Karteikarten
BUS 419 CH 5 KEY TERMS
Karten in diesem Stapel (30)
- 1Accelerated death benefitsearly receipt of life insurance proceeds that are not taxable under certain circumstances, such as the taxpayer is medically certified with an illness that is expected to cause death within 24 months.
- 2Accountable planan employer’s reimbursement plan under which employees must submit documentation supporting expenses to receive reimbursement and reimbursements are limited to legitimate business expenses.
- 3Accrual methoda method of accounting that generally recognizes income in the period earned and recognizes deductions in the period that liabilities are incurred.
- 4Alimonya support payment of cash made to a former spouse. The payment must be made under a written separation agreement or divorce decree that does not designate the payment as something other than alimony, the payment must be made when the spouses do not live together, and the payments must cease no later than when the recipient dies.
- 5Annuitya stream of equal payments over time.
- 6Assignment of income doctrinethe judicial doctrine holding that earned income is taxed to the taxpayer providing the service, and that income from property is taxed to the individual who owns the property when the income accrues.
- 7Barter clubsorganizations that facilitate the exchange of rights to goods and services between members.
- 8Cash methodthe method of accounting that recognizes income in the period in which cash, property, or services are received and recognizes deductions in the period paid.
- 9Claim of right doctrinejudicial doctrine that states that income has been realized if a taxpayer receives income and there are no restrictions on the taxpayer’s use of the income (for example, the taxpayer does not have an obligation to repay the amount).
- 10Community property systemssystems in which state laws dictate how the income and property is legally shared between a husband and a wife.
- 11Constructive receipt doctrinethe judicial doctrine that provides that a taxpayer must recognize income when it is actually or constructively received. Constructive receipt is deemed to have occurred if the income has been credited to the taxpayer’s account or if the income is unconditionally available to the taxpayer, the taxpayer is aware of the income’s availability, and there are no restrictions on the taxpayer’s control over the income.
- 12Disability insurancesometimes called sick pay or wage replacement insurance. It pays the insured for wages lost due to injury or disability.
- 13Discharge of indebtednessdebt forgiveness.
- 14Earned incomecompensation and other forms of income received for providing goods or services in the ordinary course of business.
- 15Flow-through entitieslegal entities, like partnerships, limited liability companies, and S corporations, that do not pay income tax. Income and losses from flow-through entities are allocated to their owners.
- 16Fringe benefitsnoncash benefits provided to an employee as a form of compensation. As a general rule, fringe benefits are taxable. However, certain fringe benefits are excluded from gross income.
- 17Gifta transfer of property where no, or inadequate, consideration is paid for the property.
- 18Gross incomerealized income minus excluded and deferred income.
- 19Imputed incomeincome from an economic benefit the taxpayer receives indirectly rather than directly. The amount of the income is based on comparable alternatives.
- 20Inheritancea transfer of property when the owner is deceased (the transfer is made by the decedent’s estate).
- 21Installment salea sale for which the taxpayer receives payment in more than one period.
- 22Municipal bondthe common name for state and local government debt.
- 23Nonrecognition provisionstax laws that allow taxpayers to permanently exclude income from taxation or to defer recognizing realized income until a subsequent period.
- 24Qualified retirement accountsplans meeting certain requirements that allow compensation placed in the account to be tax-deferred until the taxpayer withdraws money from the account.
- 25Realization principlethe proposition that income only exists when there is a transaction with another party resulting in a measurable change in property rights.
- 26Return of capitalthe portion of proceeds from a sale (or distribution) representing a return of the original cost of the underlying property.
- 27Tax basisthe amount of a taxpayer’s unrecovered cost of or investment in an asset; see also adjusted tax basis.
- 28Tax benefit ruleholds that a refund of an amount deducted in a previous period is only included in income to the extent that the deduction reduced taxable income.
- 29Unearned incomeincome from property that accrues as time passes without effort on the part of the owner of the property.
- 30Wherewithal to paythe ability or resources to pay taxes due from a particular transaction.