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December 7, 2023
Question

Cash Basis Accounting for Brokerage Account

  • December 7, 2023
  • 0 replies
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We are a cash basis S-corp. We recently opened a brokerage account with some reserve capital and invested in money market mutual funds.


1. What accounts and account types do we need to set up? Pros/cons of structuring hierarchically by brokerage house, type of investments, etc? 

2. Given our cash basis reporting, when and how do we report normal related transactions after the initial investment? For example: interest and dividents paid our as cash, interest and dividends reinvested, etc? 

3. Given the goal of our current investments to retain a stable $1.00 share price, I do not anticipate gains or losses on that front for now, but if anyone could advise how that would be handled in cash basis in case we branch into trading other investments, that would be great as well.

4. Do we reconcile each these accounts (especially unrealized gains/losses) with each statement or wait until we sell the investments when any reinvested gains would be realized?

5. Anything else we need to consider or plan for?