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Tax vocab matching
| Term | Definition |
|---|---|
| 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
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