Vocabulary Flashcards
Ad Valorem Taxes
Based on value, property taxes on wealth or capital
Realty
Real property like real estate, or any fixtures 
Personalty
All property that is not attached to real estate and is movable
Exercise Tax
Tax on the manufactured sale or use of goods for the transfer of property
Sales tax
A state or local tax on retail sales
Use tax
A complement to sales tax. It is assessed at the same rate as the sales tax. It prevents avoidance of sales tax.
Severance Taxes
Transaction taxes based on the notion that the state has an interest in natural resources, example oil, coal gas, or iron
Estate Tax
The right to transfer property by death. Levied on the estate of the descendent
Inheritance tax
Right to receive property from a descendent. Levied on the person receiving the property
Gift tax
a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return
Employment taxes
Income, tax imposed on employers and employees
FICA Tax
Two components.
1) Social Security tax( old, age, survivors, and disability insurance)
2. Medicare.
FUTA tax
Provides funds the states can use to minister unemployment benefits
Franchise tax
State impose on corporations for the right to do business in the state
Occupational fees
Applies to various trade, some businesses, example, liquor, license, or a fee to practice a profession
Flat tax
Consumption tax. 9% flat rate on wages and pension benefits
National sales tax
Intended as a replacement for the current federal income tax
Value added tax (VAT)
Imposed on the value of each party in a production cycle. A system of credits that results in the vat only being paid by the final consumer
Carbon tax
Aims to help reduce carbon emissions
Financial transaction tax
Can be imposed on stock and bonds, and it restricts in trading
Correspondence audit
Oh, that’s done by mail
Office audit
Restricted and conducted in IRS offices
Field audit
Examination of items reported on returns and takes place at taxpayers locations
Statue of limitation
Any lawsuit can be brought within a reasonable period of time
Prepare tax identification pin
A required pen by all persons who are paid for preparing , or assisting in preparing federal tax returns
Revenue neutrality
Changes don’t increase or decrease the net revenues
Where withdrawal pay
Recognize is there any quality of taxing a transaction when taxpayers lack means
Indexation
Government adjusted income tax components to account for inflation
Proposed regulations
New regulations and changes to existing regulations are issued in repost forms before finalized. Section 2
Final regulations
Have force and effect of the law
Temporary regulations
Are temporary. Cited as temp.rE section.
Revenue rulings
Official pronouncements of IRS. Provide examples of how IRS would apply law to specific fact situation’s
Revenue procedure
Deals with internal management, practices, and procedures of IRS
Notices
Issued when immediate guidance is needed by taxpayers and tax practitioners
Letter rulings
Issue for a fee upon taxpayers request and describes how the IRS will treat a proposed transaction for tax purposes
Determination letters
Issued at the request of taxpayers and provide guidance on the application of tax law
Technical advice memoranda (TAMs)
Deals with completed transactions
Court of original jurisdiction
Trial court. Initially, hears the case.
US District Court/US quart of Federal claims /US tax court
Taxpayers choice of 3 courts
Small cases, division
US tax court only hears cases $50,000 or less judges ruling is final
Circuit court of appeals
Trial court can be appealed by this by the losing party
Writ of Certiorari
Appeal to US Supreme Court. Grants to resolve conflict among courts of appeal.
Itemize deductions
Personal expenditures allowed by the code as deductions adjusted gross income
Asquiescence
“A” or “Acq”
IRS loses, but agrees with decisions
Nonacquiescence
“NA” or “Nonacq”
IRS loses, but disagrees
Tax research
Process of finding a component in a professional conclusion to a tax problem
Standard deductions
Depends on filing status, age and blindness
Personal independency exceptions
Tax law provides an exemption for each individual taxpayer an additional exemption for the taxpayer spouse if a joint return is file
Qualifying child
An individual who satisfies the relationship abode and age tests
Qualifying relative
An individual who satisfies the relationship, gross income, support, citizenship, and joint return test
Multiple support agreement
Qualified for dependency exemption the support test must be satisfied. Requires over 50% of the support be provided by the taxpayer where no one person provides more than 50% of the support.
Gross income
Income subjected to the federal income tax
Recovery of capital doctrine
When a taxpayer exchange occurs, the seller may be permitted to recover his or her investment (or other adjusted basis) in the property before gain or loss is recognized
Income
An increase in wealth that has been realized
Economic income
The changes in the tax payers net worth, as measured in terms of market value of assets the taxpayer consume during the year (not use for tax purposes)
Accounting income
Accountants concept of income, generally based upon the realization principal
Taxable year
Annual. Over which income is measured for income tax purposes
Cash receipts method
Method that reflects deductions as paid an income as received an any one cash year
Accrual method
Recognize revenue in the period in which it’s earned and realizable, but not necessarily when the cash is actually received
Claim of right doctrine
requires that all taxpayers pay tax on the earnings from which they benefit during the tax year.
Hybrid method
Combination of a cruel and cash methods
Constructive receipt
Income is unquantifiable available, but not physically in the taxpayer possession still subjected to income tax
Original issue discount (OID)
The difference between issue, price of a debt application and the maturity value of the obligation when the issue price is less than the maturity value. It’s interest.
Redemption price - issuance price
Fruit and tree metaphor
The courts have held that an individual who earned income from property or services cannot assign that income to another
Assignment of income
A taxpayer attempt to avoid the recognition of income by assigning another the property that generates the income
Majority interest partners
Partners to have more than 50% in partnership profits in capital. Counting in the same taxable year.
Principal partner
A partner with a 5% or greater interest in partnership or profits
Least Aggregated deferral method
An algorithm set forth in the regulations to determine the tax year, or a partnership, or a limited liability entity with owners, whose tax years differ.
the tax year of any partner that results in the least deferral of income when the profits interests and tax years of all partners are taken into account
Personal service corporation (PSC)
A corporation who is principal activity is the performance of personal services, and where services are performed
Short taxable year
Year, that is less than 12 months
Crop insurance proceeds
Proceeds received when an insured cropped is destroyed.
12 month rule for a prepaid expenses
Taxpayers to use the cash method are required to use the accrual method for deducting certain prepaid expenses
Crop method
Method of accounting for agricultural crops that are planted in one year, but harvested in a subsequent year. Cost of raising the crops are cumulative as inventory, and are deducted when the income from the crop is realized.
All events test
As apply to the recognition of income, this requires an income of an accrual basis, be recognized
1) all events have occurred that fix the taxpayers right to receive the income
2) the amount can be determined with reasonable accuracy
Economic performance test
One requirement that must be satisfied for an accrual basis, taxpayer to deduct an expense
Partnership
For income tax purposes a partnership includes a syndicate, group, pool or joint venture as well as ordinary partnerships
S corporation
Designation for a corporation that elects to be taxed similarly to a partnership
Community Property
Half of the earnings of each spouse earnings is considered on by the other spouse.
Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
Alimony and separate maintenance payments
Alimony deduction result in the payment for legal obligation, arising from the termination of a marital relationship
Alimony recapture
The amount of alimony that previously has been included in the gross income of the recipient and deducted by the payer is now deducted by the recipient and included in the gross income of the payer, as a result of front loading 
Imputed interest
For certain long-term properties, that IRS can convert some of the gain from the sale into interest income, if the contract does not provide for a minimum rate of interest to be paid by the purchaser
Sections, 483 and 1274
Annuity
Nudity I fix some of money, payable to a person as specified times for a specific period of time or for life
Report a foreign bank and financial accounts (FBAR)
Form 114 must be filed by individuals in some businesses, if they have foreign banks brokerage or similar accounts were at any time during the county year the aggregate balance exceeds 10,000
Net operating loss
To mitigate the effects of animal accounting. Concepts, section 172 allows taxpayers to use an excess loss of one year as a deductible for certain past or future years.
Nontaxable exchange
Transaction in which realized gains or losses are not recognize
Like – kind exchanges
Exchange of real property, how far productive use in a trade or business, or for investment for other investments are traits are businesses real property
