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Posted by Mark W on December 27, 2007, 9:53 pm
Please log in for more thread options I could be wrong here but if you buy bonds at purchase price (X bonds
at $Y) then at each interval, or yearly, you mark the bonds to their
current price (reflecting the interest earned but not paid) then you
would have a market value for the bond and the account would not have
excess cash - cash that does not get credited in the real world.
At sale you would show a gain of 50% but if you enter an adjusting
entry debiting the gain and crediting the interest your bottom line
would tie upon transfer.
>
>
>
>
>
> > Hi, Andrew.
>
> > What happened in the real world?
>
> > You bought bonds and recorded their purchase price in your Bonds account=
,
> > right? =A0Then you cashed them for more than you paid for them. =A0And y=
ou put
> > all the cash into your CU.
>
> > First, record all the accumulated interest to date of redemption. =A0In
> > accountant-speak: =A0Debit Bonds; Credit Interest Income. =A0This should=
bring
> > the Bonds account balance up to the redemption value of the Bonds.
>
> > Second, record redemption of the bonds: =A0Debit Cash; Credit Bonds. =A0=
Don't
> > worry about principal vs. income at this point; that has already been ta=
ken
> > care of by the previous entry.
>
> > Third, record deposit of the redemption check into your CU: =A0Debit CU;=
> > Credit Cash. =A0The CU couldn't care less if the cash is from principal =
or
> > interest - or from your wages or gambling winnings or anything else.
>
> > Ending balances:
> > Bonds: =A0 =A0Zero
> > Cash: =A0 =A0Zero
> > CU: =A0 =A0Previous balance plus redemption proceeds
> > "_Int Inc:US Savings Bonds" Category: =A0 =A0All the accumulated interes=
t. =A0The
> > interest income is fully taxable on the US Income Tax return, but is
> > entirely exempt from state and local taxation.
>
> > I've never owned a US Savings Bond, Andrew. =A0Some of my clients did, b=
ut
> > that was at least a couple of decades ago. =A0Rules may have changed in =
that
> > time, and my memory may be fuzzy, too. =A0Anyone "reading over our shoul=
ders"
> > should be aware that there are several series of US Savings Bonds (E, EE=
,
> > H - and others) and each series has its own rates and methods for paying=
> > interest. =A0Some pay the interest in periodic checks, much like most ot=
her
> > bonds. =A0Others (such as Series E/EE) are bought at a discount and matu=
re at
> > the face amount; the taxpayer may elect at the first year-end after purc=
hase
> > of the bond to report the accumulated interest annually, but most taxpay=
ers
> > choose to wait and report it all at redemption - which you apparently di=
d.
> > My comments are limited to my understanding of your specific situation a=
nd
> > may not apply to others.
>
> > Be sure to check with your own CPA to validate my comments.
>
> > RC
> > --
> > R. C. White, CPA
> > San Marcos, TX
> > (Retired. =A0No longer licensed to practice public accounting.)
> > r...@grandecom.net
> > Microsoft Windows MVP
> > (Currently running Quicken 2008 Deluxe in Vista Ultimate x64)
>
>
>
> > > OK =3D here's the deal.
>
> > > Got an asset account called 'US Savings Bonds'. =A0I update the balanc=
e as
> > > it is reported by US Savings Bond Wizard WITHOUT regard to principal o=
r
> > > interest components.
>
> > > Got a bank account called 'Credit Union Savings'.
>
> > > Cashed a bunch of them in today. =A0Want the interest accrued to go in=
to the
> > > tax category "_Int Inc:US Savings Bonds" so that it gets reported on t=
/y
> > > 2007.
> > > But want the entire amount of redemption (principal + interest) to be
> > > TRANSFERED out of the 'US Savings Bonds' account to 'Credit Union Savi=
ngs
> > > Account'.
>
> > > Therefore, can't use BOTH catagories and account name in the transfer,=
I
> > > believe, right?
>
> > > So how does one accomplish this correctly in Q to make BOTH the transf=
er
> > > as well as the correct principal/interest associations (I know the two=
> > > components based on what the wizard told me which matched the payout f=
rom
> > > the CU perfectly.)
>
> > > (PS: The wrong answer is to enter interest as it accrues I think since=
it
> > > is only REPORTED on the tax return for the year in which you make the
> > > redemption unlike OID interest.....)
>
> > > Ideas R.C. (or anyone else?)
>
> > > --
> > > -------------------------------------------------------------
> > > Regards -
>
> > > - Andrew
>
> Although you've said to defer recording the interest until cashed,
> that distorts the picture of net worth through the years. =A0Since some
> bonds MAY be reasonably held for 30 years and some people have
> significant holdings in Savings bonds, that seems to be a valid but
> incorrect way to handle. =A0My Dad, for whom I run his finances, has
> bonds old enough to no longer pay any interest and they are cashed in
> wgen they hit that point.
>
> I'm new to Quicken and I have not yet answered this for myself. =A0As a
> user of MS$, i have accrued interest as it's earned on the investment
> account Savings Bonds and carried it all as "cash", both the cost/
> purchase and earnings which were accounted as tax-free. =A0When the
> bonds ARE cashed in, I create two transactions. =A0I remove the proceeds
> from Savings Bonds (uncategroized) and create a deposit to the
> receiving account properly accounting for the interest and return of
> capital. =A0That kept net worth and Tax projections accurate.
>
> Since Quicken is using Cash Flows, I don't believe this method will
> provide an acceptable picture, but since I'm still establishing
> accounts, I haven't yet setup these EE/E Bonds. =A0I sense the same
> problem as I encountered in MS$, you can't categorize a transfer
> transaction differently on the two sides (accounts) of the transfer.
>
> I'm in a bit of quandary as to how to proceed with setup.- Hide quoted tex=
t -
>
> - Show quoted text -
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