Tag Archives: Tax Meanings

Tenancy By the Entirety

Tenancy By the Entirety

Tenancy By the Entirety means:
a form of joint ownership for real estate that exists only between husband and wife with equal rights of possession and enjoyment during their joint lives and with the right of survivorship; that is, when one dies, the property goes to the surviving tenant. Tenancy by the entirety is recognized in some states. Former IRC (check if this IRC provision is current here) §2040.

Example of Tenancy By the Entirety:

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A married couple owns property as tenants by the entirety. Neither spouse can convey his or her part of the property during the lives of the couple unless the other consents, a feature that is different from joint tenancy. Divorced spouses are tenants in common; see also tenancy in common.

Description and Definition of Tenancy by the Entirety

A joint tenancy in real property in the name of both husband and wife. If one owner dies the other takes the entire estate.

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Employer Identification Number

Employer Identification Number

About Employer Identification Number:

An Employer Identification Number (EIN) is a taxpayer identification number for an entity other than an individual, such as a partnership, corporation, estate, or trust.

See Employer Identification Number and Employer Identification Number.

A federal identification number required for businesses that have one or more employees, file returns for employment or excise taxes, maintain a qualified retirement plan, or operate as a corporation, partnership, nonprofit, estate, or trust.

See Excise and Excise.

Description and Definition of Employer Identification Number (EIN)

A nine-digit number assigned by the IRS for businesses, estates, and trusts.

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Vacation Home

Vacation Home

Vacation Home means:
a dwelling used by its owner occasionally for recreational or resort purposes; it may be rented to others for a portion of the year. Income tax deductions pertaining to vacation homes depend on the frequency of use by the owner. Generally a business loss cannot be claimed on a vacation home. Three possible tax treatments are available for vacation homes:

1. If the home is rented for fewer than 15 days, it is treated as a personal residence, and rent income is excluded from income. Mortgage interest and property taxes are treated as itemized deductions.

2. If the house is not used for personal purposes more than the greater of (a) 10% of the total days rented and (b) 14 days, it is treated as rental property. Any rental loss is treated as a passive activity loss.

3- If the house is rented for 15 or more days and is used for personal purposes more than the greater of (a) 10% of the total days rented and (b) 14 days, expenses are allowable only to the extent of income. Former IRC (check if this IRC provision is current here) §280A.

Example of Vacation Home:

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The Austins have a vacation home in the mountains that they use on weekends during the summer (at least 20 days). At other times it is rented to strangers by the week (about 90 days). If business deductions, including depreciation, exceed income, the loss cannot be deducted.

See Property Tax in the American Legal Encyclopedia and Property Tax in the World Legal Encyclopedia.

See Depreciation in the United States Encyclopedia of Law and Depreciation in the World Encyclopedia of Law.

Description and Definition of Vacation Home

A second home that may also be rented out at times to others. The tax law limits deductions for vacation homes broadly defined as any dwelling unit used by the owner or the owner's relatives for more than a specified period.

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Married Filing Jointly

Married Filing Jointly

Married Filing Jointly means:
a filing-status option for married couples who agree to report their combined income and deductions. In a Married Filing Joint filing status, the taxpayer is married and both he/she and his/her spouse agree to file a joint return. (On a joint return, the taxpayer reports his combined income and deduct his/her combined allowable expenses.) For a given level of income, filing jointly typically results in a lower tax than filing separately. However, when the spouses have approximately equal incomes, the joint return may often produce a higher tax than two single individuals would pay; this result is known as the marriage penalty. IRC (check if this IRC provision is current here) §6013.

Description and Definition of Married Filing Jointly

The filing status used by most married couples. When couples file jointly they combine their income and deductions on the same tax return. Couples must be married as of the end of the tax year to file jointly.

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Indirect Tax

Indirect Tax

About Indirect Tax:

A tax that can be shifted to others, such as sales taxes, VAT (in Europe and other regions) and business property taxes. See Indirect Tax in the U.S. Reference and Indirect Tax in the International reference.

U.S. and other Developed Countries International Tax Meaning

Tax imposed on certain transactions, goods or events. Examples include VAT, sales tax, excise duties, stamp duty, services tax, registration duty and transaction tax.

See Indirect Tax in the U.S. Reference and Indirect Tax in the International reference.

See Property Tax in the American Legal Encyclopedia and Property Tax in the World Legal Encyclopedia.

See Sales tax in the U.S. Encyclopedia and Sales tax in the International Encyclopedia

Description and Definition of Indirect Tax

A type of tax that can be shifted to others. A company might have to pay a specific tax to the government. The company pays the tax but increases the cost of their products so consumers are actually paying the tax indirectly by paying more for the company's products.

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Mid-quarter Convention

Mid-quarter Convention

Mid-quarter Convention means:
a convention whereby property is deemed to be placed in service at the midpoint of a quarter for depreciation purposes.

In general, business property is depreciated under a midyear rule that allows half a year's depreciation for the first year, whether the taxpayer buy property in January or December. However, if the taxpayer buy more than 40% of the business property the taxpayer put into service for the year during the fourth quarter, the midquarter convention takes over. With it, the taxpayer depreciate each piece of property as though it were placed into service in the middle of the calendar quarter in which it was purchased. the taxpayer claim just six weeks' worth of depreciation for property put in service during the final quarter, for example.

See Depreciation in the United States Encyclopedia of Law and Depreciation in the World Encyclopedia of Law.

Description and Definition of Mid-quarter Convention

If you buy more than 40% of the depreciable property you put into service for the tax year during the fourth quarter the mid-quarter convention applies. You depreciate each piece of property as though it were placed into service in the middle of the calendar quarter in which it was purchased. This allows six weeks of depreciation for property put in service during the last quarter of the year.

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Unstated Interest

Unstated Interest

Unstated Interest is used.

when no interest or low interest is provided in an installment sale the agreement, the part of each payment that will be treated as interest, is referred to also as unstated or imputed interest. When the stated interest on a sales contract is less than the applicable federal rate, the unstated interest is the difference between the federal rate of interest and the interest specified in the sales contract. Unstated interest affects the selling price and the contract price and also the amount of gain on the sale. It reduces the selling price and increases the seller's interest income and the buyer's interest expense.

Description and Definition of Unstated Interest

Interest the IRS assumes has been received on a loan if the stated interest rate is below a minimum, called the applicable federal rate.

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Defined-contribution Plan

Defined-contribution Plan

Defined-contribution Plan means:
a deferred retirement plan that provides a separate account for each person covered by the plan; contrast with the entry with defined-benefit pension plan. Future benefits are based only on amounts contributed to or allocated to each account. Types of defined-contribution plans include profit-sharing plans, and stock bonus plans. For plan years after 1986, the annual addition under a defined-contribution plan is limited to the lesser of $30,000 or 25% of compensation for the year. This limit is tied to the dollar limit for defined-benefit plans, as adjusted by cost-of-living adjustments. The annual addition includes items such as employer contributions and certain employee contributions. Former IRC (check if this IRC provision is current here) §§4l4(i) and 415(c).

Description and Definition of Defined Contribution Plan

A retirement plan of which the contributions are based upon a specific amount or formula. Contributions are generally based on a percentage of salary or earned income.

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Group Life Insurance

Group Life Insurance

Group Life Insurance means:
a basic employee benefit Under which an employer buys a master policy and issues to employees certificates denoting participation in the plan. Group life is also available through unions and associations. It is usually issued as yearly renewable term insurance although some policies provide permanent insurance. An employer may pay all the cost or share it with employees. The premiums paid by the company on such insurance are not taxable to the employee on coverage of up to $50,000 per person. Former IRC (check if this IRC provision is current here) §79 and Reg. §1.79-l(a).

Description and Definition of Group Life Insurance

Life insurance obtained by an employer for employees. Employees are not taxed on up to $50,000 of group life insurance coverage. Premiums for the first $50,000 of life insurance per employee are deductible by the employer.

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Value

Value

Value may have one of the following meanings, depending the context of the term:

1. worth of all the rights arising from ownership. 2. the quantity of one thing that will be given in exchange for another.

A piece of property may have a certain value to its owner (value in use) equal to the amount of other property (typically cash) that the owner would be willing to accept in exchange for the property without loss in wealth or well-being. The same property may have a different fair market value (value in exchange) equal to the amount of other property exchanged for the property when many typically motivated buyers and sellers are allowed to interact.

Description and Definition of Value

The worth of a thing.

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