Recording Stocks
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Tracking stock Investments in QuickBooks

Some clients have been concerned about our requirement to upgrade their accounting system from Quicken to QuickBooks. One of the complaints is that QB doesn't have the same ability to automatically update stock holdings to their current market values, as you can do with Quicken.

That is true.  However, such a capability has no bearing on keeping good books for proper accounting and tax return preparation.

This is really a difference between actual historical costs and temporary market fluctuations. Proper accounting, and tax return reporting, are based on actual historical costs, which can be entered appropriately in QB.

QB has the ability to set up an asset account for stock investments and then enter the details of the purchases (corp name, number of shares, etc) in the memo section of the register.

When the stock is sold, you enter the gross sales price into a QB income account and transfer the cost of the stock from the asset account to a Cost of Assets Sold contra-income account. It isn't very complicated and we do it all the time for scores of clients.

The changes in the market value of a stock, or any other asset, have no effect on taxes as long as they are still owned. We don't pay taxes on appreciation of currently owned assets; nor do we deduct losses for assets that have gone down in value, yet are still owned. Seeing how much stock holdings are worth is useful from purely an informational aspect. What I am telling clients who want to utilize Quicken's automatic market update feature is to continue to use Quicken just for that. Everything else, including an account for the historical cost of the stocks, should be recorded in QB.

My appreciation for the benefits of everyone using QB for both personal and business bookkeeping grows daily, especially when I have to work with a client's records that are not yet on QB. The ability to pick up every item of income and deduction is magnified tremendously when all bank and credit card accounts are maintained properly in QB. Those people who insist on using a shoe box method of record keeping are literally tossing away thousands of dollars in lost deductions. I see this constantly.

We have some clients who have well over a thousand trades each year, mostly in options. Since almost all of the actual activity happens within their stock broker account, we don't post each trade into QB. We just use the stockbroker's year-end recap report (usually 100+ pages long) and enter the details into our Lacerte tax prep program from there. The QB account just shows how much the client has deposited into that particular stockbroker account. Showing each individual trade in QB would be overkill, even for someone like me, who appreciates perfect bookkeeping.



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This page was last updated:
Tuesday, January 31, 2012


Kerry M. Kerstetter
11802 Deer Road
Harrison, AR  72601
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