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Author
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Topic: Updating starting balances for new year after asset sold
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Shar
Member
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posted 12-14-2004 01:02 PM
  
Our company has investments in several limited partnerships whose stock is publicly traded. We receive K-1's on these investments in the spring. By the time the tax return is done and the accountants give me the new tax basis frequently the asset is sold. Let's say we have 1000 shares of XYZ, LP at 12/31/03. I start a new year with those shares at the basis we purchased them. In March 2004 we sell the 1000 shares and I record the transaction. In June our accountants tell me there is a $750 adjustment in the tax basis of those shares as of 12/31/03. If I update the starting balance it shows the stock back on my balance sheet with a negative basis of $750. I can't delete the sale & start over. How do I correctly make those adjustments?------------------
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FN_User
Member
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posted 12-15-2004 09:43 AM
This can be a simple fix or it can get rather complicated. It depends on the nature of the shares of the partnership and how you want to account for them. Do you want the tax basis to be the same as the cost basis, or do you want to have two different values for these fields? Also, when you sold the shares of the partnership, was it a partial sale, or the whole lot?
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FN_User
Member
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posted 12-15-2004 10:12 AM
Shar Posted:I want the tax & cost basis to be the same.
Sometimes there is a partial sale; sometimes a complete sale. For future postings on this topic click on Post Reply, not Post New Topic.
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fni_support
Moderator
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posted 12-16-2004 01:55 PM
This is for a complete sale of the lot. Since you don’t want to reenter the transaction with the adjusted cost/tax basis, the correction will require two new entries. First go to the actual sale of the transaction, and click on the Multiple Distribution window. In the Tax Basis field make the correct entry; this will reflect in your Schedule D reports. The second entry will be in the General Journal, select the following two accounts 1) Capital Gains – Credit, and 2) Unrealized Gains and Loss – Debit, or vise versa depending on if the transactions resulted in a loss. This entry will correct the Income Statement, and properly account for the gains and losses of the transaction.
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