Trade vs. Settlement Dates

In financial markets, a transaction happens in two distinct stages:

1. Trade Date (T): The legal agreement to buy/sell is executed. The price is fixed.
2. Settlement Date (T+2): The legal ownership is transferred and cash is exchanged.

The Accounting Dilemma

This delay creates a gap in your records.

• On Date T: You “own” the stock risk (if price moves, you gain/lose), but you still have the cash in your account.
• On Date T+2: The cash actually leaves.

Which date should you use for your books?

Model 1: Trade Date Accounting (Standard)

Beancount (and the IRS) generally favors Trade Date Accounting.

• Concept: You record the asset change immediately on Day T.
• Reality: Your Cash account in Beancount will show a lower balance than your actual bank balance for 2 days.
• Why: Tax liability usually attaches on the Trade Date. The holding period (Long vs Short term capital gains) starts counting from the Trade Date.

Model 2: Settlement Date Accounting (Cash Basis)

Some users prefer to wait until the cash moves.

• Concept: You ignore the trade until T+2.
• Problem: Your Portfolio Value is wrong for 2 days. You might miss tax deadlines if the trade happens on Dec 31st but settles Jan 2nd.

Model 3: Full Accrual (The “Pending” Asset)

To be perfectly accurate during the gap, you must recognize that you owe money (a Payable) or are owed money (a Receivable).

On Trade Date: You don’t lose Cash yet; you gain a specific liability (“Settlement Payable”).

2024-06-01 * "Buy Stock"
  Assets:Brokerage:Stock       10 AAPL {100.00 USD}
  Liabilities:Brokerage:Settlement    -1000.00 USD

On Settlement Date: The liability is extinguished by Cash.

2024-06-03 * "Settlement"
  Liabilities:Brokerage:Settlement     1000.00 USD
  Assets:Brokerage:Cash               -1000.00 USD

While Model 3 is the most “correct” for an auditor, Model 1 (Trade Date) is the standard recommendation for personal finance in Beancount because it simplifies data entry significantly.