Tax Terminology

Tax Terminology

Here at PSVS we are in the trenches every day helping you navigate your way through the various complexities of your accounting-related activities. It is easy to forget that not everyone knows all the accounting-specific terminology we use daily.

We have created this fairly comprehensive glossary to supplement your knowledge and understanding and hopefully answer some of your questions.

Of course, if you have any questions send us an email or give us a call: (650) 578-1200.

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Calendar Quarter

One of four quarters of a calendar year: January through March, April through June, July through September, or October through December.

Call Option

The right to buy a stated number of shares of stock at a predetermined price (the strike price) before a specified date.

Capital Asset

Everything an individual owns and uses for personal purposes, pleasure, or investment.

Capital Gain Distributions

Amounts paid to an individual or credited to their account by regulated investment companies and real estate investment trusts (REITs). These amounts are also known as capital gain dividends.

Capitalize

To recover a cost over a period of years through deductions for depreciation, amortization, or depletion, and adding the cost to the basis of the property to which it relates.

Capitalized Interest

The unpaid interest on a loan that the lender adds to the outstanding principal balance of the loan.

Cash Settlement Option

Any option that, upon exercise, is settled by paying the owner of the option cash or other property and not the actual property underlying the option.

Cash Wages

Wages paid by cash, checks, money orders, or equivalent means. Cash wages do not include the value of food, lodging, clothing, or other such non-cash items given to an employee.

Casualty

The damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.

Charitable Contribution

A donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting anything of equal value.

Child

A natural child, stepchild, adopted child, or an eligible foster child.

Child Support

A payment that is specifically designated as child support or treated as specifically designated as child support under a divorce or separation instrument.

Chronically Ill Individual

An individual who has been certified by a licensed health care practitioner within the previous 12 months as one of the following: (1)an individual who is unable, for at least 90 days, to perform at least two activities of daily living without substantial assistance from another individual due to loss of functional capacity (activities of daily living are eating, toileting, transferring, bathing, dressing, and continence), or (2) an individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.

Church Employee

An employee (other than a minister or member of a religious order) of a church or qualified church-controlled organization that is exempt from employer Social Security and Medicare taxes.

Civil Service Annuity

Annuity benefits that are paid primarily under the Civil Service Retirement System or the Federal Employees Retirement System.

Class Life

The number of years that establishes the property class and the recovery period for most types of property for the General Depreciation System and the Alternative Depreciation System under the Modified Accelerated Cost Recovery System.

Closely Held Corporation

A corporation that, at any time during the last half of the tax year, has more than 50% in value of its outstanding stock directly or indirectly owned by five or fewer people. This type of corporation is generally not a personal service corporation.

Cohabitation

Individuals living together in an intimate relationship when not legally married.

Collapsed Loans

Two or more loans made to the same borrower that are treated by both the lender and the borrower as one loan.

Collectible

Any work of art, rug, antique, metal (such as gold, silver, and platinum bullion), gem, stamp, coin, or alcoholic beverage that is sought by a collector.

Common Stock

A type of share in the ownership of a company that usually provides the right to vote on decisions relating to the company's management. Shareholders are entitled to receive distributions of the company's profit in the form of dividends.

Common-Law Employee

An individual who performs services for an employer in return for compensation. An employee is subject to the control of the employer regarding what work is done and how, when, and where it is done.

Common-Law Marriage

A marriage in which a man and woman are considered to be married even without a license or a formal ceremony. Only certain states recognize common-law marriages.

Community Income

Income earned while married and domiciled in a community property state that is allocated to both spouses, regardless of which spouse actually earned it.

Community Property

The holdings and resources owned in common by a married couple.

Compensation

Money or other benefits given or received as payment for work or service. Compensation can include wages, salaries, bonuses, prizes, and tips an employee receives.

Condemnation

The process by which private property owned by a taxpayer is legally taken for public use without their consent.

Conduit IRA

An IRA account used as a holding account for eligible rollover distributions from an employer plan that can be rolled over to a new employer plan later.

Consent to Assessment

A written agreement between a taxpayer and the IRS that extends the statutory period of limitations

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