bookspec/examples/1099-and-party-totals-for-a-members-payment.toml

# How a payee's party totals and its 1099 amount relate (wanderbooks
# rules.md B-35 item 9, B-19): a member paying a contractor for the
# company through the members' financing account, by check, by their own
# card and with no method recorded; a company card charge; a company
# check; then the member reimbursed. Party totals count every payment as
# paid to the contractor, in money; the 1099 worksheet counts the
# company's payments that aren't by card, and holds the unrecorded one
# undetermined. The shape: bookspec/README.md.

id = "1099-and-party-totals-for-a-members-payment"
title = "A payee's party total is its 1099 amount plus its card payments plus its payments of unknown method"
rule = """
A member who pays a payee for the company from their own funds, the
company owing them for it through its financing account, leaves the
company the payer: on the 1099 worksheet the member's own cash or check
counts toward the payee's 1099, the member's own card is excluded (Form
1099-K), and a payment whose method isn't recorded is undetermined. Party
totals report what moved with each party, whoever handled the money: every
one of those payments is paid to the payee, in money, on its date, and the
member is paid when the company reimburses them. So the payee's party
total paid is its 1099 amount plus what was paid by card or payment
network plus what is undetermined; the reimbursement is paid to the
member and pays no payee.
"""
status = "CHOICE"
sources = [
  "Treas. Reg. §1.6041-1(e)(1): a person paying on another's behalf who only writes the check at its direction isn't the payor (wanderbooks docs/spec/sources/irs-1099-payment-method.md)",
  "Treas. Reg. §1.6041-1(a)(1)(iv): a payment card transaction is reported under §6050W, not §6041 (docs/spec/sources/irs-1099-payment-method.md)",
  "DECISION (owner, 2026-10-20): money is cash, cards, the members' financing and loans (wanderbooks rules.md B-35 item 5)",
  "DECISION D-40 (owner, 2026-10-20): payment methods; an untagged payment through financing is undetermined (rules.md B-19)",
]
tags = ["1099", "parties", "member-paid", "instruments", "cards"]

[setup]
currency = "USD"
fiscal_year_start = "01-01"
basis = "cash"
rounding = "half-away-from-zero"
cash_accounts = ["1000"]
financing_accounts = ["2100"]

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

[[setup.accounts]]
code = "2050"
name = "Company Visa"
type = "liability"

[[setup.accounts]]
code = "2100"
name = "Due to Members"
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 = "6000"
name = "Contract Labor"
type = "expense"

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

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

[[setup.parties]]
name = "Dana Studio"
roles = ["vendor", "contractor"]

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

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

# The contractor's vendor record, marked for a 1099-NEC.
[[setup.payees]]
name = "Dana Studio"
form = "1099-NEC"

[[setup.instruments]]
label = "Company Visa"
kind = "business_card"
account = "2050"

[[setup.instruments]]
label = "Tobin's checks"
kind = "member_cash_or_check"
account = "2100"
owner = "Tobin Harlow"

[[setup.instruments]]
label = "Tobin's Visa"
kind = "member_card"
account = "2100"
owner = "Tobin Harlow"

# 1. Tobin pays the contractor by personal check.
[[events]]
date = "2026-03-02"
description = "Design work, paid by Tobin's check"
parties = [{ party = "Dana Studio" }]
instrument = "Tobin's checks"
lines = [
  { account = "6000", side = "debit", amount = "1500.00" },
  { account = "2100", side = "credit", amount = "1500.00" },
]

# 2. Tobin pays on his own card.
[[events]]
date = "2026-04-01"
description = "Icons, charged to Tobin's own card"
parties = [{ party = "Dana Studio" }]
instrument = "Tobin's Visa"
lines = [
  { account = "6000", side = "debit", amount = "400.00" },
  { account = "2100", side = "credit", amount = "400.00" },
]

# 3. Tobin pays; how is not recorded.
[[events]]
date = "2026-05-01"
description = "Revisions, paid by Tobin"
parties = [{ party = "Dana Studio" }]
lines = [
  { account = "6000", side = "debit", amount = "300.00" },
  { account = "2100", side = "credit", amount = "300.00" },
]

# 4. Charged to the company card.
[[events]]
date = "2026-06-01"
description = "Banner, on the company card"
parties = [{ party = "Dana Studio" }]
lines = [
  { account = "6000", side = "debit", amount = "200.00" },
  { account = "2050", side = "credit", amount = "200.00" },
]

# 5. The company's own check.
[[events]]
date = "2026-06-15"
description = "Brochure, company check"
parties = [{ party = "Dana Studio" }]
lines = [
  { account = "6000", side = "debit", amount = "600.00" },
  { account = "1000", side = "credit", amount = "600.00" },
]

# 6. The company reimburses Tobin for events 1 to 3.
[[events]]
date = "2026-07-01"
description = "Tobin reimbursed"
parties = [{ party = "Tobin Harlow" }]
lines = [
  { account = "2100", side = "debit", amount = "2200.00" },
  { account = "1000", side = "credit", amount = "2200.00" },
]

[[expect]]
query = "party_part"
entry = 2
party = "Dana Studio"
values = { resolved = "400.00", direction = "paid", cash = "400.00", in_kind = "0.00" }

# By hand: 1,500.00 + 400.00 + 300.00 + 200.00 + 600.00 = 3,000.00, every
# payment paid to the contractor, in money.
[[expect]]
query = "party_totals"
party = "Dana Studio"
basis = "cash"
from = "2026-01-01"
to = "2026-12-31"
values = { paid = "3000.00", received = "0.00" }

# By hand: counts 1,500.00 (Tobin's check) + 600.00 (the company's check)
# = 2,100.00; excluded 400.00 (Tobin's card) + 200.00 (the company card)
# = 600.00; undetermined 300.00. 2,100.00 + 600.00 + 300.00 = 3,000.00,
# the party total. What certainly counts, 2,100.00, is at least 2,000.00:
# reportable.
[[expect]]
query = "vendor_1099"
payee = "Dana Studio"
from = "2026-01-01"
to = "2026-12-31"
values = { status = "reportable", threshold = "2000.00", paid = "2100.00", excluded_card = "600.00", undetermined = "300.00", not_reportable = "0.00" }

# The reimbursement is paid to Tobin, and pays no payee.
[[expect]]
query = "party_totals"
party = "Tobin Harlow"
basis = "cash"
from = "2026-01-01"
to = "2026-12-31"
values = { paid = "2200.00", received = "0.00" }

[[expect]]
query = "vendor_1099_paid"
from = "2026-01-01"
to = "2026-12-31"
values = { "Dana Studio" = "2100.00" }