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Tax vocab matching

TermDefinition
Entity Concept Each tax unit must keep separate records and report the results of its operations separate and apart from other tax units
Conduit Entity Allocates income, losses, and deductions to its owners for inclusion in their personal returns
Assignment of Income Income from services must be taxed to the taxpayer rendering the service and income from property must be taxed to the owner of the property
Annual accounting period concept All tax payers must report the results of their operations on an annual basis
Calendar year A tax year that ends on December 31
Taxable Entity A tax entity that is liable for the payment of tax
Fiscal Year Any tax year that ends on the last day of a month other than December
Accrual Method Taxpayer reports income as earned and deductions as incurred
Cash Method Taxpayer reports income when received in cash or its equivalent and takes deductions as they are paid
Tax Benefit Rule A deduction taken in one year that is recovered in a later year is reported as income in the year of recovery to the extent that the deduction reduced taxable income
Substance over Form The taxability of a transaction is determined by the reality of the transaction rather than some contrived appearance
Related Party These taxpayers are not deemed to transact at arm's length
Ability-to-pay concept A concept that is fundamental to the progressive tax structure
Administrative Convenience Concept Allows the omission of items from the tax base for which the costs of compliance exceeds the revenue generated
All-inclusive Income Concept All income received is taxable unless some specific provision of the tax law allows exclusion of the item
Legislative Grace Concept Exclusions and deductions result from specific acts of Congress which must be strictly applied and interpreted
Capital Recovery Concept No income is realized until the taxpayer's invested capital is recovered
Recognition The reporting of an item of income or expense in a tax return
Realization The result of an arm's length transaction
Wherewithal-to-pay Income should be recognized and a tax paid when the taxpayer has the resources to pay the tax
Constructive Receipt Income is considered received when it is credited to the taxpayer's account or made unconditionally available to the taxpayer
Claim of Right Doctrine Income is subject to tax when it is received without restrictions as to its use or disposition
Investment Expenses A type of expense deduction that embodies the profit motive requirement
Business Purpose Concept To be deductible, an expenditure must be made for a business or economic purpose that is greater than any tax avoidance motive of the taxpayer
Personal Expenses A category of expenses that is specifically disallowed
Capital Recovery Concept The amount of a deduction may not exceed its cost
Created by: wesgoforth22