>Take repairs - according to tax law, some can be deducted and some need to be capitalized.
The ones that need to be capitalized are not repairs (they are betterments, adaptations, or restorations, per IRS regulations), so they wouldn't go against the repair expense account. Instead, they would go into an asset account.
>That contradicts your claim that it's not necessary to split most accounts, since at least all accounts are being doubled!
In practice, no one actually keeps two complete sets of books. Instead, the tax return starts with the company balance sheet and income statement per books, and then makes book-to-tax adjustments only for those categories that require it, like meals and entertainment. The tax return in this sense serves as a specialized accounting system.
>why would you want to copy the entire data model and then make some modifications to one copy, rather than having a single data model that models everything?
The tax version of the company accounts is typically only updated once per year, and usually requires specialized knowledge of the tax laws, which change year to year. It isn't really designed for day to day management like the regular company books are, and as I have observed with the tax returns I prepare for small business, most owners don't really spend any time looking at the tax return.
>From my perspective, a large expense is still money out the door on day 1.
But lenders and the IRS don't see it that way. Maybe what you need is the third basic type of accounting report, the cash flow statement. Many if not most companies that go bankrupt have net positive equity, but negative cash flow. The cash flow statement, like the tax return, is also created on an "adjustment" basis, starting with net profit and then backing out the income and expense items that are not current inflows or outflows of cash, such as depreciation.
The ones that need to be capitalized are not repairs (they are betterments, adaptations, or restorations, per IRS regulations), so they wouldn't go against the repair expense account. Instead, they would go into an asset account.
>That contradicts your claim that it's not necessary to split most accounts, since at least all accounts are being doubled!
In practice, no one actually keeps two complete sets of books. Instead, the tax return starts with the company balance sheet and income statement per books, and then makes book-to-tax adjustments only for those categories that require it, like meals and entertainment. The tax return in this sense serves as a specialized accounting system.
>why would you want to copy the entire data model and then make some modifications to one copy, rather than having a single data model that models everything?
The tax version of the company accounts is typically only updated once per year, and usually requires specialized knowledge of the tax laws, which change year to year. It isn't really designed for day to day management like the regular company books are, and as I have observed with the tax returns I prepare for small business, most owners don't really spend any time looking at the tax return.
>From my perspective, a large expense is still money out the door on day 1.
But lenders and the IRS don't see it that way. Maybe what you need is the third basic type of accounting report, the cash flow statement. Many if not most companies that go bankrupt have net positive equity, but negative cash flow. The cash flow statement, like the tax return, is also created on an "adjustment" basis, starting with net profit and then backing out the income and expense items that are not current inflows or outflows of cash, such as depreciation.