Part 2 trailing off another post (https://infinitekind.tenderapp.com/discussions/investments/8136-bon...). These are my ideas around T-Bills as securities, none of which are perfect IMO. I'm hoping someone has suggestions for doing it better.

T-Bills are purchased for specific periods of time (4,8,13,17,26 & 52 week) and don't generate interest per se, they are bought and sold at a relative discount to their $100 face value and mature (end) on a fixed date at which you get your $100.

Recognizing point in time net worth is iffy. Technically you can sell a T-Bill early but prices aren't linear and I can't find any source of prices for existing T-Bills. Practically speaking the only way I can see is to linearly adjust the pricing of the T-Bill and just deal with the variance if you do happen to sell early.

My example : a 4-week T-Bill issued on 11/21 with a maturity of 12/19 that sold for $99.588556. I see a couple ways of recording this.

• Option 1 - this one is the most representative of the actual transaction and it's simple, but it generates a capital gain (not interest) on the sale. A pain at tax time especially since this interest is tax free at the state and local level. Ideally, if we could get MD to assign income for bonds (or any security) to a user selectable category this would resolve the problem. This method lets you periodically adjust pricing to somewhat reflect net worth. If you want simple and rely only on 1099's for tax time, this might be viable.

  • 11/21/23 | Buy | US T-Bill 4-week 2023.12.19 | 10 sh | $99.588556 | $995.89
  • 12/19/23 | Sell | US T-Bill 4-week 2023.12.19 | 10 sh | $100.00 | $1000.00

• Option 2 - EDIT - This doesn't work as I originally expected and to correct it, takes you to option 4. Don't think about this one, it overinflated the final value. This needs manual calculations outside of MD (which the program should be doing IMO) and the price history of the security gets whacked because of the final (and only) interest transaction, but on the plus side it reflects the actual transaction and it does report income properly for taxes. While the price skew (in history) is annoying, it doesn't really affect much. Since this is a term based instrument you are only making a single entry for interest and immediately following it with your sell; so it only skews your net worth for <5 minutes. This method lets you periodically adjust pricing to somewhat reflect net worth.

  • 11/21/23 | Buy | US T-Bill 4-week 2023.12.19 | 10 sh | $99.588556 | $995.89
  • 12/19/23 | DivReinvest | US T-Bill 4-week 2023.12.19 | 10 sh | Cat:Tax Exempt Int | $0.41444 | $4.11
  • 12/19/23 | Sell | US T-Bill 4-week 2023.12.19 | 10 sh | $100 | $1000

• Option 3 - This properly records income as interest, but it requires manipulation and doesn't at all reflect the transaction. It tries to trick the system by leveling the price at 100, and instead manipulates shares. I guess I only came up with this because it worked for I-Bonds and the other two options weren't perfect. You cannot adjust pricing to reflect periodic net worth with this one.

  • 11/21/23 | Buy | US T-Bill 4-week 2023.12.19 | 9.9589 sh | $100 | $995.89
  • 12/19/23 | DivReinvest | US T-Bill 4-week 2023.12.19 | .0411 sh | Cat:Tax Exempt Int | $100 | $4.11
  • 12/19/23 | Sell | US T-Bill 4-week 2023.12.19 | 10 sh | $100 | $1000

• Option 4 - After re-reading dwg's comment about Div & MiscInc in the linked post above, I gave using simple Div a shot. This only works if you sell the T-Bill at the same price you paid. If you sell at its proper face value ($100), you will have too much money as the Div/MiscInc adds cash money to your account. This method does however, properly report income for taxes and it doesn't require a whole lot of manual calculations (just the overall interest amount). However, if you adjust pricing upward during the term using this method to periodically reflect net worth, you need to remember that your sell transaction is NOT $100.

  • 11/21/23 | Buy | US T-Bill 4-week 2023.12.19 | 10 sh | $99.588556 | $995.89
  • 12/19/23 | Div | US T-Bill 4-week 2023.12.19 | Cat:Tax Exempt Int | $4.11
  • 12/19/23 | Sell | US T-Bill 4-week 2023.12.19 | 10 sh | $99.588556 | $995.89

Perhaps tracking as an asset makes this simpler and resolves the capital gains issue? Do you create one asset account per instrument or do all instruments get dumped into one asset account.

Aside from feedback (corrections, which one to use, what not to use),
Are there any better ways to track current (point in time) net worth of T-Bills?
Within an investment account, the edit security screen - Are the face value, maturity date, and APR actually used for anything?
Using asset accounts - how?