Trading securities

Is an unrealized loss reported to IRS?

Unrealised (or unrealized).

Basically, unrealized gross profit is not an asset, liability, expense, revenue and owner equity.

Because asset always record in DR side as a nature.

Liability record on CR side but we don't have to pay any thing in unrealized gross profit.

expense nature is DR

revenue nature is CR but unrealized gross profit is expected to be an income after realizing.

owner equity means to invest in business and unrealized gross profit is not an investment.

So, we have to assume the unrealized gross profit as liability because it is mutually unearned. Unearned, it is an advance amount which is liability until we earned it. Similarly, unrealized is expected to be earned in future after collecting the installments of sales, as unearned is a part of liability so, unrealized gross profit is also a part of liability through unearned account.

Asset Account (debit)

Unrealized Gain/Loss on Investment (credit)

This journal entry is increasing your asset but at the same time putting the funds it has been increased into a "holding" account until the gains/losses can be realized. When the asset matures or sells you make an entry to realize the gain/loss which have now become taxable income.

Unrealized Gain/Loss on Investment (debit)

Interest Income; Realized Gain/Loss (credit)

You will also need an JE to account for what is happening with the asset.

Cash (debit) (unless you are going to roll over the asset. If that's the case keep amount rolling over in asset account.)

Asset Account (credit)