swaitsandClaude Opus 5.5
d64e0e9cdf
check / check (push) Canceled after 0s
The tax-basis K-1 shared each entry's built-in gain, property without a basis, prepaid at book and property distributed among the members entry by entry, every tied odd cent to the first member: three equal odd-cent properties contributed 50/50 left the members three cents apart. Apply D-38's rule (the closes' cumulative largest remainder, through kernel::apportion_cumulative): tax_capital::RunningSplit keeps each member's exact running share, rounds the running shares afresh to the cent and hands out the change, so no member's running share is ever a cent from exact and tied cents alternate. A negative running whole is rounded as its magnitude, a zero one by the sign of the whole just split, so a run of losses mirrors its gains part for part. Exact running shares are taken to ten places before rounding: a sum of Decimal thirds can sit a hair under its cent (the law found 399.93 as 399.9299...). tax_capital::entry_parts runs the splits over every posted entry from the books' first, in date order, whatever span is asked for, with one count per set of members with a part in the entry: a member never takes a cent of an entry they had no part in (Item L's capital contributed is the basis of the property that member contributed), and the count never restarts, since its weights are each entry's own amounts, not shares. An entry's reversal takes its original's split back out of the count (RunningSplit::unsplit), so an entry's cents are the same in every span and next year's beginning is this year's ending. The K-1's per-entry lines come from k1::entry_lines, which k1_detail now uses too. The book property each member contributed in an entry stays split entry by entry (each member's property must stay within their own credit); B-36 says so. Tests: tied_odd_cents_of_property_basis_run_cumulatively (fails on the per-entry split: 665.86 / 665.83); a_member_outside_an_entry_never_ takes_its_cents (three members; fails with one count for all members), an_entrys_odd_cent_is_the_same_in_every_span (a reversal across the span's start; fails with the count carried span by span or the reversal not taken out), the_split_runs_in_date_order (fails in posting order); the law a_running_split_never_drifts_a_cent (5,000 cases: the largest-remainder rounding of exact integer shares, ties to the first, and the negated run mirrored; fails with ties to the later member or a zero running whole rounded as a gain); unit tests for one split, alternating ties, a member outside a split, the mirror at zero, unsplit and the thirds case; bookspec example partnership-k1-tax-basis-odd-cents. rules.md B-36, the handbook (tracing figures), STATUS, testing.md and verification.md updated. Co-Authored-By: Claude Opus 5.5 <noreply@anthropic.com> Claude-Session: https://claude.ai/code/session_01T3gXMVt7XJPi6ens1or9Dj
168 lines
6.3 KiB
TOML
168 lines
6.3 KiB
TOML
# B-36 with D-38: the tax-basis K-1's odd cents run cumulatively.
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id = "partnership-k1-tax-basis-odd-cents"
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title = "Tax-basis capital: odd cents of contributed property's basis split cumulatively"
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rule = "Within each contribution, the property's built-in gain or loss (value less adjusted tax basis) is shared among the members as its book value is; to the cent, each member's running share from the books' first entry MUST be the largest-remainder rounding of their exact running share (ties to the member listed first), less what earlier entries gave them, so no member's share is ever a cent from exact and tied odd cents alternate instead of piling up on one member."
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status = "CHOICE"
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sources = [
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"Instructions for Form 1065 (2025), Item L, Tax-basis method: Capital contributed during the year",
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"26 U.S.C. §723",
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"Treas. Reg. §1.704-1(b)(2)(iv)(b)",
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"DECISION D-38 (owner, 2026-10-20): odd cents everywhere alike, cumulative largest remainder; applied to the tax-basis K-1 by the owner, 2026-10-22 (wanderbooks rules.md B-36, B-13)",
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]
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tags = ["partnerships", "k1", "tax-basis", "rounding"]
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[setup]
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currency = "USD"
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fiscal_year_start = "01-01"
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basis = "accrual"
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rounding = "largest-remainder"
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cash_accounts = ["1000"]
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[[setup.accounts]]
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code = "1000"
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name = "Bank"
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type = "asset"
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[[setup.accounts]]
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code = "1500"
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name = "Equipment"
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type = "asset"
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[[setup.accounts]]
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code = "1510"
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name = "Accumulated Depreciation"
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type = "asset"
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[[setup.accounts]]
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code = "3000"
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name = "Capital, Tobin Harlow"
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type = "equity"
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[[setup.accounts]]
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code = "3001"
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name = "Capital, Morgan Ellis"
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type = "equity"
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[[setup.accounts]]
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code = "6200"
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name = "Depreciation Expense"
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type = "expense"
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[[setup.members]]
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name = "Tobin Harlow"
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capital_account = "3000"
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share = "0.5"
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[[setup.members]]
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name = "Morgan Ellis"
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capital_account = "3001"
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share = "0.5"
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# Three items the members contribute jointly, each from personal use and
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# each worth less than its adjusted basis by an odd number of cents.
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[[setup.assets]]
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id = "monitor"
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description = "Monitor"
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cost = "400.00"
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salvage = "0.00"
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life_months = 24
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in_service = "2026-01-01"
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method = "straight_line"
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cost_account = "1500"
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accumulated_account = "1510"
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expense_account = "6200"
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acquired_by = 1
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basis = { rule = "personal_use_conversion", contributor_adjusted_basis = "412.37", fmv_at_contribution = "400.00", sec704c_method = "traditional" }
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[[setup.assets]]
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id = "chair"
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description = "Chair"
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cost = "250.00"
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salvage = "0.00"
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life_months = 24
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in_service = "2026-06-01"
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method = "straight_line"
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cost_account = "1500"
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accumulated_account = "1510"
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expense_account = "6200"
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acquired_by = 2
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basis = { rule = "personal_use_conversion", contributor_adjusted_basis = "263.41", fmv_at_contribution = "250.00", sec704c_method = "traditional" }
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[[setup.assets]]
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id = "desk"
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description = "Desk"
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cost = "600.00"
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salvage = "0.00"
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life_months = 24
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in_service = "2026-11-01"
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method = "straight_line"
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cost_account = "1500"
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accumulated_account = "1510"
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expense_account = "6200"
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acquired_by = 3
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basis = { rule = "personal_use_conversion", contributor_adjusted_basis = "655.91", fmv_at_contribution = "600.00", sec704c_method = "traditional" }
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[[events]]
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date = "2026-01-01"
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description = "Monitor contributed jointly, at its value"
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lines = [
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{ account = "1500", side = "debit", amount = "400.00" },
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{ account = "3000", side = "credit", amount = "200.00" },
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{ account = "3001", side = "credit", amount = "200.00" },
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]
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[[events]]
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date = "2026-06-01"
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description = "Chair contributed jointly, at its value"
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lines = [
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{ account = "1500", side = "debit", amount = "250.00" },
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{ account = "3000", side = "credit", amount = "125.00" },
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{ account = "3001", side = "credit", amount = "125.00" },
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]
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[[events]]
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date = "2026-11-01"
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description = "Desk contributed jointly, at its value"
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lines = [
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{ account = "1500", side = "debit", amount = "600.00" },
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{ account = "3000", side = "credit", amount = "300.00" },
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{ account = "3001", side = "credit", amount = "300.00" },
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]
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# By hand, the built-in loss shared as it runs (exact shares in brackets):
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# Monitor, -12.37: running -12.37 (-6.185 each); rounded toward zero
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# -6.18 each, a cent short, the remainders tie, the cent to Tobin:
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# Tobin -6.19, Morgan -6.18.
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# Chair, -13.41: running -25.78 (-12.89 each, exact): Tobin -12.89 less
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# -6.19 given = -6.70; Morgan -12.89 less -6.18 = -6.71.
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# Desk, -55.91: running -81.69 (-40.845 each): tied again, to Tobin:
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# Tobin -40.85 less -12.89 = -27.96; Morgan -40.84 less -12.89 =
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# -27.95.
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# Year: built-in loss Tobin -40.85, Morgan -40.84; book property 625.00
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# each; tax property 625.00 + 40.85 = 665.85 and 625.00 + 40.84 = 665.84,
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# a cent apart. Shared entry by entry (each entry's tied cent to Tobin)
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# it was -40.86 / -40.83: 665.86 against 665.83, three cents apart.
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[[expect]]
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query = "k1_tax_basis"
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from = "2026-01-01"
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to = "2026-12-31"
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values = { "Tobin Harlow.contributions_property" = "665.85", "Tobin Harlow.known_ending" = "665.85", "Morgan Ellis.contributions_property" = "665.84", "Morgan Ellis.known_ending" = "665.84" }
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[[expect]]
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query = "k1_reconciliation"
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from = "2026-01-01"
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to = "2026-12-31"
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values = { "Tobin Harlow.beginning" = "0.00", "Tobin Harlow.built_in_gain_704c" = "-40.85", "Tobin Harlow.property_without_basis" = "0.00", "Tobin Harlow.property_distributed" = "0.00", "Tobin Harlow.total" = "-40.85", "Morgan Ellis.beginning" = "0.00", "Morgan Ellis.built_in_gain_704c" = "-40.84", "Morgan Ellis.property_without_basis" = "0.00", "Morgan Ellis.property_distributed" = "0.00", "Morgan Ellis.total" = "-40.84" }
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# From June the count runs on from January: the beginning is January to
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# May's ending, open (the monitor's tax depreciation is the preparer's),
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# known so far Tobin 200.00 + 6.19 = 206.19, Morgan 206.18; the span
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# takes the chair's and the desk's parts, -6.70 - 27.96 = -34.66 and
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# -6.71 - 27.95 = -34.66: tax property 425.00 + 34.66 = 459.66 each, the
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# ending the year's.
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[[expect]]
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query = "k1_tax_basis"
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from = "2026-06-01"
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to = "2026-12-31"
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values = { "Tobin Harlow.beginning" = "open", "Tobin Harlow.known_beginning" = "206.19", "Tobin Harlow.contributions_property" = "459.66", "Tobin Harlow.known_ending" = "665.85", "Morgan Ellis.beginning" = "open", "Morgan Ellis.known_beginning" = "206.18", "Morgan Ellis.contributions_property" = "459.66", "Morgan Ellis.known_ending" = "665.84" }
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