Transaction Date Question

[Buddha Buck]

Ask your accountant how he would handle this in a pen-and-paper accounting
setup. Once you do that, we can tell you how to do it in GnuCash.

It seems odd to me that you would have a statutory requirement to recognize
income on two different dates for two different purposes. In general, it's
not possible to recognize the income twice in the same set of books, which
would be what's necessary to have two different dates. Usually, income is
recognized at either the time of payment (which is when the check is paid)
or at the time of the invoice (even if it isn't paid then). I find it hard
to believe that the time between when the check is issued and the check is
deposited has any meaning at all. I find it hard to believe that the tax
authorities would set up a situation where you are required to keep double
books. But I could be wrong. Tax authorities can be strange.

I really would ask your accountant how they suggest doing it using paper
books. Give them a complex but realistic scenario (I inspected 5 houses for
Prudential on 15 December, I issued them an invoice for it on 20 December,
they dated the payment check on 28 December, postmarked it 28 January, and
I received it on 4 February. I deposited it on 7 February), and see how
they says it should be entered. That scenario covers the 2-4 month lag
between services rendered and payment, plus disparities in the date of the
check, the date it was mailed (what Mike called "constructive delivery"
date), the date it was received, and the date it was delivered. It crosses
a year boundary, which raises the issue of which year (or years) does the
income count for for each tax, etc. Ask them how to compute the GRT and
Income taxes with respect to the scenario.

If they say "separate books", then that's the way to go. On the other hand,
they may clarify that there is only one important date (which I could argue
for any of the dates listed between 20 December (invoice date) and 4
February (when I received the check), Mike would argue for 28 January as
the "constructive delivery" date, and I can see that, too). If they pick
one important date for tax purposes, go with that.

If two dates are important, then one possible solution without using two
books, vaguely hinted at in Mike's answer, is to use an intermediary
account (like Assets:Received Payments) and when you get a check enter a
transaction Assets:Received Payments <- Income:Services, notated with the
check number, payer, etc, using the date on the check (or the postmark
date, as per Mike's suggestion), and then when you deposit it, you can
enter a transaction Assets:Bank <- Assets:Received Payments. In that case,
each check will end up with two splits in Assets:Received Payments, both
tagged by the check number, one a debit, one a credit, but with different
dates. A report looking at transfers between the two asset accounts would
provide the info needed for the GRT, and the standard income reports will
provide the info needed for the Fed/State taxes.

I believe in the past I have entered in bank deposits using multiple splits
from Assets:Cash On Hand in order to handle multiple checks I was
depositing at once, so it should be possible to have both one split per
check, and one split per deposit (for reconciliation purposes).

On Mon, Jan 9, 2017 at 4:14 PM James Bucklew <bucklewspain at gmail.com> wrote:

> *M. Novfack wrote:*
>
> *I am not a professional tax advisor, so take this with the necessary
> grains of salt << though I did work in an industry (insurance) where the
> legal date of a payment could be very important. And what jurisdictions
> you are in might make a big difference.
>
> I think you are wrong in both cases. A payment by check is legally yours
> when you receive it, not when you get around to depositing it, and if
> the check is mailed to you, that would be not the date delivered to you
> but the date of the postmark << when "constructive delivery" was made >>
>
> The first case is often treated by having an "undeposited cash" account
> (treating a check that has arrived into your possession but that you
> haven't taken to the bank yet the same as if somebody handed you the
> payment in cash). Then when you get around to making the deposit, that
> transaction is just a transfer between two asset account.
>
> Note that matters like this are mainly important around the end of a
> fiscal/reporting period.
>
>
> Michael D Novack*
>
> Thank you so much for your thoughts.  I'm not sure how much I should
> get into this but I'm just trying to follow the advice of my
> accountant.  My question is if I can do what he asks easily via
> GnuCash.
>
> One way I see to do this is just to keep two separate ledgers.  Every
> check that comes in, I post in one ledger as it's issued date.  In the
> other ledger I post it as the day it gets deposited (or postmarked ...
> either one is fine as they will be virtually identical.
>
> Another way I'm thinking of is to post a check twice ... labeling it
> as Gross Receipt Tax Applicable Income and have it posting date be the
> postmarked/deposited date and then post the check again labeling it as
> Regular Income and have it posting date be the issuance date.  Note
> that not all checks coming in will be Gross Receipts Taxable ... so
> for those checks I would just post them to Regular Income and they
> would not be duplicated.  Then I need a way to filter out one or the
> other of these two income streams so that they don't get counted
> twice.  Is that possible?
>
> Do any other solutions come to mind?
>
>
> thanks again.
>
>
>
>
>
>
>
>
> On Mon, Jan 9, 2017 at 10:09 AM, James Bucklew <bucklewspain at gmail.com>
> wrote:
>
> > Hello all,
> >
> > I'm a complete beginner to GnuCash and accounting software in general.
> My
> > issue is that I have need to have two different transaction dates for two
> > different purposes.
> >
> > 1)  For paying a Gross Receipts Tax, I need to be able to have a set of
> > book where the transaction date for a check for services is dated on the
> > date that it is deposited in the bank.
> >
> > 2)  For Federal/State Tax, I need to have a set of books where the
> > transaction date for the check for services is dated on the date of
> > issuance of the check.  (Just of information: This will allow my 1099
> forms
> > to match up.)
> >
> > These two dates vary wildly .... I'm paid by insurance companies for
> > services rendered ... the issuance date of a check may vary by 2-4 months
> > from the time that I actually physically receive it in my bank account.
> >
> > Is there a way to do this easily in GnuCash without having to maintain
> > (and fill in seperately) two completely seperate ledgers?
> >
> > Best regards and thanks in advance,
> >
> > James Bucklew
> >
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