Accountant's Equation

Description and Definition of Accountant's Equation

Accountant's Equation is the equation which is the basis of a balance sheet. It is as follows: Assets = Liabilities + Owners' Equity.

Resources

See Also

Further Reading

• Accountant's Equation in the West's Tax Law Dictionary
• Accountant's Equation in “A Dictionary of Taxation”

Acquisition Debt

Description and Definition of Acquisition Debt

Acquisition Debt is debt used to buy, build, or substantially improve a principal residence or second home and which generally qualifies for a full interest expense deduction. This is the technical term that Congress uses for what most of us call home mortgage debt on which the interest is deductible. The interest on up to $1 million of acquisition indebtedness is deductible.

Resources

See Also

Further Reading

• Acquisition Debt in the West's Tax Law Dictionary
• Acquisition Debt in “A Dictionary of Taxation”

Accrual Method

Description and Definition of Accrual Method

The Accrual Method is a business method of accounting requiring income to be reported when earned and expenses to be deducted when incurred – rather than reporting income when you receive payment and expenses when you pay them. However, deductions generally may not be claimed until economic performance has occurred. The Accrual Method is usually used by most large corporations. If you own a business that maintains an inventory you are required to use the accrual method for purchases and sales.

Resources

See Also

Further Reading

• Accrual Method in the West's Tax Law Dictionary
• Accrual Method in “A Dictionary of Taxation”

Accrued Interest Adjustment

Description and Definition of Accrued Interest Adjustment

The Accrued Interest Adjustment is an adjustment that reduces your taxable interest income by any interest that you reported and paid tax on as it was earned.

Resources

See Also

Further Reading

• Accrued Interest Adjustment in the West's Tax Law Dictionary
• Accrued Interest Adjustment in “A Dictionary of Taxation”

Accountable Reimbursement Plan

Description and Definition of Accountable Reimbursement Plan

An Accountable Reimbursement Plan is an employer reimbursement plan or allowance arrangement established so that employees can receive business expense reimbursements tax free. The Accountable Reimbursement Plan must require employees to keep records of their expenses and return any excess reimbursement within a reasonable period of time.

Resources

See Also

Further Reading

• Accountable Reimbursement Plan in the West's Tax Law Dictionary
• Accountable Reimbursement Plan in “A Dictionary of Taxation”

Accounting Method

Description and Definition of Accounting Method

An Accounting Method is a method used by a business or individual to keep its records. Most individuals and small businesses use the cash method, although businesses that maintain inventory are required to use the accrual method.

Resources

See Also

Further Reading

• Accounting Method in the West's Tax Law Dictionary
• Accounting Method in “A Dictionary of Taxation”

Accelerated Cost Recovery System

Description and Definition of Accelerated Cost Recovery System (ACRS)

Accelerated Cost Recovery System (ACRS) was a statutory method of depreciation allowing accelerated rates for most types of property used in business and income-producing activities during the years 1981 through 1986. This method allowed assets to be depreciated at a faster rate than had been allowed previously. It has been superseded by Modified Accelerated Cost Recovery System (MACRS) for assets placed in service after 1986.

Resources

See Also

Further Reading

• Accelerated Cost Recovery System (ACRS) in the West's Tax Law Dictionary
• Accelerated Cost Recovery System (ACRS) in “A Dictionary of Taxation”

Accelerated Depreciation

Description and Definition of Accelerated Depreciation

Accelerated depreciation is a method of depreciation that produces larger deductions for depreciation in the early years of an asset's life versus spreading the cost evenly over the life of the asset, as with the straight-line depreciation method. For most business property, except real estate, the law allows you to depreciate the cost at a rate faster than would be allowed under straight-line depreciation.

Resources

See Also

Further Reading

• Accelerated Depreciation in the West's Tax Law Dictionary
• Accelerated Depreciation in “A Dictionary of Taxation”

Active Income

Description and Definition of Active Income

Active Income is income from wages, tips, salaries, commissions, and a trade or business in which you materially participate.

Resources

See Also

Further Reading

• Active Income in the West's Tax Law Dictionary
• Active Income in “A Dictionary of Taxation”

Actuarial Valuations

Actuarial Valuations Issue

You may find information about Actuarial Valuations in this Tax Platform of the American Encyclopedia of Law.