Thank you; this is helpful.
I never really thought about recording Deferred Income previously because
the investment people track it and let me know what has been taken out
every year. But after the discussion in this list last year, I thought it
might be good to track, at least the taxable withdrawals.
I see that Deferred Income should have been recorded, but it wasn't.
Instead of using "Opening Balance" when they were set up, the amount should
have been more appropriately credited to Deferred Income, right?
Your example of an IRA Balance brings up another question:
Suppose the IRA in your example paid a dividend of $2,000 each month...
should the Deferred Income be credited? This, it would be read like:
Assests: Investments: IRA debit $2,000
Equity: Deferred Income credit $2,000
And thus, when I take a withdrawal, I debit "Deferred Income" and credit
"taxable income"?
Is that correct?
On Mon, Jan 15, 2024 at 1:09 PM Michael or Penny Novack <
stepbystepf...@comcast.net> wrote:
> Let me ask you a question (that should make it obvious what one* of your
> problems is --- and yes, this has been discussed before)
>
> HOW did you record this deferred income when it was received? Or since
> it might have been received before you began using gnucash, how did you
> enter the accumulated deferred income when you started with gnucash?
> Forget for just a moment that the term "deferred income" in it << you
> might not be using an account of type "income" to track it --- types
> income and expense are temporary accounts of fundamental type equity and
> would be zeroed out IF you did an actual "close the books" -- you
> presumably want this amount in a standing account, one that persists
> through a "close the books"
>
> Hint --- suppose I were starting to use gnucash and I had an IRA balance
> of $500,000 and all of that is "deferred income" (not taxed yet, so will
> be when withdrawals taken). HOW did I record that starting balance? NOT
> by using the "starting balance tool". I would have an account under
> equity with a name like ":deferred income" and I would enter a
> transaction debit Assets:Investments"IRA and credit Equity:Deferred
> Income << in other words, it IS part of my equity, just kept separate >>
>
> Now we are taking a distribution (your transaction) You would have the
> first two lines right but that would be a CREDIT to Income:Taxable:IRA
> distributions and a DEBIT to Equity:Deferred Income And no, you
> are NOT decreasing your total equity (because an account of type income
> is a temporary account of fundamental type equity --- so no net change
> to equity)
>
> Michael D Novack
>
> PS: IF you never kept the accumulated deferred income as a separate part
> of equity don't try to go back and fix that. Just use equity itself for
> the second debit.
>
> * The other is that you don't seem to understand the "sense" of an
> account of type "income". That's where your wrong sign comes from
>
>
>
>
> On 1/15/2024 11:52 AM, R Losey wrote:
> > Last year, there was a discussion here about tracking taxable
> distributions
> > from IRAs which included a deferred income account. I had not been
> tracking
> > taxable income, and thought that this would be good, so I tried to do
> this
> > last year, but I think I did it incorrectly. I wanted to avail myself of
> > the knowledge and wisdom here.
> >
> > I have "Deferred Income" as an "Income" account. When I take out, say,
> > $1000.00, I made the following split:
> >
> > Assets: Investments: IRA credit $1000.00
> > Assets: Current Assets: Checking: debit $1000.00
> > Income: Taxable: IRA Distribution debit $1000.00
> > Income: Deferred Income credit $1000.00
> >
> > I suspect that I have the last two entries reversed because the IRA
> > Distribution balance is negative, and all other income accounts are
> > positive.
> >
> > I don't remember if I created the "Deferred Income" account; perhaps it
> > should not be under "Income"?
> >
> > Many thanks!
> >
>
> --
> There is no possibility of social justice on a dead planet except the
> equality of the grave.
>
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--
_________________________________
Richard Losey
rlo...@gmail.com
Micah 6:8
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