tax

 Alternative Minimum Tax.  A tax mechanism that calculates taxable income after certain deductions and tax preferences are made.  The AMT ensures that high-income individuals and entities pay a certain amount of income despite favorable tax treatment.

Definition

Short-term debt that a company owes to its suppliers for products received before payment is made. Accounts payable entries are listed under "Current Liabilities" in the business' balance sheet and the items are removed once the account has been paid.

Illustrative caselaw

See, e.g. United States v. Richman, 93 F.3d 1085 (2d Cir. 1996).

Definition

Any method of depreciation used by businesses for accounting or tax purposes that allows greater deductions in the earlier years of the life of a company asset, as opposed to the straight-line depreciation method.

Accelerated depreciation can be a useful tax incentive because it permits companies to defer payment of corporate income taxes by reducing the amount of taxable income each year.  This in turn results in increased cash flow, encouraging companies to purchase more assets.

Definition

An irrevocable trust created by a married couple to avoid probate and minimize federal estate tax. An AB trust is created by each spouse placing property into a trust and naming someone other than his or her spouse as the final beneficiary of that trust. Upon the death of the first spouse, the surviving spouse does not own the assets in that spouse's trust outright, but has a limited power over the assets in accordance with the terms of the trust.

Definition

1)  A harmonious agreement, especially between countries. 

2)  An offer to substitute a different obligation for one that was previously owed, plus the acceptance of that offer.  Either of the parties involved can propose an accord.  If the newly substituted obligation is actually performed, the performance is called a satisfaction.  See Accord and satisfaction.

Definition

Abbreviation for accounts receivable.

Definition

See accounts receivable.

Definition

Money owed to a business by another business or individual in exchange for property or services that were provided on credit.  The settlement of an account receivable begins by sending an invoice to the customer.  A company enters accounts receivable under "current assets" on its balance sheet. 

Definition

Definition

A type of savings account made possible by federal law.  By creating a financial plan under 26 U.S.C. 401(k), employers can help their workers save for retirement while reducing taxable income.  Workers can choose to deposit part of their earnings into a 401(k) account on a pre-tax basis.  Furthermore, interest earned on money in a 401(k) account is never taxed before funds are withdrawn.