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Found of Taxation
Ch. 11 The Corporate Taxpayer
| Term | Definition |
|---|---|
| closely held corporations | corporation privately owned by a relatively small number of shareholders. |
| publicly held corporation | corporation with outstanding stock traded on an established securities market |
| limited liability | a legal characteristic of the corporate form of business: corporate shareholders are not personally liable for the unpaid debts of the corporation |
| unlimited life | a legal characteristic of the corporate form of business: A corporation’s legal existence is not affected by changes in the identity of its shareholders |
| free transferability | a legal characteristic of the corporate form of business: shareholders can buy and sell corporate stock with maximum convenience and minimal transaction cost |
| buy-sell agreement | a binding agreement that restricts the conditions and terms under which shareholders may dispose of corporate stock |
| centralized management | a legal characteristic of the corporate form of business: Corporations are managed by a board of directors appointed by and acting on behalf of the shareholders |
| affiliated group | a parent corporation and its 80 percent or more controlled subsidiaries |
| consolidated tax return | a single Form 1120 reporting the combined results of the operations of an affiliated group of corporations |
| nonprofit corporations | a corporation formed for philanthropic purposes and, as a result, exempt from the federal income tax |
| dividends received deduction | a corporate deduction equal to a percentage of dividend income received from other taxable domestic corporations and certain foreign corporations |
| tax credit | a direct reduction in tax liability |
| general business credit | the aggregate of numerous different tax credits available to business enterprises |
| rehabilitation credit | a business credit equal to a percentage of the cost of rehabilitating certified historic structures |
| alternative minimum tax (AMT) | a second federal tax system parallel to the regular tax system. Congress enacted the AMT to ensure that every individual pays at least a minimal tax every year |
| minimum tax credit | AMT liability carried forward indefinitely as a credit against future regular tax liability |
| underpayment penalty | the penalty imposed by the Internal Revenue Code on both individuals and corporations that fail to make required estimated payments of current tax on a timely basis |
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