Project 2

Due: NLT 2359 on Friday, 23 Oct 2020

Introduction

You will write a program that allows a user to determine his tax bill due to capital gains. You should make use of classes that already exist (particularly one or more of the ADTs we've studied since the 6-week exam) as well as make your own class(es) should the need arise. You should also ensure that you are utilizing information hiding (i.e. private class members) whenever possible to limit unwanted access to your data members.

Overview

People have all different types of income and one of these types is called capital gains. A capital gain is a profit that results from the sale of a capital asset (stock, bond, mutual fund, property, etc.) for more than you purchased it for.

Now whenever money is made, the IRS is there to take their cut. The capital gains tax rate varies depending on a number of factors but we will only look at two rates for people in the middle class: short-term and long-term. The difference is this:

• The short-term capital gains tax rate of 25% is assessed on investments held for less than one calendar year.
• The long-term capital gains tax rate of 15% is assessed on investments held for one calendar year or longer.

The amount the IRS takes is the tax rate multiplied by the capital gain. How this capital gain is calculated is (of course!) the interesting part.

The capital gain is the sell price minus cost basis (purchase price). The IRS allows three different ways to calculate your cost basis for things in which you may own multiple shares, purchased over time (like stocks and mutual funds):

• The simplest (and default choice) is pure FIFO. Every time you sell a share, it is the oldest share you own. Because share prices usually go up in value, selling your oldest shares will result in the highest capital gains.
• Another method is average cost basis. Every time you purchase a share, each share takes on the average purchase price of all the shares you currently own. When you go to sell a share (since our goal is to minimize the amount of taxes paid) you would sell the oldest shares first to use the long-term capital gains tax rate. This results in lower capital gains bills than the pure FIFO method above.
• The final (and most complicated) is choosing the individual share that you are selling. Now you can do something smart like selling your most expensive shares first. This results in a lot of bookkeeping but the lowest tax bill.

Here is a simple example. You purchased 200 shares of Facebook in mid-2013 (100 shares at $30 in May & 100 shares at $50 in July.) Then later sold 100 shares in late-2014 at $75.

Using the three methods described, your tax bill would be:

• FIFO - ($75 - $30) * 100 shares * 15% tax rate = $4500.00 * 15% = $675.00
• Average - ($75 - $40) * 100 shares * 15% tax rate = $3500.00 * 15% = $525.00
• Most expensive - ($75 - $50) * 100 shares * 15% tax rate = $2500.00 * 15% = $375.00

Note that in each case, you received $7500 dollars for the sale. The only difference in calculating the taxes you owe on the profit is which shares you sold.

Helpful Details

The project is divided up into a number of parts. I strongly recommend that you solve each part completely - including thorough testing - before you move on to the next part. Smart (and functional) code in the early parts will save you time in the later parts. For example, here are a few ideas that may make your accounting job easier (optional, of course, but IMO helpful):

• If you take a look at test.txt you'll notice that there is a lot of information about each transaction. Some of that information is compound and requires dissection, most particularly the date. It would seem smart to create a Date class which would hold day, month, and year to make handling the date much easier in your program.
• Similarly, it would make sense to create a Share class to record the particulars of each transaction such as the Date and the purchase price. You wouldn't want to use a single Share instance to keep track of the number of shares purchased since later on you may only sell a portion of the number purchased at that price on that particular day; rather, you should create a new Share instance for every single share you purchased so that selling an individual share becomes more intuitive. Plus, you won't have to dig around your monolithic uber-Share structure to figure out what the purchase price was for a particular share.
• You should certainly use a data structure that already exists to store your holdings. For instance, if you decided to implement a Share class and wanted to use the Stack we worked with during class and lab to hold your Shares, making a Stack<Share> seems fitting.
• You may make the following assumptions about the financial transaction data you will be processing:
  1. The data in a single file be for one stock / mutual fund.
  2. The data will always be ordered chronologically.
• To obtain the proper output format as seen in the screenshots below, you should include the <iomanip> library and the following two lines of code before you decide to cout any information:

  cout.precision(2);
  cout.setf(ios::fixed,ios::floatfield);

  This will give you the nice presentation you see in the examples.

Part 1: FIFO

Write a program that reads in the information from a file such as test.txt and prints out the total taxes based upon the FIFO method. Treat all gains as long term.

$ ./part1 < test.txt
You purchased 100.00 shares of Facebook at $30.00 on 7/21/2013
You purchased 100.00 shares of Facebook at $50.00 on 5/9/2014
You sold 50.00 shares of Facebook at $75.00 on 7/19/2014
You sold 50.00 shares of Facebook at $75.00 on 7/25/2014

Using FIFO accounting, you owe Uncle Sam $675.00
$

Part 2: Short Term Gains

Write a program that reads in the information from files such as test.txt and test2.txt prints out the total taxes based upon the FIFO method. Expand your program to accurately calculate taxes for short-term and long-term capital gain.

$ ./part2 < test.txt
You purchased 100.00 shares of Facebook at $30.00 on 7/21/2013
You purchased 100.00 shares of Facebook at $50.00 on 5/9/2014
You sold 50.00 shares of Facebook at $75.00 on 7/19/2014
You sold 50.00 shares of Facebook at $75.00 on 7/25/2014

Using FIFO accounting, you owe Uncle Sam $900.00
$ ./part2 < test2.txt
You purchased 100.00 shares of Facebook at $30.00 on 7/21/2012
You purchased 100.00 shares of Facebook at $50.00 on 5/9/2013
You sold 50.00 shares of Facebook at $75.00 on 7/19/2014
You sold 50.00 shares of Facebook at $75.00 on 7/25/2014

Using FIFO accounting, you owe Uncle Sam $675.00
$

Part 3: Average cost basis

Write a program that reads in the information from files such as test.txt and test2.txt prints out the total taxes based upon the FIFO method and the average cost basis method.

$ ./part3 < test.txt
You purchased 100.00 shares of Facebook at $30.00 on 7/21/2013
You purchased 100.00 shares of Facebook at $50.00 on 5/9/2014
You sold 50.00 shares of Facebook at $75.00 on 7/19/2014
You sold 50.00 shares of Facebook at $75.00 on 7/25/2014

Using FIFO accounting, you owe Uncle Sam $900.00
Using average accounting, you owe Uncle Sam $700.00
$ ./part3 < test2.txt
You purchased 100.00 shares of Facebook at $30.00 on 7/21/2012
You purchased 100.00 shares of Facebook at $50.00 on 5/9/2013
You sold 50.00 shares of Facebook at $75.00 on 7/19/2014
You sold 50.00 shares of Facebook at $75.00 on 7/25/2014

Using FIFO accounting, you owe Uncle Sam $675.00
Using average accounting, you owe Uncle Sam $525.00
$

Part 4: Individual shares

Write a program that reads in the information from files such as test.txt and test2.txt and prints out the total taxes based upon the FIFO method, the average cost basis method, and selling your most expensive shares first.

$ ./part4 < test.txt
You purchased 100.00 shares of Facebook at $30.00 on 7/21/2013
You purchased 100.00 shares of Facebook at $50.00 on 5/9/2014
You sold 50.00 shares of Facebook at $75.00 on 7/19/2014
You sold 50.00 shares of Facebook at $75.00 on 7/25/2014

Using FIFO accounting, you owe Uncle Sam $900.00
Using average accounting, you owe Uncle Sam $700.00
By selling most expensive shares first, you owe Uncle Sam $625.00
$ ./part4 < test2.txt
You purchased 100.00 shares of Facebook at $30.00 on 7/21/2012
You purchased 100.00 shares of Facebook at $50.00 on 5/9/2013
You sold 50.00 shares of Facebook at $75.00 on 7/19/2014
You sold 50.00 shares of Facebook at $75.00 on 7/25/2014

Using FIFO accounting, you owe Uncle Sam $675.00
Using average accounting, you owe Uncle Sam $525.00
By selling most expensive shares first, you owe Uncle Sam $375.00
$

What to submit and how it will be graded

Put the main method for your solution in a file named driver.cpp, since each part builds upon the previous with corresponding output, there is no reason to submit a different driver file for each part. You will only receive credit for the highest numbered part that actually works! For example, if you have a working solution to Part 3, but only a partially completed solution to Part 4, you will not receive any partial credit for Part 4. Important points:

• Your source code must compile, or else you will earn a zero on the project.
• Your program must read input and write output in the format specified in this project description.
• Your program must give correct results! No partial credit for Parts that do not produce correct output.
• You cannot skip parts! If you submit a working solution for Part 1, 2, and 4, but a broken solution for Part 3, then you will not receive credit for completing anything higher than Part 2.

Electronic Submission

Submit all the .cpp and .h files containing the source code for your solution along with a screen captures showing your code compiling and the accounting results of your program after being run on transactions.txt (name the files compile.png & execute.png) via the the submisison website: submit.cs.usna.edu.

In a terminal window from your project02 folder, use the following command to submit your solution:

~/bin/submit -c=SI221 -p=Project02 *.cpp *.h compile.png execute.png

Do not submit any .o or executable files!

Paper Submission

Complete and submit a signed copy of this cover sheet / survey in the first class / lab session after submitting your project electronically.

Point Values

Highest Completed Part	Maximum Points Available
Part 1	60 points
Part 2	70 points
Part 3	90 points
Part 4	100 points

Extra Credit (10 extra points)

Write you own Makefile and submit it along with your code. It should work so that typing make in the terminal automatically compiles your project! (HINT: see Lab01). Your screenshot must demonstrate use of your Makefile.