Yeah, I see what you mean. Following on your example, Let's say I started the year with 50K, but during the year I keep withdrawing the profits and spend them all. I always maintain the account at 50K level, so I ended the year with 50K in my broker (But the statement will tells me that I have a total of 5K in gain, despite I spent them all) Now, here's the problem, I won't have any profits left covering my tax, and end up taking out money from my insitial 55K capital to pay tax. So the consideration is about how I can plan ahead for tax, so I limit myself to a certain amount I can spend from the profits, the rest is left for tax. I know some people only take profits once a year, so they can easily manage their accounting. But more likely, we withdraw profits more frequently than that. That's why this kind of calculation disturb me.