Tag Archives: BE

Below Market Rate Loans

Below Market Rate Loans

Description and Definition of Below Market Rate Loans

These are loans that are made at an interest rate that is below the prevailing market rate. Under certain circumstances the IRS imputes a higher interest rate. This can create additional taxable interest income even if you didn't receive the higher interest rate.

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Benefits Received

Benefits Received

Description and Definition of Benefits Received

A “Benefits Received” system of taxation occurs when people pay taxes in relation to the amount of government benefits they receive. Some of the benefits U.S. citizens receive include welfare, Medicare, and Medicaid. Some people believe that people should pay taxes based on the amount of government benefits they receive.

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Below-market Loan

Below-market Loan

About Below-market Loan:

Also called Below-market-rate loans. A loan that provides for no interest or for interest at less than the statutory federal rate (applicable federal rate, AFR). Such loans are generally recharacterized using the AFR, which will cause the lender to have constructive income to the extent of any imputed interest. That is, the difference between the rate the federal government pays on new borrowings and the interest charged on the loan. The borrower will similarly be deemed to have received a gift, compensation, dividend, or other payment that is deemed to be transferred to the lender as payment of interest. See Former IRC (check if this IRC provision is current here) §7872(e)(l).

If the taxpayer make an interest-free or bargain-rate loan to a friend or relative – or anyone else – the taxpayer may be required to include in his or her taxable income some of the interest the IRS believes the taxpayer should have charged.

See Dividend in the American Legal Encyclopedia and Dividend in the World Legal Encyclopedia.

Bequest

Bequest

Bequest means:
a gift of personal property by means of a will. Real property is usually transferred by a devise. The term disposition encompasses both a bequest of personalty and a devise of real estate.

Best-method Rule

Best-method Rule

Best-method Rule means:
a rule that states that, in determining the true taxable income of a controlled taxpayer, the arm's-length result of a controlled transaction must be determined under a method that provides the most accurate measure of such a result under the facts and circumstances of the transaction. Former Temporary Regulation (check here if this Temp. Reg. is current) §1.4821T(b)(2)(iii).

Before-tax Cash Flow

Before-tax Cash Flow

Before-tax Cash Flow means:
the cash flow before deducting income tax payments or adding income tax benefits.

Example of Before-tax Cash Flow:

Learn more about tax examples, explanations and calculations here.

After deducting debt service of $500 from a net operating income of $1,000, Curtis has a before-tax cash flow of $500. This may be reduced by taxes that are payable on the income.

See the entries Income Tax and State Income Tax in the American Encyclopedia of Law.

Beneficial Interest

Beneficial Interest

Beneficial Interest means:
the equitable interest in a trust held by the beneficiary of the trust, as distinguished from the interest of the trustee, who holds legal title. Any person who, under the terms of the trust instrument, has the right to the income or principal of the trust fund has a beneficial interest in the trust.

Benefit Period

Benefit Period

Benefit Period means, under the Medicare program, the period that begins the day a person enters a hospital and ends when he or she has been out of a hospital or skilled nursing facility for 60 consecutive days.