Since this came up in the other thread, I've got an accounting question with regard to treatment of retirement funds.
For tax purposes, retirement funds that receive pre-tax contributions are treated like tax-exempt entities, a separate taxpayer from the beneficiary, so that interest and realized capital gains are tax exempt. There are literally 990s to file, although the funds manager files them and not the beneficiary (unless self-directed). If I set up books in gnucash according to tax law, if I'm accounting for an IRA, when RMD is known, I enter it as a liability which gets reduced with each distribution. I have to show both the asset transfer between the IRA account and checking account AND ordinary income from the distribution. If there is witholding from the distribution, then that reduces the tax liability and is not shown as an asset transfer. Here's a situation I just encountered. Say the borrower is trying to qualify for a loan. Qualification rules require showing an adequate amount of income, regardless of assets. If the borrower has pre-tax retirement funds, for accounting purposes, can can distributions be considered ordinary income, like tax law compliance? If not, then the only income from the fund are interest within the fund regardless of distribution. Is there are argument to be made that the accounting rule is the same as the rule for tax law compliance? _______________________________________________ gnucash-user mailing list [email protected] To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
