Gains as Income, Revised

cwieczorek's Avatar

cwieczorek

11 Feb, 2024 12:59 AM

Howdy,

I'm a long time MD user - coming up on 14 years - and stumbled across a clever solution from @Stuart Beesley about creating two categories, a credit and debit, for showing capital gains in Income & Expense reports. I had two questions for folks who are more knowledgeable about this work around than me:

  1. If I have to manually enter this in for every sale of a security, is it possible to make the double entry using the Spilt transaction feature in the Bank Register view? I think so but maybe there's something I'm missing? I see the downside of having to be in Bank Register as one problem from the get go.

  2. Anybody have suggestions on how to automate this process? If I have 50 realized gains in a year, that's a lot of manual transaction entering and calculation of the gains. Also, I got 14 years worth of transactions and it would be nice to be able to retroactively apply this technique, if at all possible.

Big thank you to @Stuart Beesley for suggesting this and all the various tools he has created for MD over the years.

-Chris

  1. 1 Posted by dwg on 11 Feb, 2024 02:12 AM

    dwg's Avatar

    I'm a fellow user.

    Yes you can make use of a split transaction, there are some limitations. It cannot be part of the Sell or Sell/Xfr transaction since these transactions are basically an investment transaction at their heart and not a banking transaction so you would normally have it as part of a Xfr Transaction i.e. you would enter the Sell and the Xfr as two transactions.

    The Xfr transaction in its split would have the two transactions for the capital gain.

    You will still have to do the calculations, the capital gains report may or may not give you the data you need, there are inherent limitations in the data Moneydance has recorded which impacts these reports.

    As you routinely do these one technique you can employ is to duplicate a previous transaction and then just change any needed information e.g amounts, security name, date.

    Reminders are probably not a good fit as such events are not generally at predicable intervals.

    I do not see being in the bank register as that limiting, you would just switch to this register to do the actual transfer transaction so it becomes the final step in that process.

    Changing historical transactions just mean work I think, I do not really see any way of automating it.

  2. 2 Posted by cwieczorek on 11 Feb, 2024 02:25 AM

    cwieczorek's Avatar

    Thank you dwg. I've seen many of your posts and observations about the opportunities for improvements on investment reports in particular and reports in general. I've been using lot matching which seems to have limited my problems with inaccurate capital gains reporting, thankfully. If only there was some way to have a have some automation or simple push buttons for lot matching in MD....but I degress on that topic. It's sadly an area that hasn't changed in a decade and it seems not to be an interest to the developing team.

    My hesitancy for using the Bank Register in an Investment account is spilt transactions look weird in the regular register view. I've also found it's another button press or two to do a split transaction.

    Thank you for sharing your thoughts an experience.

  3. 3 Posted by dwg on 11 Feb, 2024 03:19 AM

    dwg's Avatar

    The look comes down to how the transactions are entered. If you enter the actual transfer in the Investment register then switch to the Bank register to enter the capital gains transactions it can look quite different to entering the whole transaction in the Bank register.

  4. 4 Posted by Stuart Beesley ... on 11 Feb, 2024 06:32 AM

    Stuart Beesley (Mr Toolbox)'s Avatar

    FYI - Toolbox has a feature to allow auto LOT assignment based on FIFO. You could try that. Backup first. Let me know if it works for you.

  5. 5 Posted by Stuart Beesley ... on 11 Feb, 2024 01:25 PM

    Stuart Beesley (Mr Toolbox)'s Avatar

    I haven’t tested this. But if you want a single txn for both debit and credit for the gains, then you probably have to initiate this in a bank account register, set the total to zero, and then add the splits there. But this is awfully complex. I don’t think it’s worth that effort. I’m pretty sure you cannot enter a multi split txn in an investment account directly.

  6. 6 Posted by dwg on 11 Feb, 2024 01:39 PM

    dwg's Avatar

    It is correct that you cannot enter a split transaction into an investment register, so yes it has to be done in the bank register.

    I have attached three transactions from the two registers to show how it looks. This method hides the capital gains transactions in the split. If you do not care and want to show the transactions in the register in the clear you can enter them that way without needing the split, it comes down to what you want to be able to see or not see.

  7. 7 Posted by cwieczorek on 11 Feb, 2024 06:12 PM

    cwieczorek's Avatar

    Thank you Stuart and dtd.

    For FIFO purposes I've seen it in Toolbox but I concluded it's just easier to do it manually in the Moneydance Lot assignment window, most of the time. But thank you for making the feature.

    I'll go ahead and start populating my gains with 2 manual entries in the regular register transaction fields.

  8. 8 Posted by cwieczorek on 11 Feb, 2024 10:59 PM

    cwieczorek's Avatar

    I used the FIFO lot matching for a security and got it to work.

    I have lots of different investment income categories, one for each type of USA investment type like "Taxable", "Tax Exempt", "Tax Deferred" that each need subcategories of Capital Gains categories. Thankfully for the Tax Exempt and Tax Deferred it's only a single "Capital Gains" category without distinction between short and long term gains. This is a lot of work, but it's nice to see various years coming together where I can finally see realized Capital Gains in a single Income - Expense report.

  9. 9 Posted by dwg on 11 Feb, 2024 11:50 PM

    dwg's Avatar

    Capital Gains has always been a tough one.

    Where I am it is possible to have 4 types of capital gains, Moneydance has no hope of being able to work these out or do the needed calculations, so the raw capital gains is the best I can get if I am lucky or sell out of a stock in one transaction. Many times I have to deal with lots and return of capital transactions.

    Even the localized personal finance software I have seen here cannot handle Capital Gains fully.

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