Tag Archives: CA

Capital Budget

Capital Budget

Description and Definition of Capital Budget

The estimated amount planned to be expended for capital items in a given fiscal period. Capital items are fixed assets such as facilities and equipment, the cost of which is normally written off over a number of fiscal periods. Shows plans for buying long-term assets, machinery and other items expected to last several years, and estimates the costs of those purchases.

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Carryback

Carryback

Carryback means:
a process by which the deductions or credits of one taxable year that cannot be used to reduce tax liability in that year are applied against a tax liability in an earlier year or years. Former IRC (check if this IRC provision is current here) §1212.

See also other Tax Terms and Definitions in U.S.A.

carryover.

CARRYBACK – See: Carryover.

Description and Definition of Carryback

Applying a deduction or credit from the current tax year to a prior tax year. A business net operating loss, general business credit, and foreign tax credit may be carried back. A capital loss may not be carried back. Amounts not carried back may be carried forward to later years.

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Capital Expenditure

Capital Expenditure

Capital Expenditure means:
an improvement (as distinguished from a repair) that will have a life of more than 1 year. Capital expenditures are generally depreciated or depleted over their useful life, as distinguished from repairs, which are subtracted from the income of the current year. Former IRC (check if this IRC provision is current here) §263. Example 1: Collins adds a new 25-room wing to her motel, at a cost of $250,000. The new wing is a capital expenditure. Example 2: Baker, a rancher, has a fence that is in such poor condition that it cannot be repaired. He makes a $50,000 capital expenditure to replace the fence.

In other words: The cost of a permanent improvement to property. Such expenses, such as adding central air conditioning or an addition to his or her home, increase the property's adjusted tax basis.

U.S. and other Developed Countries International Tax Meaning

Expenditure on improvement rather than repair. Where expenditure is more closely connected with the business income-earning structure than its income earning capacity, it is capital expenditure.

Description and Definition of Capital Expenditure

Costs that are not currently deductible and that are added to the basis of property. A capital expense generally increases the value of property or lengthens its useful life. Repairs, on the other hand, only maintain the property. When added to depreciable property, the cost is deductible over the life of the asset.

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Cancellation of Debt

Cancellation of Debt

Description and Definition of Cancellation of Debt

Forgiveness of a debt without payment or consideration. Cancellation of debt is taxable as income to the debtor unless the creditor intended it as a gift or it meets certain exceptions relating to bankruptcy, insolvency, or farming.

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Capital Gain Distribution

Capital Gain Distribution

Capital Gain Distribution may have one of the following meanings, depending the context of the term:

1. Mutual funds. Distributions received by mutual funds earned as capital gains retain that character when passed on to the mutual fund's investors. 2. Corporate liquidation. The difference between the fair market value of property distributed to a shareholder in excess of the shareholder's basis in his or her stock is a capital gain or capital loss.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.

Capital Gain is a gain on the sale of capital asset. See Capital Gains Tax and Capital Gains Tax.

Description and Definition of Capital Gain Distribution

A mutual fund dividend allocated to gains realized on the sale of fund portfolio assets. Distributions resulting from the sale of capital assets by a mutual fund. Report the dividend as a long-term capital gain even if you held the fund shares short term.

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Capital Loss Carryover

Capital Loss Carryover

Description and Definition of Capital Loss Carryover

The amount of capital loss not allowed as a deduction in the current year and carried over to the next year. A capital loss that is not deductible because it exceeds the annual $3,000 capital loss ceiling. A carryover loss may be deducted from capital gains of later years plus up to $3,000 of ordinary income.

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Capital Loss

Capital Loss

Capital Loss means:
the loss from the sale of a capital asset. Individuals are limited to $3,000 of loss that can be used annually to offset ordinary income; corporations may offset capital losses against capital gains but not against ordinary income. An individual may carry a capital loss forward until it is completely exhausted. A corporation may carry a capital loss back 3 years and forward 5 years. Former IRC (check if this IRC provision is current here) §§1212(a) and (b), 1222(10).

Example of Capital Loss:

Learn more about tax examples, explanations and calculations here.

Collins, an investor, purchases land for $10,000. Two years later she sells it for $8,000. The $2,000 difference is a capital loss, since the land is a capital asset.

In other words: The loss from the sale of assets such as stocks, bonds, mutual funds and real estate. Such losses are first used to offset capital gains and then up to $3,000 of excess losses can be deducted against other income, such as his or her salary. Long- and short-term losses (distinguished by whether the property was held for more than one year or a shorter period of time) are first used to offset gains of a similar nature. Any excess first offsets the other kind of gain, then up to $3,000 of net loss can be deducted against other other types of income each year.

U.S. and other Developed Countries International Tax Meaning

The loss from the sale of a capital asset.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.

Description and Definition of Capital Loss

The loss from the sale of a capital asset such as stocks, bonds, mutual funds and real estate. The difference between amount realized and adjusted basis on the sale or exchange of capital assets. Capital losses are deducted first against capital gains, and then against up to $3,000 of other income.

Description and Definition of Long-Term Capital Gain or Loss

Your profit or loss from the sale of a capital asset that you held for more than 1 year.

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