id = "members-close.odd-cent-across-closes"
title = "An odd cent split cumulatively across closes, a close to retained earnings between"
rule = "Each close to the members MUST give each member their largest-remainder split of everything closed to the same members and shares so far, to the minor unit, less what earlier closes gave them; a close to retained earnings allocates nothing to the members and MUST NOT restart the count."
status = "CHOICE"
sources = ["26 U.S.C. §704(a)", "Treas. Reg. §1.704-1(b)(2)(iv)(b)"]
tags = ["partnership", "close", "rounding", "book", "us"]

# The regression this example comes from (wanderbooks P3 defect 17, audit
# F52, anonymized): a net loss of 399.23 at 50/50, closed in January and
# again in March, with February closed to retained earnings. Restarting the
# count at March gave A the tied cent twice (A −399.24, B −399.22).
#
# By hand, from the rule:
#   January: −399.23 × 0.5 = −199.615 each; rounded toward zero, −199.61
#     each, one cent short; the remainders tie (0.005), so the cent goes to
#     the member listed first: A −199.62, B −199.61.
#   February: 10.00 to retained earnings; the members' count skips it.
#   March: the count's running total is −798.46, −399.23 each exactly;
#     less January's −199.62 / −199.61, March gives A −199.61, B −199.62.
#   Each member ends at −399.23, their exact share.

[setup]
currency = "USD"
fiscal_year_start = "01-01"
basis = "accrual"
rounding = "largest-remainder"  # odd cents to the largest remainders, ties
                                # to the member listed first, cumulatively

[[setup.accounts]]
code = "1000"
name = "Cash"
type = "asset"

[[setup.accounts]]
code = "3000"
name = "Capital, A"
type = "equity"

[[setup.accounts]]
code = "3001"
name = "Capital, B"
type = "equity"

[[setup.accounts]]
code = "3999"
name = "Retained earnings"
type = "equity"

[[setup.accounts]]
code = "6000"
name = "Fees"
type = "expense"

[[setup.members]]
name = "A"
capital_account = "3000"
share = "0.5"

[[setup.members]]
name = "B"
capital_account = "3001"
share = "0.5"

[[events]]                      # event 1
date = "2026-01-15"
description = "January's fees"
lines = [
  { account = "6000", side = "debit", amount = "399.23" },
  { account = "1000", side = "credit", amount = "399.23" },
]

[[events]]                      # event 2: the closing entry
date = "2026-01-31"
description = "Close January to the members"
close = { start = "2026-01-01", to = "members" }

[[events]]                      # event 3
date = "2026-02-15"
description = "February's fees"
lines = [
  { account = "6000", side = "debit", amount = "10.00" },
  { account = "1000", side = "credit", amount = "10.00" },
]

[[events]]                      # event 4
date = "2026-02-28"
description = "Close February to retained earnings"
close = { start = "2026-02-01", to = "retained_earnings" }

[[events]]                      # event 5
date = "2026-03-15"
description = "March's fees"
lines = [
  { account = "6000", side = "debit", amount = "399.23" },
  { account = "1000", side = "credit", amount = "399.23" },
]

[[events]]                      # event 6
date = "2026-03-31"
description = "Close March to the members"
close = { start = "2026-03-01", to = "members" }

[[expect]]
query = "entry"
entry = 2

[expect.values]
"6000.credit" = "399.23"
"3000.debit" = "199.62"
"3001.debit" = "199.61"

[[expect]]
query = "entry"
entry = 6

[expect.values]
"6000.credit" = "399.23"
"3000.debit" = "199.61"
"3001.debit" = "199.62"

[[expect]]
query = "balances"
as_of = "2026-03-31"

[expect.values]
"3000" = "-399.23"
"3001" = "-399.23"
"3999" = "-10.00"
"1000" = "-808.46"