Tracking expenses that are really transfers

[Jonathan Klabunde Tomer]

Hello,

I have a number of situations where I view a transaction as simultaneously an "expense" and a transfer to an asset (or liability) account, and I'm wondering if anyone else has this experience and likes their solution.

Example 1: when my hot water heater broke, I took the opportunity to upgrade to a tankless model. According to the tax code, the difference between what a replacement of the original would have cost and the actual amount I spent on the new unit gets to be added to the cost basis of my house. But outside of doing my taxes, I pretty much consider this to be an expense. I currently have it booked like this:

2019-09-01 * "Some Plumber" "tankless HWH parts & installation"

  Assets:Checking -5000 USD

  Expenses:House:Contractors 500 USD

  Expenses:House:Appliances 500 USD

  Assets:House:Capital-Improvements 4000 USD

but then when I look at my income statement, it looks like I only spent $1,000 on this project when I really spent $5,000. The tax man may (eventually) care that $4,000 went to improving my home's value, but I don't.

Example 2: when I pay my mortgage, I recognize a small interest expense and a large principal payment as a transfer:

2019-10-01 * ""

  Assets:Checking -4500 USD

  Expenses:Mortgage:Interest 3000 USD

  Liabilities:Mortgage 1500 USD

If I care about changes in my net worth, this makes perfect sense. But if I'm trying to budget, I need to know my actual cash flow, not my P&L; if my income is enough to pay off my real expenses but not my real expenses plus my principal payments, I'm in trouble. I don't have a good way to model this at all.

Example 3: I have a donor-advised fund that I use for tax arbitrage of my charitable giving. When I move securities into the DAF, I am making a transfer from one asset account to another, but for tax purposes it would be very helpful to collect everything that's deductible as charitable giving into a single account. What I do now is:

2019-12-01 * "Transfer of appreciated securities to DAF"

  Assets:Brokerage:STOCK -100 STOCK { 2015-03-04 } @ 100 USD

  Income:Brokerage:STOCK:Capital-Gains:Non-Taxable

  Expenses:Charitable-Giving 10000 USD

  Income:DAF:Contributions 10000 USD

  Assets:DAF 200 DAF { 50 USD }

This works, but it means I have a phantom Income account to ignore in my income statements, which is kind of weird.

How do you all handle these types of situation in your accounting and reporting?

[tinot...@gmail.com]

Hi,

What I'm doing is having two or more beancount files for this kind of situations.

For example, you could have a tax.bean and a personal.bean and write in each the different accounts, definitions, etc.

I know is not the best because you must maintain 2 files, 2 writes, etc... but at least, when you are talking to the tax men the information is clear and when you are checking your personal finances also.

Regards.

[Martin Michlmayr]

* Jonathan Klabunde Tomer <jonath...@gmail.com> [2019-12-05 16:27]:

> But if I'm trying to budget, I need to know my actual cash flow, not
> my P&L

I think for examples 1 and 2, you just answered your own question
here. In some cases you want to know expenses (P&L), but in other
cases you want to know how much money went out (i.e. cash flow).

So I think the question is how to do cash flows in beancount.

--
Martin Michlmayr
https://www.cyrius.com/

[Jonathan Klabunde Tomer]

On Friday, December 6, 2019 at 12:06:02 AM UTC-8, tinot...@gmail.com wrote:

Hi,

What I'm doing is having two or more beancount files for this kind of situations.

For example, you could have a tax.bean and a personal.bean and write in each the different accounts, definitions, etc.

I know is not the best because you must maintain 2 files, 2 writes, etc... but at least, when you are talking to the tax men the information is clear and when you are checking your personal finances also.

Regards.

I know large businesses do keep parallel sets of books in this way, but I'm hoping to avoid that much extra work :)

I will likely end up devising some extra metadata tags for accounts and transactions so I can run reports to slice things in different ways, but I was wondering if anyone has a system they already like.

[dervish]

Just like an idea.

In Fava, you can easily turn off tagged transactions. Like this: -# tag

And you see the picture as if these transactions do not exist.

The idea: to make the first transaction as tax-based, and then make the second transaction, which cancels the previous one and makes the necessary postings for real life. Tag the second transaction. If necessary, disable this tag and see the picture for tax accounting.

2019-09-01 * "Some Plumber" "tankless HWH parts & installation"

  Assets:Checking -5000 USD

  Expenses:House:Contractors 500 USD

  Expenses:House:Appliances 500 USD

  Assets:House:Capital-Improvements 4000 USD

2019-09-01 * "Some Plumber" "tankless HWH parts & installation"

  #exclude-me-for-taxman

  Assets:House:Capital-Improvements -4000 USD  ; reversal

  Expenses:House:Contractors 2000 USD               ; more expenses

  Expenses:House:Appliances 2000 USD                ; more expenses

  ; or some other expenses

Now, if we just look at our accounting we see real picture.
But we can exclude the tag: -# exclude-me-for-taxman. Then we will see what is needed for tax accounting.

пятница, 6 декабря 2019 г., 5:27:54 UTC+5 пользователь Jonathan Klabunde Tomer написал:

[Red S]

You are wanting two different views (reports) into the same set of transactions. I ran into similar needs, and wrote a plugin to rename accounts, that I turn on or off depending on what kind of reporting I want. In your first and second examples, you'd turn on (or off) the following renames using the plugin:

1. Assets:House:Capital-Improvements -> Expenses:House:Appliances
2. Liabilities:Mortgage -> Expenses:Mortgage:Principal

Turning them on gives you the cash flow view, and without the plugin, you get the tax view. Does that help?

[Jonathan Klabunde Tomer]

Brilliant, that's exactly what I want. Now that you give me the idea I imagine I can write the plugin in an hour or two, but I might as well ask you for a link to save the time :) 

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[Red S]

I meant to include a link but forgot! Here it is:

https://github.com/redstreet/beancount_plugins_redstreet/tree/master/rename_accounts

[Jonathan Klabunde Tomer]

Thanks :)