Depreciation (Accounting) refers to the method of allocating the cost of a tangible asset over its useful life. It is an accounting technique used to account for the gradual wear and tear, aging, or decrease in the utility of an asset.
The principle that transactions must have a genuine financial or economic effect and not be solely orchestrated to evade taxes. This concept is crucial for determining the legitimacy and validity of financial actions, especially in tax law.
A federal tax lien is a legal claim by the government against a property when the owner fails to pay federal taxes. This debt attachment ensures the government has first priority on any proceeds from the sale of the property.
A federal tax levied on the transfer of any property or assets from one individual to another without receiving anything (or less than the market value) in return. The tax primarily affects larger gifts and can intersect with estate tax considerations.
A deduction that allows taxpayers who use part of their home for business purposes to deduct certain expenses from their taxable income.
Imputed interest is the interest that tax authorities assume to be paid on a loan, even if no actual interest payment has been made or if the interest rate is below market levels.
The Internal Revenue Code (IRC) is a comprehensive set of tax laws enacted by the United States Congress to specify how various types of income are to be taxed and what deductions are allowed. It serves as the foundation for the country's federal tax laws and is critical in shaping tax policy and administration.
The Internal Revenue Service (IRS) is a federal agency that oversees the administration and collection of federal income taxes. Responsible for distributing tax forms, auditing tax returns, and enforcing federal tax laws, the IRS plays a crucial role in the financial ecosystem of the United States.
The Internal Revenue Service (IRS) is the U.S. federal agency responsible for tax collection and tax law enforcement, ensuring compliance with the nation’s tax laws and providing guidance and services to taxpayers.
The Modified Accelerated Cost Recovery System (MACRS) is a method of depreciation used for income tax purposes in the United States. It allows for the accelerated depreciation of property over specified recovery periods.
Passive activity income refers to profits derived from business activities in which the taxpayer does not materially participate or rental activities, which are typically deemed passive regardless of material participation.
Safe harbor refers to regulations or provisions designed to shield companies or individuals from legal repercussions, provided they adhere to specified guidelines or practices. These rules offer clarity and a guarantee of compliance, thus minimizing legal risk and ambiguity.
Section 1221 of the Internal Revenue Code specifies what does not constitute a capital asset, crucial for determining tax treatment of different assets.
A tax bracket refers to the range of income subject to a certain marginal tax rate. It defines the percentage of each additional dollar in income required to be paid as income taxes.
A tax deduction is an expense that can be subtracted from an individual or entity's gross income to reduce the amount subject to tax.
A tax liability refers to the amount of tax debt owed to the Internal Revenue Service (IRS) or a state's tax authority. These liabilities can result from income earned, properties owned, or other taxable activities.
