Qualified Replacement Property refers to property acquired in a like-kind exchange or due to an involuntary conversion, provided that the new property has the same qualified use as the property it replaces.
A qualified residence refers to a principal residence and one other residence that a taxpayer or spouse owns. Interest paid on a qualified residence may be deductible as an itemized deduction.
A QTIP trust allows a grantor to provide income for their surviving spouse and designate other beneficiaries for the remaining trust assets after the surviving spouse's death.
Reaganomics is a term used to describe the conservative, free-market economic policies endorsed by President Ronald Reagan and his administration during his time in office from 1981 to 1989.
A Real Estate Investment Trust (REIT) operates as a company that owns, operates, or finances income-producing real estate, allowing individual investors to earn a share of the income produced through commercial real estate ownership, without actually having to buy, manage, or finance any properties.
A Real Estate Mortgage Investment Conduit (REMIC) is a special purpose vehicle (SPV) designed to pool mortgage loans and issue mortgage-backed securities (MBS).
A realized gain represents the profit earned from the sale of an asset, calculated as the difference between the asset's selling price and its original purchase price. This gain, although realized, is not always immediately subject to taxation.
The recapture of depreciation is a tax provision that allows the IRS to tax the portion of gains on the sale of property that represents 'excess' depreciation.
In the context of tax-free exchanges, a recognized gain is the portion of a gain that becomes taxable. While a realized gain represents the total profit from the sale or exchange of an asset, the recognized gain is the part that the IRS considers taxable income.
The process by which a taxpayer receives a return of cost through distributions or payments with respect to a property. A recovery of basis is generally nontaxable if it follows a taxable distribution of earnings and profits from a corporate liquidation.
A registered trader is a taxable person who has complied with the registration for value added tax (VAT) regulations. This compliance allows them to charge VAT on taxable supplies and reclaim any VAT they have paid on their purchases.
A regressive tax is a tax system where the tax rate decreases as the income of the taxpayer increases. This structure places more financial burden on lower-income earners relative to their income.
Repairs refer to work performed to return a property to its former condition without extending its useful life, distinguishing them from capital improvements. In the context of income property, repairs are an operating expense for accounting and tax purposes.
Repatriation involves the movement of financial assets or profits of an organization or individual from a foreign country back to their home country, often for investment or distribution purposes.
Repressive taxes, often called sin taxes, are designed to discourage certain activities rather than generate revenue. High tariffs and taxes on commodities such as tobacco and alcohol are examples of repressive taxes intended to reduce the consumption of these products by raising their prices.
The accrual of bad-debt expense based on the projected worthlessness of receivables or prior experience with uncollectible receivables. The reserve method is permitted only for some small banks and thrift institutions with assets of $500 million or less, while other accrual taxpayers must use the specific charge-off method.
In the context of taxation and real estate, a residence refers to a place where someone lives. It can be classified into various types including personal residence, principal residence, and qualified residence.
A person who has been admitted to permanent resident status but has not been granted citizenship; often referred to as a 'Green Card' holder.
The revaluation reserve account is a reserve accounting entry where unrealized profits or losses from the revaluation of fixed assets are recorded. It's essential for financial accuracy and compliance in the revaluation method used.
Revenue Procedures are published statements from the Internal Revenue Service (IRS) detailing instructions for the taxpayer and IRS officials in performing their duties.
Rollover refers to replacing a loan or debt with another or changing the institution that invests one's pension plan, without recognition of taxable income.
A ruling is an authoritative decision or pronouncement made by a court or an authoritative body like the IRS, which provides a formal decision on a matter of law.
A sale or exchange refers to the disposition of property in a value-for-value transaction, as opposed to a disposition by gift, contribution, or similar means.
Schedule K-1 is a tax document used to report the incomes, deductions, and credits of partnerships, S corporations, estates, and trusts for tax purposes.
A residence that is not one's principal residence. A taxpayer may deduct interest up to certain limits on two personal residences, provided certain occupancy requirements are met.
An arrangement in which the value-added tax (VAT) due on second-hand goods sold is calculated based on the trader's margin, rather than the total selling price.
Individuals who independently operate their trades or businesses and are taxed based on their profits rather than through PAYE, with unique National Insurance contributions compared to employees.
The Self-Employment Contributions Act (SECA) taxes are imposed on the net earnings of individuals from self-employment. These contributions fund Social Security and Medicare programs for self-employed individuals.
Provision for Social Security (old-age, survivor's, and disability insurance) and Medicare (hospital insurance) for self-employed individuals. The rate is equal to the combined rates paid for Social Security by both employer and employee.
A 'Separate (Tax) Return' refers to the option for married couples to file their tax returns individually rather than jointly, which may offer different tax benefits and considerations.
Shadow Advance Corporation Tax (Shadow ACT) refers to the system that applied to any unrelieved surplus Advance Corporation Tax (ACT) on 6 April 1999, when ACT was abolished. It preserved the right to carry forward surplus ACT without reducing the corporation tax liability for periods after 6 April 1999.
In various contexts, a short form is an instrument or document that serves as a reference or a simplified version of a longer, more complex document.
For tax purposes, a short-term capital gain (loss) is the profit (loss) realized from the sale of securities or other capital assets not held long enough to qualify for a long-term capital gain (loss).
A simple trust is a legal arrangement under which the trust must distribute all of its income to beneficiaries annually. It is subject to specific tax regulations and benefits from a $300 standard deduction.
A sin tax is a specific type of tax imposed on goods that are considered harmful to individuals and society, such as alcohol, tobacco, and gambling. This tax aims to reduce consumption of these products, improve public health, and generate revenue for the government.
Single Life Distributions are monthly annuity payments made to a retired employee for life from a retirement plan. These distributions are taxed when received.
The Social Security tax, specifically the Old-Age, Survivors, and Disability Insurance (OASDI) portion, is a crucial federal tax under the Federal Insurance Contributions Act (FICA) that applies to compensation and self-employment earnings.
Spendable income, also known as after-tax cash flow, refers to the amount of money an individual or business has available to spend after all taxes have been deducted from their gross income.
The standard deduction is a provision that allows taxpayers to deduct a specified amount from their gross income, thereby reducing their taxable income. This deduction is an alternative to itemizing deductions and is adjusted for inflation annually.
The Standard Mileage Method permits an automobile business expense deduction based on a standard mileage rate. It allows taxpayers to deduct a specific amount per mile driven for various purposes.
Stock-for-asset reorganization is a form of corporate restructuring where an acquiring corporation exchanges its voting stock (or its parent's voting stock) for substantially all of the assets of another corporation.
The straight-line method of depreciation is a calculation method whereby an equal amount of an asset's cost is allocated as an expense for each year of the asset's useful life. This method is commonly used for accounting and tax purposes.
Subchapter J of the Internal Revenue Code concerns the taxation provisions related to estates, trusts, beneficiaries, and decedents. It outlines the rules and regulations for income distribution, fiduciary responsibilities, and tax computation for these entities.
A Subchapter S Corporation, commonly referred to as an S Corporation, is a special type of corporate structure recognized under Subchapter S of the Internal Revenue Code. It allows corporations to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.
Substance vs. Form Concept in accounting and taxation refers to the distinction between the material or essential part of a transaction (substance) and the observance of legal or technical order (form). It is critical to distinguish between these in various tax situations, where courts and the IRS may look past the form to determine the actual substance of a transaction.
The Supplemental Young Child Credit is a component of tax policy aimed at providing additional financial support to families with young children. This credit is often integrated within broader tax credit programs, such as the Earned Income Tax Credit (EITC) in the United States, to reduce the tax burden for qualifying taxpayers with dependent children.
A surcharge is an additional fee or levy added to an existing charge, cost, or tax. It is commonly applied to manage varying expenses or to cover costs that aren't accounted for in the primary charge.
A syndicate is a collaborative group of individuals or companies formed to undertake a project that would be difficult to accomplish individually. It can be classified as a partnership or corporation for tax purposes.
Expenditures incurred for promoting and marketing interests, which are capitalized as an intangible asset (and not deductible or amortizable).
Taper Relief was a tax relief mechanism used in the U.K. to reduce the amount of Capital Gains Tax (CGT) payable on the disposal of assets, provided these assets were held for a certain period. It was replaced by Entrepreneurs' Relief in 2008.
A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. Taxes include income tax, sales tax, property tax, estate tax, and others.
A tax assessor is an official who determines the value of properties within a specific jurisdiction for the purpose of calculating property taxes.
Minimizing tax liabilities legally and by means of full disclosure to the tax authorities.
The Tax Benefit Rule addresses the treatment of certain recoveries or repayments as taxable or deductible based on how they affect tax liability in prior years.
A tax bracket refers to a range of income that is taxed at a specific rate. As income increases and moves into higher brackets, the rate of taxation is adjusted according to predefined thresholds set by the tax authority.
Tax Commissioners are officials responsible for overseeing tax assessments, collections, and tax-related legal matters within a designated area. They often play a crucial role in interpreting tax laws and policy application.
A tax exemption refers to a statutory provision which reduces or eliminates the obligation to pay a financial charge (tax) that would otherwise be imposed by a governing body.
Tax impact refers to the effect of a tax upon the production and consumption of the good being taxed, as well as the influence of the tax on broader economic processes such as production or consumption.
Tax incidence refers to the analysis of the distribution of the tax burden between buyers and sellers. It assesses who ultimately bears the economic burden of a tax.
Tax liability refers to the total amount of tax debt owed by an individual, organization, or corporation to a tax authority. It includes both current taxes due and any unpaid taxes from prior periods.
Tax loss carryback and carryover are tax benefits that allow taxpayers to use losses from one year to offset taxable income in other years, effectively reducing tax liability.
A tax preference item is an income or deduction excluded or partially excluded from regular tax calculations but must be added back for alternative minimum tax (AMT) purposes.
A tax rate is the percentage at which an individual or corporation is taxed. Tax liability is calculated by applying the appropriate tax rate to the tax base.
Tax Rate Schedules provide predefined percentages applicable to various income ranges, crucial for the taxation process of individuals and entities. These schedules must be utilized by taxpayers with taxable income of $100,000 or more, while others typically use detailed tax tables.
A tax roll is a detailed listing and description of all taxable property within a tax district, including assessed values and amounts.
A tax straddle is a technique that was once used to postpone tax liability by showing a short-term loss in the current tax year and realizing a long-term gain in the following tax year.
The Tax Wedge represents the economic effect of taxes which can potentially inhibit specific results by creating a wedge between the economic activities of producers and consumers.
An investment option where accumulated earnings are not taxed until the investor takes possession of the assets.
Tax-exempt income refers to specific types of income that are not subject to federal income tax. This includes certain Social Security benefits, welfare benefits, nontaxable life insurance proceeds, armed forces family allotments, nontaxable pensions, and tax-exempt interest.
A financial obligation whose interest is exempt from taxation by federal, state, and/or local authorities.
A tax-free designation refers to any payment, allowance, or benefit that is not subject to taxation, providing financial advantages to recipients without impacting their taxable income.
A taxable supply refers to the provision of goods or services in the UK that is subject to Value Added Tax (VAT). It excludes any exempt supplies as defined by VAT legislation.
A levy imposed on individuals and corporate bodies by central or local governments to finance government expenditures and implement fiscal policies, excluding payments for specific services rendered.
A portion of Social Security benefits may be included in taxable income, contingent upon the taxpayer's filing status and total income.
An informal name for an Inspector of Taxes, who ensures compliance with tax laws and regulations.
A periodic inheritance tax charge on most forms of discretionary trusts, structured to balance the lack of generational transfer taxes.
In accounting, the time of supply refers to the date when goods are removed or made available to a customer, or when services are completed for a customer, marking the point at which tax is chargeable.
The concept of 'Trade or Business' encompasses all activities and operations undertaken with the aim of generating profit through commercial or trading transactions. It is a critical term for both taxation and business regulation purposes.
Undivided interest describes an ownership right to use and possession of a property that is shared among co-owners, with no one co-owner having exclusive rights to any portion of the property.
Unearned income refers to income that is not derived from active work, such as wages, salaries, or professional fees, but from investments, savings, or other passive sources like dividends, interest, and rental income.
Uniform Capitalization Rules (UNICAP) are a method of valuing inventory for tax purposes, requiring the capitalization of direct costs and an allocable portion of indirect costs related to production or resale activities. These costs must be included in the basis of property produced or in inventory costs and are then recoverable through depreciation, amortization, or as cost of goods sold.
Unrealized depreciation refers to the excess of the adjusted basis of an asset over its fair market value, for determining losses on the sale or other disposition of the asset.
Unrelated Business Income (UBI) pertains to income generated by a tax-exempt organization from activities unrelated to its primary exempt purpose.
A vacation home is a dwelling that owners use occasionally for recreational or resort purposes. It may be rented to others for part of the year and the income tax deductions depend on the frequency of owner use.
Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production or distribution and is ultimately borne by the end consumer.
A Value-Added Tax (VAT) is a type of indirect tax levied on goods and services at each stage of production or distribution where value is added. It is prevalent in many countries worldwide and represents a significant source of revenue for governments.
