How should capital gains or losses be reported if there are explicit donor restrictions on them?

When capital gains or losses are subject to explicit donor restrictions, they must be reported in the restricted class. This is because the terms of the donor's intent dictate how these gains or losses can be utilized by the organization. Reporting them in the restricted class reflects the legal and operational obligations the organization has to adhere to the donor's specifications. This ensures transparency and accountability in how the organization's funds are managed and shows respect for the donor's wishes.

In contrast, reporting them in the unrestricted class would not accurately reflect the conditions attached to these funds and could mislead stakeholders about the availability of resources for general use. Similarly, including them in the operating budget would not be appropriate since capital gains or losses are not part of the regular operating income and expenses of the organization. Not reporting them at all would disregard the accounting standards that dictate the importance of reflecting all financial transactions accurately, thereby hindering clarity in financial reporting.