bookspec/examples/p3-party-own-liability-never-pays.toml

# P3 defect 24 and wanderbooks rules.md B-35 item 6: a credit to a
# liability the company owes a party itself never counts as paying that
# party. Regression test: ledger-core tests/spec_party_totals.rs
# defect24_a_credit_to_a_partys_own_liability_never_pays_it. The shape:
# bookspec/README.md.

id = "p3-party-own-liability-never-pays"
title = "A credit to what the company owes a party itself never pays it"
rule = """
A party may be named the creditor of the liabilities the company owes it
itself: a card's issuer, a loan's lender, each member for what the
members advanced. For an entry naming it, a credit to one is a promise,
not a payment: a fee on the issuer's own card, equipment bought on the
seller's own note, a distribution credited to what the members are owed.
It counts when it is paid. Property a member contributes subject to a
loan counts at its value net of the loan, in kind.
"""
status = "AUTHORITY"
sources = [
  "Helvering v. Price, 309 U.S. 409, 412-413 (1940): a promise to pay, even a secured one, is not payment (wanderbooks docs/spec/sources/helvering-v-price-1940.md)",
  "Treas. Reg. §1.704-1(b)(2)(iv)(b)(2): property contributed, net of liabilities the partnership takes it subject to (docs/spec/sources/irs-capital-accounts.md)",
  "DECISION (owner, 2026-10-20): a liability credit never counts as paying that liability's own creditor (rules.md B-35)",
]
tags = ["parties", "creditors", "cards", "notes", "distributions", "members"]

[setup]
currency = "USD"
fiscal_year_start = "01-01"
basis = "accrual"
rounding = "half-even"
cash_accounts = ["1000"]
financing_accounts = ["2100", "2500"]

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

[[setup.accounts]]
code = "1500"
name = "Equipment"
type = "asset"

[[setup.accounts]]
code = "2050"
name = "Business Card"
type = "liability"

[[setup.accounts]]
code = "2100"
name = "Due to Members"
type = "liability"

[[setup.accounts]]
code = "2500"
name = "Note Payable"
type = "liability"

[[setup.accounts]]
code = "3000"
name = "Capital — Tobin Harlow"
type = "equity"

[[setup.accounts]]
code = "3001"
name = "Capital — Morgan Ellis"
type = "equity"

[[setup.accounts]]
code = "6400"
name = "Bank Fees"
type = "expense"

[[setup.parties]]
name = "Harbor Bank"
roles = ["financial_institution"]
creditor_of = ["2050"]

[[setup.parties]]
name = "Lakeside Supply"
roles = []
creditor_of = ["2500"]

[[setup.parties]]
name = "Tobin Harlow"
roles = ["member"]
creditor_of = ["2100"]

[[setup.parties]]
name = "Morgan Ellis"
roles = ["member"]
creditor_of = ["2100"]

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

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

# 1. The issuer's fee on its own card: neither.
[[events]]
date = "2026-05-01"
description = "Card fee"
parties = [{ party = "Harbor Bank" }]
lines = [
  { account = "6400", side = "debit", amount = "25.00" },
  { account = "2050", side = "credit", amount = "25.00" },
]

# 2. The card paid off: paid to the issuer.
[[events]]
date = "2026-05-20"
description = "Card payment"
parties = [{ party = "Harbor Bank" }]
lines = [
  { account = "2050", side = "debit", amount = "125.00" },
  { account = "1000", side = "credit", amount = "125.00" },
]

# 3. A distribution to Tobin credited to what the members are owed:
# still owed, counts as nothing.
[[events]]
date = "2026-06-30"
description = "Distribution declared"
parties = [{ party = "Tobin Harlow" }]
lines = [
  { account = "3000", side = "debit", amount = "200.00" },
  { account = "2100", side = "credit", amount = "200.00" },
]

# 4. It is paid: paid, money.
[[events]]
date = "2026-07-15"
description = "Distribution paid"
parties = [{ party = "Tobin Harlow" }]
lines = [
  { account = "2100", side = "debit", amount = "200.00" },
  { account = "1000", side = "credit", amount = "200.00" },
]

# 5. Equipment on the seller's own note: neither.
[[events]]
date = "2026-08-01"
description = "Equipment on a note"
parties = [{ party = "Lakeside Supply" }]
lines = [
  { account = "1500", side = "debit", amount = "900.00" },
  { account = "2500", side = "credit", amount = "900.00" },
]

# 6. A payment on the note: paid.
[[events]]
date = "2026-09-01"
description = "Note payment"
parties = [{ party = "Lakeside Supply" }]
lines = [
  { account = "2500", side = "debit", amount = "300.00" },
  { account = "1000", side = "credit", amount = "300.00" },
]

# 7. Equipment worth 1,000.00 Morgan contributes subject to 200.00 owed
# on the note: 800.00 received, in kind (before P3: "paid 200.00").
[[events]]
date = "2026-09-15"
description = "Equipment contributed with its loan"
parties = [{ party = "Morgan Ellis" }]
lines = [
  { account = "1500", side = "debit", amount = "1000.00" },
  { account = "2500", side = "credit", amount = "200.00" },
  { account = "3001", side = "credit", amount = "800.00" },
]

[[expect]]
query = "party_part"
entry = 1
party = "Harbor Bank"
values = { resolved = "-25.00", direction = "neither", cash = "0.00", in_kind = "0.00" }

# Before naming the issuer the card's creditor: 150.00.
[[expect]]
query = "party_totals"
party = "Harbor Bank"
basis = "all"
from = "2026-01-01"
to = "2026-12-31"
values = { paid = "125.00", received = "0.00" }

[[expect]]
query = "party_part"
entry = 3
party = "Tobin Harlow"
values = { resolved = "200.00", direction = "neither", cash = "0.00", in_kind = "0.00" }

[[expect]]
query = "party_totals"
party = "Tobin Harlow"
basis = "all"
from = "2026-01-01"
to = "2026-12-31"
values = { paid = "200.00", received = "0.00" }

[[expect]]
query = "party_part"
entry = 5
party = "Lakeside Supply"
values = { resolved = "-900.00", direction = "neither", cash = "0.00", in_kind = "0.00" }

[[expect]]
query = "party_totals"
party = "Lakeside Supply"
basis = "all"
from = "2026-01-01"
to = "2026-12-31"
values = { paid = "300.00", received = "0.00" }

[[expect]]
query = "party_part"
entry = 7
party = "Morgan Ellis"
values = { resolved = "-800.00", direction = "received", cash = "0.00", in_kind = "-800.00" }

[[expect]]
query = "party_totals"
party = "Morgan Ellis"
basis = "cash"
from = "2026-01-01"
to = "2026-12-31"
values = { paid = "0.00", received = "0.00" }

[[expect]]
query = "party_totals"
party = "Morgan Ellis"
basis = "all"
from = "2026-01-01"
to = "2026-12-31"
values = { paid = "0.00", received = "800.00" }