File diff 6202489c0070 → a08541d6d730
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@@ -148,49 +148,49 @@ Proper Documentation For All Transactions
Ledger CLI offers a flexible structure of tagging any entry, including
separate tags for parts of a split transaction.  This system uses those tags
to ensure proper documentation is included for each financial transaction
that occurs for the organization.

Note that since Ledger CLI is a complete double-entry accounting system, each
transaction can correspond to multiple entries in the general ledger.  The
data entry format of Ledger CLI lists each double-entry accounting
transaction in a text file.

Documentation may in fact differ for entries within the transaction.  Ledger
CLI's tagging structure is flexible in this regard: each portion of a
double-entry transaction can carry the same tag or a different tag.  For
example, in this entry:

    2012-05-03 Sir Moneybags
            ;Entity: Sir-Moneybags
            ;Invoice: accounts/documentation/org/invoices/2012-05-30_moneybags-invoice_as-sent.txt
        Accrued:Accounts Receivable:Conservancy  $100,000.00
        Income:Main Org:Donations               $-100,000.00
            ;IncomeType: Donations

The portion of the transaction that credits the `Income:Main Org:Donations`
has three tags: [`Entity`](#entity-tag), [`Invoice`](#invoice-tag) and
[`IncomeType`](#income-type).  The `Entity` and `Invoice` tags, since they're
[`IncomeType`](#incometype-tag).  The `Entity` and `Invoice` tags, since they're
listed at the top of the transaction, propagate through and apply to both
sides.  But, the `IncomeType` tag, which has no meaning for `Accrued:`
accounts, is applied only to the `Income:Main Org:Donations` part of
the transaction.

Below you'll find detailed descriptions of all the possible tags that are
used in this system.  The actual declarations and enforcement of rules of
these tags can be found in the file `accounts/config/config-tags.ledger` in
this project.


### Documentation Tags

Documentation tags are tags that link to other backup documents that provide
evidence and details that justify a particular ledger entry.  The value of
the tag is a relative path name of a file elsewhere in the same repository
that documents the specific expense.  For example, an entry like this:

     2012-02-05 Office Supply Galore - Online Order
         Expenses:Main Org:Office Supplies     $35.00
             ;Receipt: accounts/documentation/org/receipts/2012-02-05_office-supply-galore.txt
         Liabilities:Credit Card:Visa         -$35.00

shows that a purchase was made at Office Supply Galore's online store for
@@ -303,49 +303,49 @@ The `IncomeType` tag is used for all `Income` accounts.  This refers to the
type of income.  The value of the `IncomeType` tag is always a string.
Since this particular system is designed for USA non-profit entities who file
USA Form 990, the following `IncomeType` values are supported:

* `Donations`, which refers to standard charitable donations.

* `RBI`, which refers to "related business income".

* `UBTI`, which refers to "unrelated business taxable income".

Not that donor-advised funds and government grants don't currently have their
own `IncomeType`.  It's possible this might be necessary; the authors aren't
familiar with how to handle those items on the Form 990.  It would be a
relatively simple change to `config-tags.ledger`, though, to support other
income types, or to change it entirely to handle use-cases other than USA
Form 990 filing.

#### TaxImplication Tag

The `TaxImplication` tag is used for all `Asset:` accounts when the
transaction includes a payment of $10.00 or more leaving the account.  This
tag catalogs any tax implications that might occur on outgoing funds.

The most important USA-related issue tracked by this tag are contractors who
must have annual 1099 and/or W2 issued.  An [`Entity` tag](entity-tag) should always
must have annual 1099 and/or W2 issued.  An [`Entity` tag](#entity-tag) should always
go along with a TaxImplication tag.

The possible values for this field are:

* `1099`, indicating the amount paid requires issuance of a USA Federal Form
  1099 for the `Entity` involved.

* `W2`, indicating the amount paid will be part of a USA Federal income, as
  reported on Form W2 report for the `Entity` involved.

* `Retirement-Pretax`, indicating the amount paid was made to a W2 employee
  as part of pre-tax retirement plan, such as a 401(k) or 403(b) plan.

* `Accountant-Advises-No-1099`, indicating that the circumstances and rules
  seem to indicate a USA Federal Form 1099 should be issued for the `Entity`
  involved, but an outside accountant advised that no 1099 needs be issued
  for this `Entity`.

* `Bank-Transfer`, indicating that the amount is a transfer between two
  banking accounts under the control of the NPO itself.

* `Foreign-Individual-Contractor`, indicating that the NPO has established
  that the `Entity` is a contractor residing outside the USA who is not a USA
  citizen and does not for any reason pay taxes in the USA.