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Author
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Topic: Tax reports & Capital Gains reports
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jordonez
Member
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posted 01-22-2002 12:11 PM
 
As I have been reconciling my capital gains with brokerage reports and income statements, I found one entity that had one number on the Income statement for the long and short term capital gains and another amount when I ran the tax report - Sched D. The Sched D report was correct. I went back to investigate the transactions that made up the capital gains numbers that flowed through to the Income statement. The differences were all transactions where the short-term capital gains was categorized as a long-term.
I do have my transactions options to send capital gains to the corresponding accounts.
I did have the date acquired correctly entered. Why could this occur? And interestingly why could the program do the Sched D correctly and not categorize the transaction correctly?
This type of mistake makes me lose confidence in my records!
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Pamela
Member
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posted 01-23-2002 08:43 AM
The Schedule D report is based on the investment information recorded in the assets accounts coded as Schedule D capital assets (determined by the location in the Chart of Accounts or format type.) The report numbers are pulled from the A/L account screen. Therefore, if your sold date is correct and the tax code for the account is Asset - Capital Gain/Loss, it will go onto the Schedule D report correctly.However, if your transaction activity options are not set up properly for a particular Category (i.e. Savings/Money Market) and Account (i.e. Morgan Stanley), then your transactions report may not match the Schedule D report. Check your settings for that entity again.
Remember, each entity, category, and account can have different capital gains accounts set up. Go to the problem entity, category, and account in the transaction activity screen. - Select Tools
- Select Transaction Activity Options
- Select Short-Term Capital Gains command button.
- Make sure that the selected account is the Short-Term account you want to use for that entity and that investment firm's sales.
You might use a general Short-Term Capital Gains account for ALL accounts. However, you can also set up Short-Term Capital Gains accounts for each investment firm. (i.e. Cap Gains S/T MS - for Morgan Stanley, etc) The above instructions allow you to choose the specific Short-Term account you want to use once that Capital Gains account has been set up. - Once you have verified/changed that setting, as long as the Capital Gain account is in the correct section of the Chart of Accounts, your reports should match up.
- You will have to go back in each entry and change the Capital Gains account to reflect the correct Short-Term account. The system will not automatically go back in and do that.
- Make sure the settings in the Entity's New Year are correct so that going forward your reports will match up.
Please reply to this post if you are unable to resolve your problem.
[This message has been edited by Pamela (edited 01-23-2002).]
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jordonez
Member
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posted 01-23-2002 09:23 AM
My settings for the Sched D are correct and the Sched D was correct and complete.
I am aware of setting the options for the capital gains categories. My question is related to the program's abilities. I believed that if the date for the stock's acquisition was available, then at sale date the program should pick the correct treatment. It has done that for many. I want to find out why it did not do it for about 10 transactions - classifying them as long term when by the dates they were short term. If I can't correct this problem, then it adds another task to my entry activity, something that should be automatic. Now, instead of being able to zip through some transactions I'll have to check this more closely.
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Pamela
Member
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posted 01-23-2002 10:26 AM
I understand that you are aware of setting the capital gains accounts. I meant that you still need to verify that they are set properly because it can be done differently for each category and brokerage account.Perhaps someone in your firm changed those settings without notifying you? The system uses the sale date for the Schedule D report. However, for the transaction activity (sales), it uses the capital gains settings for that entity, category, and account. This is done so that users can set up different g/l accounts for each brokerage firm if they want to. The system then puts those together under the appropriate section on the Schedule D. Once those setting have been set up correctly, you won't need to do any additional reviewing. Please check and verify that for the problem entity, category, and account that the Short-Term Capital Gain setting is set up with a Short-Term Capital Gain account in the correct location in the Chart of Accounts with the correct Tax Code.
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jordonez
Member
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posted 01-23-2002 11:05 AM
Well, I double-checked the Chart of Accounts (COA) and the Transactions Options.
In the COA the Capital Gains accounts are within their category.
In the tax code it says Capital Gains. I don't know where else to check.
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Pamela
Member
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posted 01-23-2002 04:01 PM
We are working to find a solution.
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John
Administrator
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posted 01-24-2002 07:55 AM
The reason the schedule D would not agree with the Capital Gains income accounts depends on the actual sale transactions.
The Schedule D gets the information from the Asset/Liab info. So Schedule D is looking at the actual date acquired and the sold date. If the Asset/Liab info is changed after the sale transaction then the Schedule D would reflect the change. But the transaction would not.As for the sale transaction, the capital gains income account is entered when the transaction is recorded. The capital gains income account can be set based on the Transaction Entry Options for short term or long term. If these options were not set at the time the transactions were entered then the user would have to enter the correct capital gains income account. There is a prompt in the status bar that indicates if the sale is short term or long term. Also even if the account is entered from the Transaction Entry Option, then the user still has the ability to override and change the account. To fix the situation, you can change the transactions to use the correct capital gain income account. If these incorrect transactions were the first sales and the last sales are correct then it may have been a case that the option was not set at the beginning. Hope this helps to understand how this works.
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