A type of loss or tax credit that must be reduced as a result of the exclusion of debt cancellation from a taxpayer's gross income. Tax attributes are adjusted when a taxpayer declares bankruptcy. Tax attributes include net operating losses and carryovers, general business credit carryovers, alternative minimum tax credit carryovers, capital loss and foreign tax credit carryovers. Taxpayers who are forgiven debts as a result of bankruptcy do not have to include the forgiven debt as income, but certain tax attributes must be reduced by an amount proportionate to the amount of debt that has been forgiven. For example, if $5,000 in debt was forgiven, then the taxpayer could elect to have the basis of his/her rental property reduced by $5,000 and defer the tax until the property is sold. If the property is sold for a gain, then $5,000 of that gain will be taxed as ordinary income.
The practice of profiting from differences between the way transactions are treated for tax purposes. The complexity of tax codes often allows for many incentives which drive individuals to restructure their transactions in the most advantageous way in order to pay the least amount of tax. Some forms of tax arbitrage are legal while others are illegal. Tax arbitrage can, for example, involve recognizing revenues in a low tax region while recognizing expenses in a high tax region. Such a practice would minimize the tax bill by maximizing deductions while minimizing taxes paid on earnings. It is suspected that tax arbitrage is extremely widespread, but by its nature, it is difficult to give precise figures as to what extent tax arbitrage is employed.
A measure of the percentage that a consumer's income would have to adjust by in order to maintain the same level of purchasing power. The tax and price index (TPI) takes into account changes in retail prices due to inflation, as well as changes to direct taxes that reduce a consumer's disposable income. The index uses data collected in the United Kingdom. Unlike the retail price index (RPI), which uses changes in retail prices only, the TPI also takes into account other factors that affect real disposable income, namely taxes. An increase in both direct taxes and the price of retail goods would require a consumer's income to increase by more than an increase in retail prices alone. If direct taxes, such as income taxes, are reduced while the price of retail goods increases, the RPI will show a greater increase than the TPI.
A financial expert with advanced training and knowledge of tax law. The services of a tax advisor are usually retained in order to minimize taxation while remaining compliant with the law in complicated financial situations. Tax advisors can include Certified Public Accounts, tax attorneys and financial advisors. Tax advisors and preparers are regulated but not licensed by the Internal Revenue Service. Treasury Department Circular No. 230. Reg. 10.33(a) of the circular outlines the duties of tax advisors. There can be penalties and disciplinary action for failing to follow the standards outlined by the IRS.
Accounting methods that focus on taxes rather than the appearance of public financial statements. Tax accounting is governed by the Internal Revenue Code which dictates the specific rules that companies and individuals must follow when preparing their tax returns. Tax principles often differ from Generally Accepted Accounting Principles. Balance sheet items can be accounted for differently when preparing financial statements and tax payables. For example, companies can prepare their financial statements implementing the first-in-first-out (FIFO) method to record their inventory for financial purposes, yet they can implement the last-in-first-out (LIFO) approach for tax purposes. The latter procedure reduces the current year's taxes payable.
An individual (or group) who, through fraud, dishonesty or avoidance, does not pay the amount of tax that would be obligated if tax rules were properly followed. A tax cheat may improperly use tax shelters or purposefully miscategorize earnings and expenses under the pretense that the government will not miss the lost revenue because of the obligation's size relative to all taxes collected. Those found to be cheating on their taxes may be subject to fines, penalties or imprisonment. The Internal Revenue Service (IRS) allows taxpayers to report individuals and organizations that they suspect are tax cheats. As an incentive, it provides a potential reward if it is found that those being reported did, in fact, underpay taxes.
A tax break is a savings on a taxpayer's liability. A tax break provides a savings through tax deductions, tax credits, tax exemptions and other incentives. An example of a tax break is the First-Time Homebuyer Tax Credit which provided a tax credit up to $8,000 for qualified purchasers of primary residences on their 2009 and 2010 tax returns. Tax breaks can greatly reduce a taxpayer's liability. Deductions are expenses that can be subtracted from gross income to reduce taxable income; credits reduce tax liability dollar-for-dollar and have a greater impact than deductions; exemptions occur where a tax for a certain item or type of income is reduced or eliminated.
The rate at which an individual is taxed. Tax brackets are set based on income levels; individuals with lower income levels are taxed at a lower rate than individuals with higher income levels. Tax brackets serve as cutoff points for given income tax rates; therefore, if an individual's annual taxable income exceeds the cutoff point, that person is taxed according to the next tax bracket. Most countries tax individual incomes using a system of tax brackets. This structure implements what is referred to as a progressive tax system, in which taxation progressively increases as an individual's income grows. This contrasts with a flat tax structure, in which all individuals are taxed at the same rate, regardless of their income levels.Proponents of the use of tax brackets and a progressive tax system contend that individuals with high incomes are more able to pay income taxes while maintaining a high standard of living, while low-income individuals struggle to meet their basic needs, and should be subject to less taxation.Furthermore, the use of tax brackets has an automatic stabilizing effect on an individuals' after-tax income, as a decrease in salary is counteracted by a decrease in tax rate, leaving the individual with a less substantial decrease in after-tax income.
登录
工商服务
危机公关
金融律师
app开发
财税服务
金融牌照
网站建设
知识产权
企业征信
审计评估