The 83(b) election is an IRC provision giving an employee or founder the option to pay taxes upfront on the fair market value of restricted equity.

26 CFR 1.83-2: Election to include in gross income in year of transfer

Table of Contents
What Is the 83(b) Election? $100,000 is the Year 1 value of the firm
$10,000 is the value of the firm at inception or the book value
10% is the ownership stake of the co-founder
20% represents the 5-year vesting period for the co-founder's 1 million shares (200,000 shares/1 million shares) The 83(b) election applies to equity that is subject to vesting, and it alerts the Internal Revenue Service (IRS) to tax the elector for the ownership at the time of granting, rather than at the time of stock vesting. The 83(b) election is a provision under the Internal Revenue Code (IRC) that gives an employee, or startup founder, the option to pay taxes on the total fair market value of restricted stock at the time of granting. The 83(b) election is a provision under the Internal Revenue Code (IRC) that gives an employee, or startup founder, the option to pay taxes on the total fair market value of restricted stock at the time of granting.

83(b) Election

The accumulated earnings tax is imposed on companies with retained earnings deemed to be unreasonable and in excess of what is considered ordinary.

https://www.law.cornell.edu/cfr/text/26/1.537-1

An accumulated earnings tax is a tax imposed by the federal government on companies with retained earnings deemed to be unreasonable and in excess of what is considered ordinary. Corporations that accumulate their earnings or profits, instead of distributing them as dividends to shareholders, will be subjected to the accumulated earnings tax if the amount of earnings retained is above a certain level. An accumulated earnings tax is a tax imposed by the federal government on companies with retained earnings deemed to be unreasonable and in excess of what is considered ordinary. An accumulated earnings tax is a tax on retained earnings that are considered unreasonable, which should be paid out as dividends. If a company does not distribute any dividends by keeping a portion of retained earnings as accumulated earnings, shareholders are able to avoid this tax.

Accumulated Earnings Tax

Bonus depreciation is a tax break that allows businesses to immediately deduct a large percentage, currently 100%, of the purchase price of eligible assets.

Bonus depreciation is a tax incentive that allows a business to immediately deduct a large percentage of the purchase price of eligible assets, such as machinery, rather than write them off over the "useful life" of that asset. The Tax Cuts and Jobs Act of 2017 doubled the bonus depreciation deduction from 50% to 100%.
The Tax Cuts and Jobs Act, passed in 2017, made major changes to the rules on bonus depreciation. For a business that claims bonus depreciation on an item that costs $100,000, for example, the resulting deduction would be worth $21,000, assuming the company's tax rate is 21%.
Bonus depreciation must be taken in the first year that the depreciable item is placed in service. Bonus depreciation is calculated by multiplying the bonus depreciation rate (currently 100%) by the cost basis of the acquired asset. The bonus depreciation lets companies deduct 30% of the cost of eligible assets before the standard depreciation method was applied.

Bonus Depreciation

Business tax credits are federal income tax credits available to corporations.

Business tax credits are an amount that companies can subtract from the taxes owed to a government. The main difference between a business tax credit and a business tax deduction is that tax deductions are used to reduce the taxable income whereas a tax credit directly reduces the tax liability. If a business has exceeded their tax credits for the current tax year, but not the prior year, they may be able to carry those credits backwards and apply them to the tax returns that they have already filed. Business tax credits can come in many forms, but some of the common business tax credits are aimed at activities like hiring employees who face barriers to employment, investing in research, upgrading a building to be more efficient, and so on.﻿﻿ In the same vein, if they have more credits than are permitted in the current tax year, they may carry the balance of those credits into the next tax year.

Business Tax Credits

A capital tax is a corporate wealth tax levied by some provinces of Canada. A capital tax is based on assets, not income.

Taxable Capital Employed in Canada – Financial Institutions (2014 and later tax years)

T2 Corporation – Income Tax Guide – Chapter 8: Page 9 of the T2 return

A capital tax is a tax levied on a corporation that is based on its assets rather than its income. Financial institutions with taxable capital employed in Canada exceeding $10 million are required to file a capital tax form (Schedule 34),﻿﻿﻿ although only financial institutions with capital employed exceeding $1 billion pay the federal capital tax. For tax purposes, the Financial Corporation Capital Tax Act defines a financial corporation as a bank, trust company, credit union, loan corporation, or life insurance company and includes an agent, assignee, trustee, liquidator, receiver, or official having possession or control of any part of the property of the bank, trust company, or loan company but does not include a trust company or loan company incorporated without share capital. Prior to 2007, the federal government imposed a capital tax on the taxable capital employed in Canada in excess of $50 million of any corporation that was resident in Canada or any non-resident corporation that carried on business in Canada through a permanent establishment. Canada limited its federal capital tax to financial corporations in 2006,﻿﻿ and some provinces of Canada also collect a capital specific to financial institutions.

Capital Tax

A cascade tax is a system that imposes sales taxes on products at each successive stage in their progress from raw material to consumer purchase.

EU Country Commercial Guide. Value Added Tax (VAT)

A cascade tax or cascading tax refers to a system that imposes sales taxes on products at each successive stage in the supply chain from raw material to consumer purchase. These may include central taxes such as sales tax, excise duty tax, and service tax, as well as state-level taxes such as entertainment tax, entry tax, transfer tax, and luxury tax. The main alternative to a cascade tax is a single-stage tax such as the value-added tax (VAT), also called a goods and services tax (GST). When a country imposes a GST tax rather than a value-added tax, it merges several taxes into one single tax. Alternatives to a cascade tax include a value-added tax or goods-and-services tax.

Cascade Tax

Comprehensive tax allocation is a term for the practice of reconciling expenses compiled for tax purposes with those of financial reporting.

Publication 946 (2020) How to Depreciate Your Property

Comprehensive tax allocation is an analysis that identifies the effect of taxation on revenue-generating transactions during a non-standard reporting period. Four classes of transactions can lead to a temporary discrepancy between tax and accounting periods:
Accelerated reporting of taxable income
Delayed reporting of taxable income
Accelerated reporting of deductible expenses
Delayed reporting of deductible expenses As mentioned, comprehensive tax allocation is also known as interperiod tax allocation, which is a reference to the two sets of reporting periods that firms use in accounting. Comprehensive tax allocation is an analysis that companies use to identify discrepancies between their accounting for business purposes and their accounting for tax purposes. Comprehensive tax allocation allows for the reconciliation of these temporary differences that arise between tax reporting and financial performance reporting timelines.

Comprehensive Tax Allocation

A consolidated tax return is a single income tax return filed by an affiliated group of corporations that combines their tax liability.

https://www.law.cornell.edu/uscode/text/26/1504

A consolidated tax return is a corporate income tax return of an affiliated group of corporations, who elect to report their combined tax liability on a single return. A consolidated tax return is a corporate income tax return of an affiliated group of corporations, who elect to report their combined tax liability on a single return. An includible company, defined by tax law, is any corporation except for certain insurance companies, foreign corporations, tax-exempt corporations, regulated investment companies, real estate investment trusts, and S corporations. A consolidated tax return combines the tax liability of all includible corporations in an affiliated group. Companies not allowed to consolidate include certain insurance companies, foreign corporations, tax-exempt corporations, regulated investment companies, real estate investment trusts, and S corporations.

Consolidated Tax Return

Constructive receipt is when cash has not been physically received, but the individual or business can still control or utilize the money.

Publication 538: Accounting Periods and Methods

Constructive receipt is an accounting term that requires an individual or business to pay taxes on income despite the fact that the money has not yet been received in actuality. Taxpayers must include any income on their taxes based on the year that income was constructively received, even if they don’t have possession of the funds.
An individual is considered to be in constructive receipt of income when they have the ability to control or utilize the funds, even if they do not have direct possession of them, or if it is guaranteed they will have the ability to draw upon the funds in the future.
A business is said to be in constructive receipt if the business has the ability to use the money without restriction or if it has been deposited into the business's account. In terms of income, when there is constructive receipt of income, this means that taxpayers cannot pay their taxes on income or compensation that has not been spent yet. Constructive receipt is an accounting term that requires an individual or business to pay taxes on income despite the fact that the money has not yet been received in actuality. For tax purposes, this person must report the amount of the paycheck as earned income for that year, even if they did not actually deposit the check until after the new year.
What matters here is not that the individual actually received the benefit of spending or depositing that money, but that they possessed the capacity to do so — even if they delayed or forwent that capacity in real life.

Constructive Receipt

A corporate lien is a claim made against a business for outstanding debt owed to another business or tax obligations owed to the government.

A corporate lien is legal claim against a business for money owed to another entity. The first is a UCC lien, which is filed with the Secretary of State’s office in most U.S. states.﻿﻿ Tax liens are also typically filed in the state of the company’s legal headquarters and will show any liens placed against unpaid back taxes.﻿﻿ Lastly, judgment liens are filed when a legal judgment has already occurred; these judgments are most often filed in local county courthouses. Placing a corporate lien against a business requires a court order agreeing that the company is in arrears for money owed to another entity. A corporate lien is usually placed on a business for a debt or unpaid bills owed to another business. Corporate liens are legal claims against a business that are backed by a court order and filed against the assets of the business.

Corporate Lien

A corporate inversion is the process of moving and reincorporating a company in a country with lower tax rates.

A corporate inversion—also called a tax inversion—is a process by which companies, primarily based in the U.S., relocate operations overseas to reduce their income tax burden. A corporate inversion—also called a tax inversion—is a process by which companies, primarily based in the U.S., relocate operations overseas to reduce their income tax burden. As of 2020, the new U.S. corporate tax rate has put corporate inversion on the back burner for multinationals calling the U.S. home. Companies who receive a significant portion of income from foreign sources may employ corporate inversion as a strategy because the foreign income is being taxed both abroad and in the country of incorporation. From a profitability and competitiveness standpoint, corporate inversions represent a smart business move because they lower the tax burden on a company's operations.

Corporate Inversion

Dividend exclusion is a rule that allows corporations to subtract dividends received from income for tax purposes.

Tax Cuts and Jobs Act: A Comparison for Large Businesses and International Taxpayers

How Did the Tax Cuts and Jobs Act Change Business Taxes

Dividend exclusion refers to an Internal Revenue Service (IRS) provision that allows corporations to subtract a portion of dividends received when they calculate their taxable income. Similar to dividend exclusion is the dividends received deduction, which is a tax write-off for corporations that receive dividends from related entities. A dividend exclusion is a provision by the Internal Revenue Service (IRS) that allows corporations to deduct a portion of their dividends received when they calculate their taxable income. Dividend exclusion essentially allows corporations to deduct dividends received from their investments, ensuring that the dividends of the receiving entity are only taxed once. The dividends received deduction is a federal tax write-off for eligible corporations in the U.S. that receive dividends from related entities.

Dividend Exclusion

Earnings stripping is a common tactic used by U.S. corporations to minimize their tax bills by shifting profits abroad to countries with lower tax rates.

Interest Expense Limitation and the New I.R.C. 163 (j): Not Just a Foreign Concept Anymore

Earnings Stripping, Transfer Pricing, and U.S. Income Tax Treaties

Earnings stripping is a common tactic used by multinational corporations to escape high domestic taxation by using interest deductions in a friendly tax regime area to lower their corporate taxes. It is commonly used during corporate inversions: a transaction through which the corporate structure of a U.S.-based multinational corporation is altered so that a new foreign corporation, typically located in a low-tax or tax-free country, replaces the existing U.S. parent corporation as the parent of the corporate group. In general, the earnings stripping rules apply to a corporation with a debt-to-equity ratio in excess of 1.5 to 1; a net interest expense that exceeds 50% of its adjusted taxable income for the year, and an interest expense that is not subject to full U.S. income or withholding tax in the hands of the recipient. As part of earnings stripping, a foreign-controlled domestic corporation (or a U.S. corporation that is based in a foreign country) or parent company makes a loan to its U.S. subsidiary for operational expenses. To curb the practice of earnings stripping, the Revenue Reconciliation Act of 1989 placed a 50% restriction on related-party interest deductions a foreign-owned U.S. corporation could take while calculating its income tax.

Earnings Stripping

An excess profits tax is a type of tax that is assessed upon income or business profits beyond a specified amount.

A progressive European wealth tax to fund the European COVID response

The History of Excess Profits Taxes Not as Effective or Harmless as Today’s Advocates Portray

An excess profits tax is a special tax that is assessed upon individual or corporate income beyond a specified amount of return on invested capital, usually in excess of what is deemed to be a normal income. For example if construction supply companies are able to make higher than normal profits by charging higher prices in the wake of a hurricane, the government may consider implementing an excess profits tax on them on the grounds that their higher profits are due to the random occurrence of the hurricane rather than to good business sense or management practices. In effect, an excess profits tax represents an increase in marginal tax rates on profits in higher tax brackets. An excess profits tax is an extra tax levied on business profits or income above a specified rate of profit. An excess profits tax is an extra tax imposed on business profits or income above a certain rate.

Excess Profits Tax

The Federal Unemployment Tax Act (FUTA) imposes a payroll tax on businesses with employees, collecting revenue that funds unemployment benefits.

Topic No. 759 Form 940– Employer's Annual Federal Unemployment (FUTA) Tax Return – Filing and Deposit Requirements.

The Federal Unemployment Tax Act (FUTA) is a piece of legislation that imposes a payroll tax on any business with employees. Employers who also pay their state unemployment insurance can receive a federal tax credit of up to 5.4%, resulting in an effective FUTA tax rate of 0.6**%**. Furthermore, payments such as fringe benefits, group term life insurance benefits, and employer contributions to employee retirement accounts are not included in the tax calculation for the federal unemployment tax. The Federal Unemployment Tax Act (FUTA) is legislation that imposes a payroll tax on any business with employees; the revenue raised is used to fund unemployment benefits. In this way, FUTA tax differs from other payroll taxes, such as Social Security tax, which applies to both employers and employees.

Federal Unemployment Tax Act (FUTA)

The first-year allowance is a tax allowance permitting UK corporations to deduct capital expenditures during the year the equipment was first purchased. 

The first-year allowance is a UK tax allowance permitting British corporations to deduct between 6% and 100% of the cost of qualifying capital expenditures made during the year the equipment was first purchased. The first-year allowance is a UK tax allowance permitting British corporations to deduct between 6% and 100% of the cost of qualifying capital expenditures made during the year the equipment was first purchased. If a business does not take the first-year allowance in the eligible tax year, they can still claim a partial reduction on the cost in the following year using alternative write down allowances. Examples of capital expenditures eligible for the first-year allowance include some cars that meet low CO2 emission standards; energy-saving equipment; water conservation equipment, various biofuel and hydrogen refueling equipment as well as zero-emission delivery vehicles. To further encourage this, the British government in late 2017 extended the first-year allowances on zero-emission vehicles and refueling equipment to a full three years, instead of just the first year.

First-Year Allowance

Form 2106: Employee Business Expenses is a tax form distributed by the Internal Revenue Service (IRS).

About Form 2106, Employee Business Expenses

IRS issues standard mileage rates for 2021

Form 2106: Employee Business Expenses is a tax form distributed by the Internal Revenue Service (IRS) used by employees to deduct ordinary and necessary expenses related to their jobs. Whether you used standard mileage or actual expenses, expenses incurred commuting to and from work are not considered eligible business expenses. Prior to 2018, any employee with unreimbursed work expenses could use Form 2106 to claim those expenses as a miscellaneous itemized deduction. Prior to 2018, any employee with unreimbursed work expenses could use Form 2106 to claim those expenses as a miscellaneous itemized deduction According to the IRS, only the following taxpayers can use Form 2106:
Armed Forces reservists
Qualified performing artists
Fee-basis state or local government officials
Employees with impairment-related work expenses

Form 2106: Employee Business Expenses

A franchise tax is levied at the state level against businesses and partnerships chartered within that state and is not a tax on franchises.

Table of Contents
What Is a Franchise Tax? The state calculates its franchise tax based on a company’s margin which is computed in one of four ways:
Total revenue multiplied by 70%
Total revenue minus cost of goods sold (COGS)
Total revenue minus compensation paid to all personnel
Total revenue minus $1 million
Corporate revenue is calculated by subtracting statutory exclusions from the amount of revenue reported on a corporation's federal income tax return.
The Franchise Tax Board is usually a state-operated tax agency for both personal and business taxes. LLCs that elect to be taxed as a corporation are subject to California's corporate income tax instead of a franchise tax; meanwhile, franchise taxes for LLP and LPs vary but must pay the minimum $800 franchise tax. Sole proprietorships are not usually subject to franchise taxes and other forms of state business income tax, in part because these businesses are not formally registered with the state in which they do business. Despite the name, a franchise tax is not a tax on franchises and is separate from federal and state income taxes that must be filed annually.

Franchise Tax

Franked investment income (FII) is income that is received as a tax-free distribution by one company from another.

Franked investment income (FII) is income that is received as a tax-free distribution by one company from another. If ABC company pays franked investment income to XYZ company, XYZ company does not have to pay tax on the income. Once the issuing company has paid corporate tax on the income being distributed, the tax payment is attributed also to the companies who receive the franked dividend. The shareholder or receiving entity then does not have to pay tax or pays a reduced tax on the franked dividend income. At this ratio, all resident shareholders who pay income tax at the rate of 28% or less will not have to pay any further income tax.

Franked Investment Income

Indian Employment Credit is a tax credit offered to companies who employ Native American employees on a reservation.

ITG FAQ #1 Answer -- What Tax Credits Are Available to Businesses that Employ Native Americans

Instructions for Form 3800, General Business Credit

The Indian Employment Credit is a monetary incentive in the form of a tax credit offered by the United States federal government to employers who hire registered Native Americans, referred to as "Native American Indians" or "American Indians" in Internal Revenue Service (IRS) documentation, and spouses of registered Native Americans, who live on or near a Native American reservation and work for an employer on that reservation. Employers that are estates or trusts report the credit on Form 8845 or IRS Form 3800, General Business Credit, depending on whether the source credit comes from a beneficiary.﻿﻿ Cooperatives must determine the total tax liability before determining where to report the Indian Employment Credit. The Indian Employment Credit is a tax credit offered by the United States government through the IRS to employers who hire Native Americans or spouses of Native Americans who live on or near reservations. For the purposes of the Indian Employment Credit, qualified wages are all wages paid to a qualified employee except for those that qualify for the Work Opportunity Credit reported on IRS Form 8845. Qualified employee health insurance costs are costs paid or incurred by an employer for health insurance coverage for a qualified employee while the employee is a qualified employee.

Indian Employment Credit

The Internal Revenue Service publishes the IRS Publication 334: Tax Guide for Small Business as a reference for sole proprietors and statutory employees.

Publication 334: Tax Guide for Small Business

IRS Publication 334: Tax Guide for Small Business is a guide for individuals who are required to fill out Schedule C to report income. In addition to covering the tax treatment on both business income and expenses, IRS Publication 334 also indicates what forms the taxpayer needs to fill out, what business income needs to be reported, what accounting method the business owner should use, and what to do if a business is sold or dissolved during the year. The last chapter of IRS Publication 334: Tax Guide for Small Business highlights additional assistance offered by the federal government to small business owners through the Small Business Administration or the SBA. IRS Publication 334 provides details on how to calculate common business deductions, take business tax credits available to a small businesses, and other vital information. As the document name suggests, IRS Publication 334: Tax Guide for Small Business provides small business owners with information on federal tax law as it applies to their businesses.

IRS Publication 334: Tax Guide for Small Business

Publication 541 is a document published by the Internal Revenue Service (IRS) that provides tax information for partners and partnerships.

IRS Publication 541 is a document issued by the Internal Revenue Service (IRS) that explains tax laws and regulations related to partnerships. According to IRS Publication 541, “An unincorporated organization with two or more members is generally classified as a partnership for federal tax purposes if its members carry on a trade, business, financial operation, or venture and divide its profits.”
If you have formed an organization after 1996 with two or more members that produce income, this organization will be considered a partnership unless it has been incorporated as some other type of company, like an S corporation or an LLC. It explains rules for business owners to follow who wish to form partnerships or terminate a partnership, and how to treat various income that is produced by the partnership. The IRS will also decline to treat your organization as a partnership if the organization is an insurance company, it’s owned by a state or foreign government, it’s a tax-exempt organization or it’s a real estate investment trust. A partnership is a type of business that typically does not pay corporate income tax, but passes on that income to the owners, or partners, of the business.

IRS Publication 541

IRS Publication 557 details the rules and regulations that have to be followed by an organization in order to obtain tax-exempt status. 

Publication 557: Tax-Exempt Status for Your Organization

Publication 557 - Organization Reference Chart

Publication 557 - Organizations not discussed in this publication

Publication 557 - Description of activities

IRS Publication 557 is a document published and by the Internal Revenue Service (IRS) that explains the rules to be followed by an organization in order to obtain and maintain tax-exempt status. IRS Publication 557 guides taxpayers as to the required forms and documents, the appeals process if tax-exempt status is denied, and reasons why exempt status may be revoked. IRS Publication 557 guides taxpayers through the required forms and documents, the appeals process if tax-exempt status is not approved, and reasons why exempt status may be revoked. IRS Publication 557 is a document published and by the Internal Revenue Service (IRS) that explains the rules to be followed by an organization in order to obtain and maintain tax-exempt status. IRS Publication 557 includes a reference chart that details what section of the Internal Revenue Code applies to an organization qualifying for tax-exempt status and the forms that must be filled out in order to apply.

IRS Publication 557: Tax-Exempt Status for Your Organization

Instructions from the IRS on when employers must deposit most withheld federal employment taxes.

IRS Publication 931: Deposit Requirements For Employment Taxes is a document published by the Internal Revenue Service (IRS) that instructs employers on how to deposit withheld Social Security, Medicare, and income taxes for their employees. The lookback period for withholding taxes to be collected in 2021 begins on July 1, 2019, and ends on June 30, 2020.
IRS Notice 931 is not a tax form but provides instructions for employers to complete IRS Form 941, which accompanies withholding deposits. Employer withholding of employment tax liabilities remains a bedrock principle of tax codes around the world since any system that relied on employees to make their own tax payments would inevitably result in missed payments and expensive collection efforts by the government. The deposit schedule selected is based on the amount of tax liability reported during a lookback period, which is four calendar-year quarters beginning on July 1 of the year preceding the previous year. For a new employer, the income for the lookback year is considered zero, thus new companies automatically fall under the monthly payment schedule for the first year, so long as their tax liability in any month is under $100,000.

IRS Publication 931: Deposit Requirements for Employment Taxes

IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits is an IRS document providing information on accounting for fringe benefits.

Publication 15-B (2021), Employer's Tax Guide to Fringe Benefits

The IRS Publication 15-B or the Employer's Tax Guide to Fringe Benefits is a document published by the Internal Revenue Service (IRS) that provides employers with guidance on how to account for additions to compensation given to employees when filing taxes. IRS Publication 15-B or the Employer's Tax Guide to Fringe Benefits is a guide that employers use to learn how to file the fringe benefits they provide to their employees.
Fringe benefits can also be provided for non-employees like independent contractors, and these too must be reported for tax purposes.
Most fringe benefits are taxable unless they have been specifically been made tax-exempt by law. Accident and health benefits, commuting benefits, dependent care assistance, educational assistance, employee discounts, health savings accounts (HSA), and retirement planning services are some examples of fringe benefits the IRS considers tax-exempt. Most fringe benefits that are income tax-exempt are also exempt from Social Security, Medicare and federal unemployment taxes, but not all.﻿﻿ Adoption assistance is exempt from income tax only, for example. Recipients of taxable fringe benefits have to include the fair market value of the benefit in their taxable income for the year.

IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits

Listed property is a specific class of depreciable property that is subject to special tax rules if it is used for business no more than 50% of the time.

Publication 946: How To Depreciate Property

The term listed property refers to a certain type of depreciable property that may be used primarily for business purposes. This test stipulates that the business usage of the listed property must be more than 50%.﻿﻿ This must be done for every asset a business claims as listed property in order to:
Claim a bonus depreciation
Claim an expensing election
To depreciate the property under the modified accelerated cost recovery system (MACRS) depreciation system
A recaptured depreciation may be added back to income in any year after the first year of use that the listed property business usage drops below 50%. Listed property that does not meet the predominant use test is not eligible for Section 179 depreciation—the maximum amount of depreciation allowed—or other accelerated depreciation methods.
Costs associated with​ ​the use of listed property are not deductible as business expenses. Listed property—also referred to at times as mixed-use property—used primarily for business reasons is subject to the statutory percentage depreciation method, as it will be considered a business asset. According to the Internal Revenue Service (IRS), listed property includes:
Automobiles weighing less than 6,000 pounds, excluding ambulances, hearses, and trucks or vans qualified nonpersonal use vehicles.
Other property used for transportation purposes including trucks, buses, boats, airplanes, motorcycles, and other vehicles used to transport persons or goods.
Properties used for entertainment, recreation or amusement.

Listed Property

The Low-Income Housing Tax Credit (LIHTC) provides an incentive for home developers to build, buy, and refurbish housing for low-income taxpayers.

An Introduction to the Low-Income Housing Tax Credit

What Is the Low-Income Housing Tax Credit and How Does It Work

Sec 215 -- Qualification as Affordable Housing

The Low-Income Housing Tax Credit (LIHTC) is a tax incentive for housing developers to construct, purchase, or renovate housing for low-income individuals and families. To qualify for the LIHTC, a project must meet one of the following conditions:
1.  Twenty percent or more of the rental units are rented to tenants earning 50% or less of the median income in the area based on the family size.
2.  Forty percent or more of the rental units are rented to tenants earning 60% or less of the median income in the area based on the family size.
3.  Forty percent or more of the rental units are rented to tenants with income averaging no more than 60% of the median income in the area and no units are rented to tenants earning more than 80% of the median income. There are specific qualifications residents must fulfill to benefit from these types of housing projects, including maximum income guidelines.
The Low-Income Housing Tax Credit (LIHTC) subsidizes the creation of low-income housing by offering a 10-year tax credit to these projects. Low-income housing refers to any housing project or residential building that rents units out to tenants who qualify for reduced rent based on income and family size, or who receive a federal stipend to help make their monthly rental payment. While the Low-Income Housing Tax Credit is intended to spur the creation of more low-income housing, there are other types of supports for the people seeking low-income housing.

Low-Income Housing Tax Credit (LIHTC)

A Nevada corporation is a business incorporated in the state of Nevada, which is known for its business-friendly tax and corporate law statutes. 

A Nevada corporation is a business incorporated in the state of Nevada, a state known to be business-friendly through its tax and corporate law statutes. A Nevada corporation is a business incorporated in the state of Nevada, a state known to be business-friendly through its tax and corporate law statutes. Nevada corporations enjoy a number of benefits for incorporating in Nevada, including no state income tax, no franchise taxes, and enhanced protection for the personal assets of a corporation's owners and directors. Companies that incorporate in Nevada have several distinct advantages, including no state income tax, no franchise taxes, no personal income taxes, and no inheritance taxes. As corporations are governed largely by state law, this has created an opportunity for states like Nevada and Delaware to create business friendly environments.

Nevada Corporation

Nonpassive income and losses refer to gains and losses incurred in business activity in which a taxpayer is a material participant.

Nonpassive income and losses constitute any income or losses that cannot be classified as passive. Included in nonpassive income is any active income, such as wages, business income, or investment income. Nonpassive income includes any active income, such as wages, business income, or investment income. Losses or income may qualify as nonpassive if the taxpayer annually and actively participates for more than 500 hours in the business venture (100 hours if no other partner or co-worker puts in more work hours than the taxpayer during the year). Conversely, nonpassive losses cannot be offset by passive income from partnerships or other sources of income in which the taxpayer is not a material participant.

What Is Nonpassive Income and Losses?

A payroll deduction plan is when an employer withholds money from an employee's paycheck, most commonly for employee benefits and taxes. 

Table of Contents
What Is a Payroll Deduction Plan? Some common voluntary payroll deduction plan examples include:
401(k) plan, IRA, or other retirement savings plan contributions
Medical, dental, or vision health insurance plans
Flexible spending account or pre-tax health savings account contributions
Life insurance premiums (often sponsored by the employer)
Charitable to employer-sponsored charitable giving plans
Short-term disability insurance plans
Payment for job-specific items, such as clothing, uniforms, or tools
U.S. Savings Bond purchases
Payments for purchases of company merchandise (computers or other retired equipment)
Tuition or professional certification fee deductions
Some common involuntary payroll deduction plan examples include:
Federal income tax withholding (federally mandated)
FICA taxes (for Social Security and Medicare contributions and premiums)
State income tax withholding (mandated by states that impose a tax on income)
Local taxes (imposed by cities, counties, and towns for disability or unemployment insurance)
Wage garnishments
Child support payments (when ordered by a court)
Pre-tax deductions are subtracted from an employee's gross salary before taxes and social security are calculated. How a Payroll Deduction Plan Works
Examples of Payroll Deduction Plans
Pre-Tax Deductions
How to Calculate Payroll Deductions
Special Considerations
The Bottom Line
Payroll Deduction FAQs
A payroll deduction plan refers to when an employer withholds money from an employee's paycheck for a variety of purposes, but most commonly for benefits. To calculate an employee's take-home pay, the first step is to subtract any pre-tax deductions from their gross income, such as insurance deductions or certain retirement contributions. A voluntary payroll deduction plan happens when an employee opts for—and gives written permission to—an employer to withhold money for certain purposes, such as a retirement savings plan, healthcare, or life insurance premiums, among others.

Payroll Deduction Plan

A Pigovian tax is a tax assessed against businesses that engage in activities that create negative side effects, such as environmental pollution.

A Pigovian (Pigouvian) tax is a tax assessed against private individuals or businesses for engaging in activities that create adverse side effects for society. Pigovian taxes are meant to equal the cost of the negative externality but can be difficult to determine and if overestimated can harm society.
The Pigovian tax is meant to discourage activities that impose a cost of production onto third parties and society as a whole. According to Pigou, negative externalities prevent a market economy from reaching equilibrium when producers do not take on all costs of production. Using Pigou’s analytical framework, Coase demonstrated that Pigou’s examination and solution were often wrong, for at least three separate reasons:
1.  Negative externalities did not necessarily lead to an inefficient result.
2.  Even if they were inefficient, Pigovian taxes did not tend to lead to an efficient result.
3.  The critical element is transaction cost theory, not externality theory.
Despite any counterarguments towards Pigou's theories, Pigovian taxes are prevalent in society today. A Pigovian tax is intended to tax the producer of goods or services that create adverse side effects for society. Plastic is a by-product of burning fossil fuels and results in the damage of marine life, while paper bags encourage deforestation.
All of the above products cause a negative externality, whose price does not take into consideration the cost to society.

Pigovian Tax

Profit motive is the intent to achieve monetary gain in a transaction or material endeavor.

Publication 525: Taxable and Nontaxable Income

IRC Sec. 183: Activities Not Engaged in For Profit (ATG)

The profit motive is the intent to achieve a monetary gain in a project, transaction, or material endeavor. Another way a business owner can establish profit motive is by showing that they operated for profit under the IRS's nine criteria profit motive test.﻿﻿ The nine critical factors used by the IRS to determine whether a business is run for profit or as a hobby are:
1.  Whether the activity is conducted in a business-like manner
2.  The expertise of the taxpayer or their advisers
3.  Time and effort spent in operating the business
4.  The likelihood that the business assets will appreciate in value
5.  Past success of the taxpayer in engaging in a similar (or dissimilar) venture
6.  History of income or loss of the activity
7.  Amount of any occasional profits earned
8.  Taxpayer’s financial status
9.  Any elements of personal pleasure or recreation Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit, that is, an activity undertaken with a profit motive. The idea of a profit motive was behind Adam Smith's invisible hand, which suggests that self-interested, profit-seeking individuals are broadly beneficial to society. If a company makes five different products and earns most of its profit from just two, then the profit motive view would suggest that the company dump the unprofitable lines and invest more in the profitable production lines.

Profit Motive

A proxy tax is a tax on lobbying or political expenses that exceed an allowable amount set by the IRS.

A proxy tax is a tax penalty assessed against mostly tax-exempt organizations but may have to pay taxes on funds used to pay for lobbying activities. A proxy tax is a tax penalty assessed against mostly tax-exempt organizations but may have to pay taxes on funds used to pay for lobbying activities. In that case, the tax-exempt organization will be required to make up the tax revenue forgone because dues-paying members overestimated the share of their tax-deductible dues. To maintain a bright line between such lobbying activity and the other tax-exempt activities, the IRS requires business leagues to estimate what percentage of their funds will go to lobbying versus other, tax-exempt activities. In such a case, the proxy tax rate levied would be the highest marginal corporate tax rate for that tax year.

Proxy Tax

IRS Schedule K-1 is a document used to describe the incomes, losses, and dividends of a business's partners or an S corporation's shareholders.

A Simple Guide to the Schedule K-1 Tax Form

Table of Contents
Expand Among those likely to receive a Schedule K-1 are:
S corporation shareholders
Partners in limited liability corporations (LLCs), limited liability partnerships (LLPs), or other business partnerships
Investors in limited partnerships (LPs) or master limited partnerships (MLPs)
Investors in certain exchange-traded funds (ETFs)
Trust or estate beneficiaries
It varies, depending on the individual's participation and status. Those receiving K-1-reported income should consult with a tax professional to determine if their proceeds trigger the alternative minimum tax.
Schedule K-1 is an Internal Revenue Service (IRS) tax form that's issued annually. A partner can earn several types of income on Schedule K-1, including rental income from a partnership’s real estate holdings and income from bond interest and stock dividends. What Is Schedule K-1?
Understanding Schedule K-1
IRS Schedule K-1 FAQs

Schedule K-1

Tangible personal property is a tax term describing personal property that can be physically relocated, such as furniture and office equipment.

Tangible personal property is a tax term describing personal property that can be physically relocated, such as furniture and office equipment. The property appraiser places a value on the property, and the tax amount due is calculated by multiplying the property value by the tax rate set by the tax authorities in the state. Tangible personal property is anything other than real property (land and building) that is used in the operations of a business or rental property. Tangible personal property is the opposite of real property, in a sense, as real property is immovable. Tangible personal property is a tax term describing personal property that can be physically relocated, such as furniture and office equipment.

Tangible Personal Property

A tax loss carryforward is an opportunity for a taxpayer to move a tax loss to a future time to offset a profit. 

Publication 536 (2019), Net Operating Losses (NOLs) for Individuals, Estates, and Trusts.

Treasury Department and IRS Issue Guidance for Consolidated Groups Regarding Net Operating Losses

Trump's Taxes Show Chronic Losses and Years of Tax Avoidance

Tax Implications of the Five-Year NOL Carryback

Worker, Homeownership, and Business Assistance Act of 2009

Publication 550: Investment Income and Expenses

A tax loss carryforward (or carryover) is a provision that allows a taxpayer to move a tax loss to future years to offset a profit. The CARES Act allows corporate taxpayers with eligible NOLs in tax years 2018 to 2020 to claim a refund for prior year tax returns by applying the NOL as a carryback, up to five tax years preceding the tax year of the loss. An NOL carryforward applies the current year's NOL against future years' net income to reduce its over tax liability in the future tax period. For example, if a company experiences negative net operating income (NOI) in year one, but positive NOI in subsequent years, it can reduce future profits using the NOL carryforward to record some or all of the loss from the first year in the subsequent years. The 2009 tax law allowed a five-year NOL carryback provision for tax years 2008 and 2009, rather than the two-year carryback provision that was in place at the time.

Tax Loss Carryforward

A tax umbrella refers to a company's use of tax law provisions to reduce tax liability.

Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts

A tax umbrella refers to the use by a company of the losses it sustained in previous years to offset taxes on the profits it achieves in future years. The ways in which tax umbrellas apply to individuals and companies, as well as laws and regulations regarding tax umbrellas, vary by state, which is why it's important for investors and companies to consult with qualified tax accountants when determining tax umbrellas. A tax umbrella is a provision in the tax code that allows for future tax payments to be reduced due to prior losses or tax liabilities. In 2017, Congress replaced the graduated corporate tax structure in the U.S. with a 21% flat corporate tax as part of the Tax Cuts and Jobs Act (TCJA).
Tax umbrellas create cushions for future tax relief, making them valuable assets for companies. Typically, this company would need to pay about $180,000 in taxes, but because it had a tax umbrella from the previous year, it can apply that to this year’s tax bill, reducing the payment owed.

Small Business Taxes

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Terms in Small Business Taxes