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Questions and Answers
A tax ______ is an amount of money that can be offset against a tax liability.
A tax ______ is an amount of money that can be offset against a tax liability.
deduction
______ property. Property held primarily for sale to customers.
______ property. Property held primarily for sale to customers.
inventory
Tax-free ______. When like-kind property is exchanged, allowing taxation of the gain to be deferred.
Tax-free ______. When like-kind property is exchanged, allowing taxation of the gain to be deferred.
exchange
Initial _____ (acquisition cost).
Initial _____ (acquisition cost).
______ tax rate refers to the rate that will apply to the last dollar that a taxpayer earns.
______ tax rate refers to the rate that will apply to the last dollar that a taxpayer earns.
A compulsory contribution to state revenue, levied by the government on workers' income and business profits.
A compulsory contribution to state revenue, levied by the government on workers' income and business profits.
A capital ____ refers to profit that results from a sale of a capital asset, such as stock, bond or real estate, where the sale price exceeds the purchase price.
A capital ____ refers to profit that results from a sale of a capital asset, such as stock, bond or real estate, where the sale price exceeds the purchase price.
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Study Notes
Taxation Concepts
- A tax credit is an amount of money that can be offset against a tax liability.
- Inventory property is property held primarily for sale to customers.
- A tax-free exchange, also known as a Section 1031 exchange, allows taxation of the gain to be deferred when like-kind property is exchanged.
- Initial acquisition cost refers to the cost of acquiring a property or asset.
- Marginal tax rate is the rate that will apply to the last dollar that a taxpayer earns.
Tax Terms
- Income tax is a compulsory contribution to state revenue, levied by the government on workers' income and business profits.
- A capital gain refers to profit that results from a sale of a capital asset, such as stock, bond, or real estate, where the sale price exceeds the purchase price.
Tax Rules and Expenses
- A tax form is a federal government document that details the rules individuals and businesses must follow in paying taxes to the government.
- A deductible expense is an expense that can be used to reduce taxable income.
- A trade or business generally includes any activity carried on for the production of income from selling goods or performing services.
- Taxable income includes any economic benefit realized by a taxpayer that isn't excluded from income by the tax code.
- Capital expenditures are a type of expenditure.
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