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Author	Topic: Bond Sales with Interest in the Proceeds
FN_User Member	posted 09-12-2005 07:26 AM Can you please explain the following. The asset screen is recording the difference between proceeds and cost as a gain in the tax reports even tho we have changed the "GAIN" account in the MD screen to an Interest account. The general ledger balances are OK but the Tax reports show a gain -when it is actually interest. We buy US bonds at a discount and all the interest is paid when the bond matures. So part of the proceeds are interest. Since most of our transactions are with stocks we have set the Option to automatically put in the short or long term gain on the MD screen. On the main transaction screen we enter the Bond account name and answer yes to the asset sold question. Then we enter the total proceeds say $700000. Then it goes to the MD screen . The Bond asset line shows the correct cost (say $697000) so we tab by it. The next line shows a short term gain of $3000. We change the account to bond interest and tab to the amount but leave it at 3000. Since the transaction is in balance we accept the transaction. The Bond Interest has the correct 3000 in it. But running the tax report shows the 3000 as a gain. The asset screen also shows it as a gain because the proceeds show the total 700000 not just the cost. If we split the transaction into 2 lines on the main transaction screen it works correctly because the 1st line is the sale of the asset at cost (the proceeds). The second line is the interest. WE would like to do it in one transaction- which is the amount of the check 700K. Can you please explain . Thanks Jim Kenney IP: Logged
fni_support Moderator	posted 09-12-2005 07:27 AM Hello Jim, Thanks for the question and the great description. I understand what you mean. Let me try to shed some light on what FN is doing: 1. The asset screen is recording the difference between proceeds and cost as a gain in the tax reports even tho we have changed the "GAIN" account in the MD screen to an Interest account. --Yes, the Asset & Liability Info screen records the difference between the proceeds (net transaction amount) and the cost of the asset as a gain. Currently, it does not look at the detail within the Multiple Distribution to determine if only part of the proceeds is gain. 2. The general ledger balances are OK but the Tax reports show a gain -when it is actually interest. --The general ledger balances are taken from the amounts recorded for the individual accounts in the transaction. This is true for Balances Sheets, Income Statements, and Transaction reports. However, the Tax reports are generated from the information on the Asset & Liability Info screen. That is why you see the total difference between the proceeds and the cost show up as a gain on the Tax reports--it is pulling those numbers directly from the Asset & Liability screen. Your solution of breaking the entry into two separate transactions is the best way to handle the situation at this time. You could change the Proceeds amount on the Asset & Liability Info screen for the sold asset which would change the gain on the Asset & Liability Info screen. However, I do NOT recommend this workaround as the system could attempt to correct the discrepancy at a later time. I would continue entering two separate transactions to ensure the Tax reports and general ledger balances are correct. Sincerely, George Szundi Financial Navigator Int'l IP: Logged

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