We suspect that we are not properly 'accounting' for the proceeds and payments related to (at least) personal and investment loans and would appreciate feedback from subscribers who are more knowledgeable. Considerations:
- Personal and Investment loans are similar, but the cash flows are reversed since personal loans are loans to others while investment loans are made by others to me.
- There is a pending fix for Investment loan proceeds not appearing on the Income statement (where it probably should not be anyway).
- Make appropriate changes to the Income, Expense and Cash Flow Statements for loan proceeds as well as principle and interest payments.
- These changes need to understandable by most subscribers.
The tables in the attached .jpg show how Pralana Online current reports these and the changes under consideration. We look forward to your comments and any questions.
@cstone Sorry for the late reply to this request. I think I was one of the users that raised this issue on the personal loan side. I made a loan to my partner so she could purchase my half of our business. The changes that I think you have outlined would work for me. The loan would have interest as ordinary income and the principle payments would be partly just a return of capital (so just cash flow) and part LTCG. The LTCG would be a fixed percentage of the principle amount in each payment.
So it appears that it would solve my issue and make things much MUCH simpler on my end instead of the kludged work-around I came up with.
The 2025/02/16 release added the ability for you to specify a percentage of principal received on personal loan payments to be taxed as LTCG. I can see the LTCG on the Taxes > AGI Detail and on the Form 1040.
Please check this at your convenience and let me know if it does works as intended for your loan.
Thanks,
Charlie Stone, Pralana
