Booking the taking of PTO and vesting of RSUs

[Jeff Brantley]

The vesting cookbook details a way to account for RSUs, and elsewhere there is occasional mention of tracking paid time off (PTO) as a commodity VACHR (vacation hours), though I've not seen as much detail on the latter. There appears to be some similarity here, as both situations represent credit for future income---income which the US IRS considers to have occurred upon that future date. For vacation, my employer's pay slips specifically split out what is normally a single "salary" line item into salary and PTO pay, with an effective hourly rate listed. Some companies also allow cashing out of vacation at various times, such as when terminating one's employment.

So, assuming one is booking VACHR or HOOL.UNVEST into Asset accounts, I could see the "realization" date booking going one of two ways:

Option 1) Directly cash in the commodity (with some made up numbers):

2018-01-15 * "Payroll"

  ;Typical posting when no vacation taken:
  ;Income:Hooli:Salary -2600.00 USD

  Assets:Hooli:Vacation      -8 VACHR @ 30.00 USD

  Income:Hooli:Salary  -2360.00 USD

  ; ...postings to spend down 2600.00 USD in gross income...

This lines up well with how my existing payslips are already structured, using pricing (@) to directly capture the relationship between hours burned and corresponding portion of gross income. This is a one-off price conversion, too, I don't think VACHR or HOOL.UNVEST would want to be held "at cost" right?

Option 2)

2018-01-15 * "Payroll"

  Assets:Hooli:Vacation      -8 VACHR

  Expenses:[Hooli:]Vacation   8 VACHR  ; not sure if I'd want the Hooli segment to scope it

  Income:Hooli:Salary   -240.00 USD    ; could still choose to break this out specifically

  Income:Hooli:Salary  -2360.00 USD
  ; ...postings to spend down 2600.00 USD in gross income...

In this case, the expended commodity is not as directly coupled to the amount of cash realized, but this lines up better with the U.S. IRS view, which is that I earned the corresponding income in 2018 (i.e., there is an Income posting in a 2018-scoped transaction). Likewise with RSUs, where the shares generally vest in a different year from that of the initial grant, and the IRS sees income in the vesting year.

Option 2 is what the Vesting cookbook suggests. I'm just wondering (a) if there were any additional considerations or pros/cons behind this suggestion besides those I've mentioned, and (b) whether Martin Blais or any others who track vacation do likewise when they take vacation.

[Jeff Brantley]

As I await responses, another advantage of Option 2 has already occurred to me: since the expenditure of vacation is more decoupled from the associated income, I can easily factor it into a separate transaction dated for the start or end of the vacation, rather bundled into payday.

[Martin Blais]

On Wed, Jan 23, 2019 at 11:23 PM Jeff Brantley <jsb...@gmail.com> wrote:

The vesting cookbook details a way to account for RSUs, and elsewhere there is occasional mention of tracking paid time off (PTO) as a commodity VACHR (vacation hours), though I've not seen as much detail on the latter. There appears to be some similarity here, as both situations represent credit for future income---income which the US IRS considers to have occurred upon that future date.

In the case of vacation the IRS is not involved; it's your employer who is tracking the amount of accumulated vacation hours they owe you.

 

For vacation, my employer's pay slips specifically split out what is normally a single "salary" line item into salary and PTO pay, with an effective hourly rate listed.

Perfect!  

FWIW mine doesn't, so this looks like a new case to me (does that mean you pay more taxes than I do? i.e., do you pay taxes on your received vacation equivalent? and if that's the case, if you converted to cash it would be already taxed money? Hmm. I doubt it.).

 

Some companies also allow cashing out of vacation at various times, such as when terminating one's employment.

Yep; and if you track it, you should be able to calculate precisely how much that check is going to be for.

So, assuming one is booking VACHR or HOOL.UNVEST into Asset accounts, I could see the "realization" date booking going one of two ways:

Note that - importantly - the VACHR units can convert to dollars and some non-zero value should appear on your balance sheet, and when you take vacations your balance sheet should diminish. I price those to estimated net salary / hours and insert new pricing directives if salary changes. This is not quite the case for granted but unvested RSUs; their present value is zero (until they vest). I price those to zero.

Option 1) Directly cash in the commodity (with some made up numbers):

2018-01-15 * "Payroll"

  ;Typical posting when no vacation taken:
  ;Income:Hooli:Salary -2600.00 USD

  Assets:Hooli:Vacation      -8 VACHR @ 30.00 USD

  Income:Hooli:Salary  -2360.00 USD

  ; ...postings to spend down 2600.00 USD in gross income...

This lines up well with how my existing payslips are already structured, using pricing (@) to directly capture the relationship between hours burned and corresponding portion of gross income. This is a one-off price conversion, too, I don't think VACHR or HOOL.UNVEST would want to be held "at cost" right?

I don't track cost basis for either of those. In fact, it makes sense not to, say, if your hourly salary increases, the value of those accumulated hours implicitly increases automatically (there's no tax implication for this AFAIK).

Option 2)

2018-01-15 * "Payroll"

  Assets:Hooli:Vacation      -8 VACHR

  Expenses:[Hooli:]Vacation   8 VACHR  ; not sure if I'd want the Hooli segment to scope it

Not an expense. Only use the expense account when you "spend" your vacation hours (that is, you take vacation). Looks like the above.

 

  Income:Hooli:Salary   -240.00 USD    ; could still choose to break this out specifically

  Income:Hooli:Salary  -2360.00 USD
  ; ...postings to spend down 2600.00 USD in gross income...

In this case, the expended commodity is not as directly coupled to the amount of cash realized, but this lines up better with the U.S. IRS view, which is that I earned the corresponding income in 2018 (i.e., there is an Income posting in a 2018-scoped transaction). Likewise with RSUs, where the shares generally vest in a different year from that of the initial grant, and the IRS sees income in the vesting year.

Do they? Are you taxed on the 240.00 USD? I don't think you must be.

Option 2 is what the Vesting cookbook suggests.

Actually I book the +8 VACHR asset against a -8 VACHR income account, like this:

  ...

  Assets:US:Hooli:Vacation                           7.69 VACHR

  Income:US:Hooli:Vacation                          -7.69 VACHR

these are tacked at the end of each of the regular payroll transactions I get.

I suppose one way to look at this is to consider the my salary leg includes implicitly something like that above and I'm paying taxes on the vacation that way.

If I were you, I'd do it the way I do, and book your income as -2600.00 USD (if you pay taxes on that amount).

 

I'm just wondering (a) if there were any additional considerations or pros/cons behind this suggestion besides those I've mentioned, and (b) whether Martin Blais or any others who track vacation do likewise when they take vacation.

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[Martin Blais]

Yes

Definitely.

When you take your vacay.

One annoying thing is that sometimes the date when the vacay is deducted by the employer doesn't match quite the date you actually took the days off. I manually adjust. 

(inbox is growing... I'm seriously behind)

On Wed, Jan 23, 2019 at 11:33 PM Jeff Brantley <jsb...@gmail.com> wrote:

As I await responses, another advantage of Option 2 has already occurred to me: since the expenditure of vacation is more decoupled from the associated income, I can easily factor it into a separate transaction dated for the start or end of the vacation, rather bundled into payday.

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[Jeff Brantley]

On Wednesday, January 23, 2019 at 11:52:23 PM UTC-6, Martin Blais wrote:

On Wed, Jan 23, 2019 at 11:23 PM Jeff Brantley <jsb...@gmail.com> wrote:

The vesting cookbook details a way to account for RSUs, and elsewhere there is occasional mention of tracking paid time off (PTO) as a commodity VACHR (vacation hours), though I've not seen as much detail on the latter. There appears to be some similarity here, as both situations represent credit for future income---income which the US IRS considers to have occurred upon that future date.

In the case of vacation the IRS is not involved; it's your employer who is tracking the amount of accumulated vacation hours they owe you.

We're in agreement here. I'm saying the IRS doesn't care when I accrue vacation or get an unvested stock grant, they care when I receive income (which my employer may implicitly or explicitly attribute a portion of to PTO taken) or when my shares vest.

 

For vacation, my employer's pay slips specifically split out what is normally a single "salary" line item into salary and PTO pay, with an effective hourly rate listed.

Perfect!  

FWIW mine doesn't, so this looks like a new case to me (does that mean you pay more taxes than I do? i.e., do you pay taxes on your received vacation equivalent? and if that's the case, if you converted to cash it would be already taxed money? Hmm. I doubt it.).

To be clear, I'm describing the case when I take vacation. I accrue vacation as hours like a typical salaried job, with no corresponding tax at that time. When I take vacation, my income and withholding are the same as other paychecks (+/- 0.01 USD), but my payslip breaks the income line into two lines, one showing hours * hourly-rate => vacation pay, and the other line making up the difference to arrive at my normal income amount.

 

Some companies also allow cashing out of vacation at various times, such as when terminating one's employment.

Yep; and if you track it, you should be able to calculate precisely how much that check is going to be for.

So, assuming one is booking VACHR or HOOL.UNVEST into Asset accounts, I could see the "realization" date booking going one of two ways:

Note that - importantly - the VACHR units can convert to dollars and some non-zero value should appear on your balance sheet, and when you take vacations your balance sheet should diminish. I price those to estimated net salary / hours and insert new pricing directives if salary changes. This is not quite the case for granted but unvested RSUs; their present value is zero (until they vest). I price those to zero.

Oh interesting; and one fewer oddball currency on the balance sheet.

Option 1) Directly cash in the commodity (with some made up numbers):

2018-01-15 * "Payroll"

  ;Typical posting when no vacation taken:
  ;Income:Hooli:Salary -2600.00 USD

  Assets:Hooli:Vacation      -8 VACHR @ 30.00 USD

  Income:Hooli:Salary  -2360.00 USD

  ; ...postings to spend down 2600.00 USD in gross income...

This lines up well with how my existing payslips are already structured, using pricing (@) to directly capture the relationship between hours burned and corresponding portion of gross income. This is a one-off price conversion, too, I don't think VACHR or HOOL.UNVEST would want to be held "at cost" right?

I don't track cost basis for either of those. In fact, it makes sense not to, say, if your hourly salary increases, the value of those accumulated hours implicitly increases automatically (there's no tax implication for this AFAIK).

Right.

Option 2)

2018-01-15 * "Payroll"

  Assets:Hooli:Vacation      -8 VACHR

  Expenses:[Hooli:]Vacation   8 VACHR  ; not sure if I'd want the Hooli segment to scope it

Not an expense. Only use the expense account when you "spend" your vacation hours (that is, you take vacation). Looks like the above.

 

But I am asking about how to book the case when I take a vacation. With Option 1, I treat this as directly liquidating an existing asset of 8 VACHR, whereas Option 2 shows the spending of VACHR coincident with receiving income, a portion of which my employer attributes to the vacation time used.

  Income:Hooli:Salary   -240.00 USD    ; could still choose to break this out specifically

  Income:Hooli:Salary  -2360.00 USD
  ; ...postings to spend down 2600.00 USD in gross income...

In this case, the expended commodity is not as directly coupled to the amount of cash realized, but this lines up better with the U.S. IRS view, which is that I earned the corresponding income in 2018 (i.e., there is an Income posting in a 2018-scoped transaction). Likewise with RSUs, where the shares generally vest in a different year from that of the initial grant, and the IRS sees income in the vesting year.

Do they? Are you taxed on the 240.00 USD? I don't think you must be.

I think your surprise here is because you think I'm illustrating accrual of vacation? In this case, the pay is a concrete 2600.00 USD, 240.00 USD of which is attributed to taking some vacation time. All the other lines (tax withholding, benefits, and net pay) are the same as any other paycheck, within 0.01 USD anyway.

Option 2 is what the Vesting cookbook suggests.

Actually I book the +8 VACHR asset against a -8 VACHR income account, like this:

  ...

  Assets:US:Hooli:Vacation                           7.69 VACHR

  Income:US:Hooli:Vacation                          -7.69 VACHR

these are tacked at the end of each of the regular payroll transactions I get.

Yeah somehow we got out of sync about what we're discussing, accruing vs. spending vacation. I'm asking about spending. I'm already on board with what you show here for the accrual part.

 

I suppose one way to look at this is to consider the my salary leg includes implicitly something like that above and I'm paying taxes on the vacation that way.

If I were you, I'd do it the way I do, and book your income as -2600.00 USD (if you pay taxes on that amount).

 

I'm just wondering (a) if there were any additional considerations or pros/cons behind this suggestion besides those I've mentioned, and (b) whether Martin Blais or any others who track vacation do likewise when they take vacation.

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Crossed lines aside, it seems like this will mostly come down to what's useful for reporting? Booking the use of vacation as directly liquidating a VACHR asset fails to produce Income account activity at the moment the IRS would "see" real income. Booking it as spending VACHR and getting income at the same (or similar) date doesn't suffer from that drawback. Booking it as returning VACHR to an Income account (an option #3) while getting USD income seems plausible, but booking VACHR to Expenses actually lets you run a report of how much vacation time you used up in a given period.

Regarding the forked portion of this thread, I want to make clear: I was not implying that it was taking too long to get a reply when I said "As I wait responses." I was trying to indicate that my own self-reply was not a complete answer, so I still wanted to hear input from the list.

Thanks!

[Jeff Brantley]

By the way, I did try inserting a pricing directive for my VACHR, but it won't show USD when I use the VALUE function in a query. From what I can tell, VALUE only does something if the commodity is held at cost.

I.e., if I book an Income/Assets pair transferring 8 VACHR, I still see VACHR in the query results, but if I book the pair as 8 VACHR {30.00 USD}, then I get USD reported (based on newest price directive) for the portions held at cost, and VACHR reported for those with no cost attached.

Is this expected behavior?

[Jason Chu]

Because it's a commodity and not at cost, I believe you want to use CONVERT(SUM(position), 'USD') instead of VALUE() because it doesn't have a market value, but it does have a conversion rate on a particular day.

I would say this is correct because you don't care what the value of the thing (vacation hour) was when you got it, all you care about is how much it is worth today.

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[Martin Blais]

On Thu, Jan 24, 2019 at 9:19 AM Jeff Brantley <jsb...@gmail.com> wrote:

On Wednesday, January 23, 2019 at 11:52:23 PM UTC-6, Martin Blais wrote:

On Wed, Jan 23, 2019 at 11:23 PM Jeff Brantley <jsb...@gmail.com> wrote:

The vesting cookbook details a way to account for RSUs, and elsewhere there is occasional mention of tracking paid time off (PTO) as a commodity VACHR (vacation hours), though I've not seen as much detail on the latter. There appears to be some similarity here, as both situations represent credit for future income---income which the US IRS considers to have occurred upon that future date.

In the case of vacation the IRS is not involved; it's your employer who is tracking the amount of accumulated vacation hours they owe you.

We're in agreement here. I'm saying the IRS doesn't care when I accrue vacation or get an unvested stock grant, they care when I receive income (which my employer may implicitly or explicitly attribute a portion of to PTO taken) or when my shares vest.

 

For vacation, my employer's pay slips specifically split out what is normally a single "salary" line item into salary and PTO pay, with an effective hourly rate listed.

Perfect!  

FWIW mine doesn't, so this looks like a new case to me (does that mean you pay more taxes than I do? i.e., do you pay taxes on your received vacation equivalent? and if that's the case, if you converted to cash it would be already taxed money? Hmm. I doubt it.).

To be clear, I'm describing the case when I take vacation. I accrue vacation as hours like a typical salaried job, with no corresponding tax at that time. When I take vacation, my income and withholding are the same as other paychecks (+/- 0.01 USD), but my payslip breaks the income line into two lines, one showing hours * hourly-rate => vacation pay, and the other line making up the difference to arrive at my normal income amount.

Oh I see now.

Then I would just deduct from my vacation assets account at that point.

TBH, that would be convenient if my own employer's payment processor did that; in my case it's a bit unclear what pay slip each vacation day goes unto, so I end up booking the vacation on dates between the pay dates in order to make it balance, and I visually cross-check against the records from Workday, which is the system that is used to request & report on time off.

Absolutely no worries.

(I'm way, way behind on my email and my Beancount inbox has grown to an unmanageable level. I'm trying to prioritize reading books and otherwise focused on work, I'll get to reply all the emails eventually, it'll take time, I'm basically prioritizing other goals for a while.)

Thanks!

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[Jeff Brantley]

On Tuesday, January 29, 2019 at 3:43:55 PM UTC-6, Jason Chu wrote:

Because it's a commodity and not at cost, I believe you want to use CONVERT(SUM(position), 'USD') instead of VALUE() because it doesn't have a market value, but it does have a conversion rate on a particular day.

Ok, I think I see the logic in that. And that does work.

 

I would say this is correct because you don't care what the value of the thing (vacation hour) was when you got it, all you care about is how much it is worth today.

Yeah I'm failing to think of a case where I would want to know how much my PTO hours appreciated.

Thanks!

[Jeff Brantley]

Of course, thanks for popping in.

Cheers