One of two accounting methods used to allocate the costs of extracting natural resources, such as timber, minerals and oil, and to take those costs as a tax deduction. Cost depletion looks at the total amount of the resource to be extracted, how much was extracted during the tax year and the amount of money spent to extract it. The proportion of resources extracted divided by the total resources is the percentage used to help determine the deduction in that period. Depletion is similar to depreciation, which is used to allocate the cost of tangible assets like equipment over their useful lives. The other method of depletion is "percentage depletion", which is calculated by multiplying the gross income received in the tax year from extracting a resource by an IRS-determined percentage established for each resource (for example, if the percentage was 22%, you would multiply your gross income by 22%).
A levy placed on the profit of a firm; different rates are used for different levels of profits. Corporate taxes are usually levied by all levels of government (ie. State and Country)
1. The original value of an asset for tax purposes (usually the purchase price), adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain, which is equal to the difference between the asset's cost basis and the current market value. Also known as "tax basis".2. The difference between the cash price and the futures price of a given commodity. 1. Using the correct tax basis is important especially if you reinvested dividends and capital gains distributions instead of taking the earnings in cash. Reinvesting distributions increases the tax basis of your investment, which you must account for in order to report a lower capital gain (and therefore pay less tax). If you don't use the higher tax basis, you could end up paying taxes twice on the reinvested distributions.For example, say you bought 100 shares of a stock for $1,000 last year and you reinvested the $100 of dividends distributed from the company. The next year, you received $200 in dividends and capital-gains distributions, which you again reinvested. Since tax law considers these reinvested earnings as paid to you even though you didn't actually have the cash in hand, your adjusted cost basis when the stock is sold should be recorded at $1,300 instead of the original purchase price of $1,000. Thus, if the sale price is $1,500, the taxable gain would only be $200 ($1,500 - $1,300) instead of $500 ($1,500 - $1,000). If you record the cost basis as $1,000, you'll end up paying more taxes than you have to.2. For example, if particular corn futures contract happens to be trading at $3.50, while the current market price of the commodity today is $3.10, there is said to be a $0.40 basis.
A claim made against a business for outstanding debt. The debt can be owed to another business, or could be in the form of tax obligations to the government. For example, the federal government may impose a corporate tax lien on a company that fails to pay payroll tax or some other tax obligations. The corporate lien is placed on the company's assets to indicate that the company has financial obligations outstanding. Companies, like investors, are responsible for the debt that they take on, as well as other financial responsibilities, such as paying their employees. If a company cannot meet its obligations, investors can step in and purchase the corporate lien, which settles the obligation with the lending party and allowing the investors to pursue compensation from the company and possibly any penalties they may be subject to. If the company ultimately declares bankruptcy, holders of the corporate lien may also be more likely to have a higher priority than stockholders.
Tax audits that the IRS performs by mail. Correspondence audits are the lowest level of auditng performed by the IRS. The IRS sends the taxpayer a written request for additional information about a specific item or issue on a specific tax return. If the taxpayer can produce sufficient evidence to resolve the issue, the procedure is closed. A correspondence audit is considered the least serious form of an audit because it is generally only used for relatively simple matters and involves small amounts of momey. The next step after a correspondence audit is an office audit, where the IRS requires the taxpayer to come to an IRS location to discuss the issue in question.
The act of a parent company, whose headquarters are located within U.S. borders, switching registration with their offshore subsidiary in order to take advantage of foreign tax benefits. This practice is becoming more popular due to increasing offshore tax advantages and corporate mobility. The U.S. government is attempting to restrict corporate inversion because of losses in tax revenue.
Any travel expenses incurred while at a business convention. These expenses are tax-deductible if they are business or work-related. Travel expenses may include food, lodgings, convention materials, gas, car rentals and more.Most companies require their employees to keep a log of their purchases and provide the company with receipts for anything they want a reimbursement for.
The test that is applied to determine whether meals, lodging, transportation or other work-related expenses furnished by an employer for employees are taxable. The convenience of employer test mandates that any employee expenses paid for by the employer must be solely for the convenience of the employer, and must be incurred on the employer's premises if applicable. If this is the case, then those expenses are not included in the employee's income. The convenience of employer test applies both to the taxability of expenses paid by the employer and the deductibility of unreimbursed expenses borne by employees. In the latter case, the bottom line is usually when the employer does not furnish the equipment or tools necessary for the employee to do the job. If the employee is paying these expenses and the expenses pass the convenience of employer test, then they may be deductible subject to certain limitations.
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