Tax Vocabulary
The corporate tax formula begins with this
What is gross income
The partnership files a copy of this with the IRS to report the share of the partnership's income, deductions, credits, etc.
What is Schedule K-1 (Form 1065)
Recognized when a receivable is no longer collectible because a customer is unable to fulfill their obligation to pay an outstanding debt due to bankruptcy or other financial problems.
What is bad debt expense
Distribution of corporate profits to eligible shareholders
What is a dividend
The legal process used to form a corporate entity or company?
What is incorporation
A security that represents the ownership of a fraction of a corporation
What is stock
Form used to file Corporation Application for Quick Refund of Overpayment of Estimated Tax
What is IRS Form 4466
C Corporations can deduct certain charitable contributions, though they may not deduct more than ___% of their pretax income in any given year
What is 10%
This happens when a company's allowable deductions exceed its taxable income within a tax period.
Net operating loss (NOL)
These costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business
What are start-up costs
Type of corporation in which the principal activity is the performance of personal services that are substantially performed by employee-owners.
What is personal service corporation (PSC)
Form used for corporate income tax return
What is IRS Form 1120
Excess capital losses may be carried back ____ years and carried forward for ____ years
What is carried back 3 years and carried forward 5 years.
This applies to certain corporations that receive dividends from related entities and alleviates the potential consequences of triple taxation
What is dividend received deduction (DRD)
The dollar amount that can be immediately expensed for start-up costs (subject to the dollar cap and excess of $50,000 phaseout).
What is $5,000
A corporation, other than an S corporation, can deduct capital losses only up to its ________
What is capital gains
Form used to file US Return of Partnership Income
What is IRS form 1065
Dollar limit of deduction for a publicly held corporation’s compensation to any covered employee.
(Covered employees are: principal executive officer, principal financial officer & three other most highly compensated officers)
What is $1,000,000
Receiving corporation can deduct what percentage of the dividends received if it owns 20% or more of the distributing corporation's stock
What is 65%
This IRS Section states corporations may elect to amortize organizational expenses over 180-month period beginning with the month in which the corporation begins business
What is IRS § 1.195-1 Election to amortize start-up expenditures
This type of corporation's directors and officers operate the business with the same authority and behavior as in a traditional corporation but are required to consider the impact of their decisions not only on shareholders but also on employees, customers, the community, and local and global environment.
What is a benefit corporation (B-Corp)
This schedule contains the Reconciliation of Income (Loss) per Books With Income (Loss) per Return
What is Schedule M-1
This type of depreciation allows for faster depreciation in the first years of an asset's life and slows depreciation later on
What is MACRS (Modified Accelerated Cost Recovery System) depreciation
Receiving corporation can deduct what percentage of the dividends received if it owns 20% or less of the distributing corporation's stock
What is 50%
Expenses related to forming a corporation, partnership, or limited liability company
What are organizational expenses