KBH Applications

Transaction Terminology: 'KBH Investor Accounting' offers four types of transactions for positions. The application uses options terminology of "Buy to Open" with "Sell to Close" and "Sell to Open" with "Buy to Close". These transactions then support equity short sales on margin, option writes, short futures, short forex, and that in addition to all long positions. Margin situations are accounted by entering only the actual cash deposit. Margin calls are not accounted but strength or weakness of the position can be followed by updating prices.

Equity Accounting: Equity accounting requires no special instruction except that for non-margin positions the cash deposit should be equal or greater than the opening position. And margin short sales are accounted with "Sell to Open", "Buy to Close", and update of prices. Long positons in inverse ETF's are accounted with "Buy to Open", "Sell to Close", and update of prices.

Options Accounting: Options accounting requires no special instruction except that options WRITES are accounted with "Sell to Open", "Buy to Close", and update of prices. Of course a covered call is an option write that is accounted separately from the underlying equity position unless or until exercised.

Futures Accounting: To account futures, multiply the futures price times the contract size number to arrive at a total amount to enter. Next, enter the contract size number as the "Number of Securities". Then track movements of the position with update of prices. Of course begin with deposit of margin.

Note on Forex Accounting: A complete back-office accounting method for Forex is available on special request. The situation is fairly complex because currency rollover re-prices the currency. A simplified method using return-of-capital is not yet developed. For a simplified overall accounting read the "Abbreviated Accounting" section.

Note on Forex Tax Accounting: The Forex trading result as ordinary income might just go on Line 8, Schedule 1 of the 1040 but probably the year-end Forex statement should be attached to Part II and Line 10 of Form 4797. If elected by the beginning of the year the spot Forex could get 60/40 capital gain/loss tax treatment by attaching the year-end Forex statement to Part 1 and Line 1 of Form 6781. To go on Form 6781 the spot Forex should also be available as futures contracts.

Abbreviated Accounting for All Account Types and Asset Classes: There is a new era of investors just depending on their computerized account statements and tax forms and then having no other viewpoint of the investing activity. In that case then enter the year-beginning balance as a deposit. Next, enter an increase in monthly balance as a Dividend or enter a decrease in monthly balance as an Expense. However, enter additional deposits as both Deposit and Expense and note the Expense input as "ADJUST". Also enter withdrawals as both Withdrawal and Dividend and note the Dividend input as "ADJUST". Of course, this is an overall accounting and not a capital-gain accounting. Well, for Futures and for Forex, this accounting method could be both an overall accounting and a year-ending mark-to-market gain/loss accounting for tax purposes.

KBH Investor Accounting

KBH Forex Structure Application

Copyright by KBH
Last revised:
August 10, 2016
October 22, 2017
November 21, 2017
November 28, 2020
December 27, 2021
December 30, 2021