[GNC] Need better documentation - and maybe more robust functionality - on using Lots

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[GNC] Need better documentation - and maybe more robust functionality - on using Lots

Art Chimes-2
I'm sort-of hijacking an old subject line rather than its thread, but
here's what I've been perusing the past hour or so:
https://lists.gnucash.org/pipermail/gnucash-user/2015-September/061855.html

I started buying shares of a company (let's say GE) 20+ years ago, at
first in their DRIP plan, which was the only way I could do
dollar-cost averaging purchases ($200 a month) and also reinvesting
quarterly dividends. The downside is that over time, you end up with a
lot of transactions and significant bookkeeping overhead. But that's
what computers are for, right?

At one point I sold 300 shares. To reduce the capital gains tax on
this transaction, I specified to my broker the shares to be sold.
Specifically, the ones with the highest basis, to minimize the taxable
gain. For U.S. taxpayers, that's one of several ways you can calculate
gain when selling only part of an asset like shares of stock or mutual
fund. (I think FIFO is the default, and there are others.)

I have been spending the past six months trying to migrate from
Quicken (2000 Basic edition) to Gnucash for a variety of reasons, but
mainly because its use of double-entry, support of multiple
currencies, the open source model, multi-platform, etc. -- generally
it seems a more grown-up program. There is a steep learning curve,
however, and with about two decades of financial records to import, it
has not been a trivial task.

Today, I started tackling the sale of those 300 GE shares in 2012,
distributed among 27 individual lots purchased between 1996 and 2004.
I thought I was making good progress, using the "View Lots" function.
As has been noted before, the documentation is not very comprehensive.
There may be a circular reason for this: it's a complex corner of the
program that most users will never need. And if you do need to use it,
the documentation at the nitty-gritty level probably isn't
particularly useful, so instead maybe you boot up LibreOffice Calc and
keep track of your lots that way.

I think I have figured out how to put 26 of the 27 purchase lots that
I sold into that 2012 sales lot -- I don't know that those are the
official terms, but I think you understand what I mean -- but the 27th
lot consists of only *some* of the shares bought in that particular
transaction. (You can't usually sell fractional shares, so I needed a
whole number of shares, not 300.072.)

I could find nothing in the documentation, of course, about how to do
this. Maybe I could take that 27th purchase and arbitrarily divide it
into two transactions: the purchase of the fraction that I would sell
in 2012, and the rest.

The other problem, which I didn't pursue enough to figure out if it
really is a problem, has to do with the company's two-for-1 stock
split in the middle of all this. Most of the shares being sold were
purchased before the split; others came after the split. As far as I
can tell, the "View Lots" module can't adjust for splits. Right now, I
have 26 of the 27 lots adding up to 149.813 shares, almost all of
which represent one-half of the shares actually sold, because of the
2:1 split.

I'm writing this long post to find out if (1) I'm missing something
and (2) if I should add an enhancement suggestion to Bugzilla.  I wish
I could code, in which case I might see what I could contribute.
Unfortunately, I'm not a programmer.

By the way, there's probably a lot of programming mojo behind the
scenes, but for the user, Quicken -- even my ancient edition --
handles this sort of transaction surprisingly smoothly. I create a
transaction to sell 300 shares. A pop-up asks if I want to take the
average cost or specify lots. I choose the Lot Identification button,
and another pop-up presents a list of existing purchase lots
(including purchase date,  price, number of shares) and a place for me
to enter how many of those shares I wish to sell. There are also
buttons to automatically select FIFO and LIFO shares, or a selection
to result in either the minimum or maximum gain. (One area where it
sometime fails, if I remember correctly, is that sometimes it stumbles
over a rounding error.)

Even if Gnucash isn't perfect, I am still in awe of the very smart
people who have taken the product this far. Thank you all.

Art
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Re: [GNC] Need better documentation - and maybe more robust functionality - on using Lots

pmkelly
The other problem, which I didn't pursue enough to figure out if it
really is a problem, has to do with the company's two-for-1 stock
split in the middle of all this. Most of the shares being sold were
purchased before the split; others came after the split. As far as I
can tell, the "View Lots" module can't adjust for splits. Right now, I
have 26 of the 27 lots adding up to 149.813 shares, almost all of
which represent one-half of the shares actually sold, because of the
2:1 split.

I have found that imported splits from quicken do not work correctly in
Lots.  What I had to do was re-enter the split in GnuCash from Actions-
Stock Splits.  After re-entering the split, I would then delete the old
split.  Once that was completed, Lots handled the gains/loss correctly.




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Re: [GNC] Need better documentation - and maybe more robust functionality - on using Lots

randix
In reply to this post by Art Chimes-2
I luv GnuCash, but not for investments, certainly not for stock trading. Lot
selection, forget about it... clearly none of that was a priority for the
developers and I have zero expectation that will change. Use another program
for recording and maintaining bookkeeping for those investments.



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Re: [GNC] Need better documentation - and maybe more robust functionality - on using Lots

Alton Brantley
In reply to this post by Art Chimes-2
If you’re a day-trader, I can sympathize, put you would probably find the same issues with other personal accounting programs.

I use Gnucash to manage 7 different investment portfolios, including trading options, and I track commission fees, reconcile the lots, adjust for partial lot sales,  and  reconcile to the penny with my brokerage statement every month.

When opening a transaction for stocks, enter the shares and stock price; for options, enter contractsx100 and option price.
Create a subaccount for commissions under each brokerage account. I consider it a prepaid expense (to be realized when I close the transaction. I call it “Commissions-open.”

When closing a transaction, do the same.

On opening a lot, Go to Action->View Lots, Use “New Lot” button to create new lot, and move the open transaction into it with the double arrows, and “Close” button.
On closing, select the appropriate lot, and do the same.

You’ll get a “Realized Gain/Loss” transaction in your stock account. That will be the “gross gain/loss” based on shares/contracts and prices.
You need to add a split to subtract the “Commissions-open” charges from the realized gain/loss to get your net realized gain/loss. (Note: easy check—rename splits for “Commissions-open” in the transactions to “Commissions-closed”. Commissions-closed should ALWAYS total 0. Commission-open should always hold unclosed positions.”

Once I close out an active security, I move it to a subaccount (Positions-Closed placeholder) under brokerage account.

For partial position closings, apportion the initial commission by replacing the commission split with two apportioned splits.



> I luv GnuCash, but not for investments, certainly not for stock trading. Lot
> selection, forget about it... clearly none of that was a priority for the
> developers and I have zero expectation that will change. Use another program
> for recording and maintaining bookkeeping for those investments.
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Re: [GNC] Need better documentation - and maybe more robust functionality - on using Lots

David Carlson-4
I think many users want the software to do all that thinking for them so
they don't have to think about short term vs long term, lots, etc.

GnuCash isn't at that level.

Developers that want to add that capability would be welcomed to join the
ranks.

David Carlson

On Mon, Jun 24, 2019, 9:25 AM Alton Brantley <[hidden email]>
wrote:

> If you’re a day-trader, I can sympathize, put you would probably find the
> same issues with other personal accounting programs.
>
> I use Gnucash to manage 7 different investment portfolios, including
> trading options, and I track commission fees, reconcile the lots, adjust
> for partial lot sales,  and  reconcile to the penny with my brokerage
> statement every month.
>
> When opening a transaction for stocks, enter the shares and stock price;
> for options, enter contractsx100 and option price.
> Create a subaccount for commissions under each brokerage account. I
> consider it a prepaid expense (to be realized when I close the transaction.
> I call it “Commissions-open.”
>
> When closing a transaction, do the same.
>
> On opening a lot, Go to Action->View Lots, Use “New Lot” button to create
> new lot, and move the open transaction into it with the double arrows, and
> “Close” button.
> On closing, select the appropriate lot, and do the same.
>
> You’ll get a “Realized Gain/Loss” transaction in your stock account. That
> will be the “gross gain/loss” based on shares/contracts and prices.
> You need to add a split to subtract the “Commissions-open” charges from
> the realized gain/loss to get your net realized gain/loss. (Note: easy
> check—rename splits for “Commissions-open” in the transactions to
> “Commissions-closed”. Commissions-closed should ALWAYS total 0.
> Commission-open should always hold unclosed positions.”
>
> Once I close out an active security, I move it to a subaccount
> (Positions-Closed placeholder) under brokerage account.
>
> For partial position closings, apportion the initial commission by
> replacing the commission split with two apportioned splits.
>
>
>
> > I luv GnuCash, but not for investments, certainly not for stock trading.
> Lot
> > selection, forget about it... clearly none of that was a priority for the
> > developers and I have zero expectation that will change. Use another
> program
> > for recording and maintaining bookkeeping for those investments.
> _______________________________________________
> gnucash-user mailing list
> [hidden email]
> To update your subscription preferences or to unsubscribe:
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> If you are using Nabble or Gmane, please see
> https://wiki.gnucash.org/wiki/Mailing_Lists for more information.
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> Please remember to CC this list on all your replies.
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>
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