and removing the record of those funds from the Regular Assets that you started the year with. So because you have removed them from Regular Assets you are not in danger of receiving them *again*. And in essence you are just accounting for this sale of stocks manually through special receipts. Sounds exactly right.

Dan

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