Cost basis tracking - non-American

[Mark Scannell]

Hello -

I'm based in the UK and looking to use beancount and Fava. I'm not fussed about bean count tracking taxable capital gains (that's separate), but it's nice for it to present current market value over the average acquisition cost.

The approach I'm taking:

• Use booking method NONE.
• Use an explicit cost at acquisition time (normally the price).
• Use an explicit cost at disposal time. This may be for non-taxable accounts the market price, but for taxable it will be the capital gains cost basis.

This appears to work reasonably, calculating the average acquisition cost.

It would be wonderful for it to track UK capital gains, but for I think major changes to how booking is done -- I suspect it would need to be out of the parser and in a separate module/plugin all together.

For now I just need to mark the explicit cost at disposal time to the appropriate capital gains cost basis.

Mark

[Eric Altendorf]

On Sun, Jul 23, 2023 at 1:59 AM Mark Scannell <mesc...@gmail.com> wrote:

Hello -

I'm based in the UK and looking to use beancount and Fava. I'm not fussed about bean count tracking taxable capital gains (that's separate), but it's nice for it to present current market value over the average acquisition cost.

The approach I'm taking:

• Use booking method NONE.
• Use an explicit cost at acquisition time (normally the price).
• Use an explicit cost at disposal time. This may be for non-taxable accounts the market price, but for taxable it will be the capital gains cost basis.

This appears to work reasonably, calculating the average acquisition cost.

It would be wonderful for it to track UK capital gains, but for I think major changes to how booking is done -- I suspect it would need to be out of the parser and in a separate module/plugin all together.

I'm not familiar with UK cap gains.  What's missing to compute it?  And what does it mean that you want UK cap gains, but you aren't worried about taxable cap gains?

you've seen 

https://beancount.github.io/docs/trading_with_beancount.html#realized-and-unrealized-pl

https://beancount.github.io/docs/trading_with_beancount.html#reporting-unrealized-pl

yes?

For now I just need to mark the explicit cost at disposal time to the appropriate capital gains cost basis.

Mark

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[Mark Scannell]

Hello -

On Sun, 23 Jul 2023 at 22:32, Eric Altendorf <erical...@gmail.com> wrote:

I'm not familiar with UK cap gains.  What's missing to compute it?  And what does it mean that you want UK cap gains, but you aren't worried about taxable cap gains?

UK capital gains starts with a very simple average cost basis, but has some modifications where if you buy the same shares shortly after selling then you use the cost basis of the future buy. So you can't actually calculate the taxable gains (for sure) until more than 30 days after you've sold.

I didn't express myself well. While it would be nice if beancount could calculate the actual taxable capital gains, I don't see that necessary -- I can calculate it separately and add it in. There is no "lot selection" in the UK that you need to track, you simply buy and sell the shares and based on that history you end up owing tax.

 

you've seen 

https://beancount.github.io/docs/trading_with_beancount.html#realized-and-unrealized-pl

https://beancount.github.io/docs/trading_with_beancount.html#reporting-unrealized-pl

yes?

Yes, and I get horrifically confused on the realizing of capital gains:

• For selling 'realized' shares you must choose a lot of shares that you've acquired. This is only necessary for US-style capital gains tracking where you need to track by purchase price.
• The booking method of 'NONE' however seems to work -- I put in whatever cost basis for buying/selling, which is dictated by the UK capital gains. Holdings, while having a series of separate lots, really should be merged into one single lot in this case.

The only challenge with this is that it creates many, many holdings -- positive and negative -- when I'd rather just have one merged together.

I'm just wondering if I'm missing something with this approach, and what I can do to help better document it.

Mark

 

For now I just need to mark the explicit cost at disposal time to the appropriate capital gains cost basis.

Mark

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[Eric Altendorf]

On Sun, Jul 23, 2023 at 23:08 Mark Scannell <mesc...@gmail.com> wrote:

Hello -

On Sun, 23 Jul 2023 at 22:32, Eric Altendorf <erical...@gmail.com> wrote:

I'm not familiar with UK cap gains.  What's missing to compute it?  And what does it mean that you want UK cap gains, but you aren't worried about taxable cap gains?

UK capital gains starts with a very simple average cost basis, but has some modifications where if you buy the same shares shortly after selling then you use the cost basis of the future buy. So you can't actually calculate the taxable gains (for sure) until more than 30 days after you've sold.

Fwiw, this sounds very similar to US taxes, what’s called “wash sales”.  There’s some discussion of this in the beancount docs.

I didn't express myself well. While it would be nice if beancount could calculate the actual taxable capital gains, I don't see that necessary -- I can calculate it separately and add it in. There is no "lot selection" in the UK that you need to track, you simply buy and sell the shares and based on that history you end up owing tax.

I’m no expert on any of this, but if you need to compute capital gains, then you need to know the original cost of the shares you sell, right?  It sounds like you’re implying that in the UK you don’t get to pick, you just have to use the first bought shares?  If so, that’s what is called FIFO lot selection in us taxes and in beancount.

 

you've seen 

https://beancount.github.io/docs/trading_with_beancount.html#realized-and-unrealized-pl

https://beancount.github.io/docs/trading_with_beancount.html#reporting-unrealized-pl

yes?

Yes, and I get horrifically confused on the realizing of capital gains:

• For selling 'realized' shares you must choose a lot of shares that you've acquired. This is only necessary for US-style capital gains tracking where you need to track by purchase price.

Hmm, I think I’m confused how to reconcile this with what you said above…

• The booking method of 'NONE' however seems to work -- I put in whatever cost basis for buying/selling, which is dictated by the UK capital gains. Holdings, while having a series of separate lots, really should be merged into one single lot in this case.

The only challenge with this is that it creates many, many holdings -- positive and negative -- when I'd rather just have one merged together.

Is this perhaps what “average” cost is in beancount?  I’m really just guessing here because it’s still not clear to me exactly what you’re looking for.

I'm just wondering if I'm missing something with this approach, and what I can do to help better document it.

Mark

 

For now I just need to mark the explicit cost at disposal time to the appropriate capital gains cost basis.

Mark

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