An individual retirement account (IRA) is a form of "individual retirement plan", provided by many financial institutions, that provides tax advantages for retirement savings in the United States. An individual retirement account is a type of "individual retirement arrangement" as described in IRS Publication 590, individual retirement arrangements (IRAs). The term IRA, used to describe both individual retirement accounts and the broader category of individual retirement arrangements, encompasses an individual retirement account; a trust or custodial account set up for the exclusive benefit of taxpayers or their beneficiaries; and an individual retirement annuity, by which the taxpayers purchase an annuity contract or an endowment contract from a life insurance company.
The Low-Income Housing Tax Credit is a dollar-for-dollar tax credit in the United States for affordable housing investments. It was created under the Tax Reform Act of 1986 (TRA86) and gives incentives for the utilization of private equity in the development of affordable housing aimed at low-income Americans. LIHTC accounts for the majority of all affordable rental housing created in the United States today. As the maximum rent that can be charged is based upon the Area Median Income ("AMI"), LIHTC housing remains unaffordable to many low-income renters. The credits are also commonly called Section 42 credits in reference to the applicable section of the Internal Revenue Code. The tax credits are more attractive than tax deductions as the credits provide a dollar-for-dollar reduction in a taxpayer's federal income tax, whereas a tax deduction only provides a reduction in taxable income. The "passive loss rules" and similar tax changes made by TRA86 greatly reduced the value of tax credits and deductions to individual taxpayers. Less than 10% of current credit expenditures are claimed by individual investors.
A gift tax is a tax imposed on the transfer of ownership of property. The United States Internal Revenue Service says, a gift is "Any transfer to an individual, either directly or indirectly, where full compensation is not received in return."
Income taxes in the United States are imposed by the federal, most state, and many local governments. The income taxes are determined by applying a tax rate, which may increase as income increases, to taxable income, which is the total income less allowable deductions. Income is broadly defined. Individuals and corporations are directly taxable, and estates and trusts may be taxable on undistributed income. Partnerships are not taxed, but their partners are taxed on their shares of partnership income. Residents and citizens are taxed on worldwide income, while nonresidents are taxed only on income within the jurisdiction. Several types of credits reduce tax, and some types of credits may exceed tax before credits. An alternative tax applies at the federal and some state levels.
Character is the type of income to calculate the taxpayer's tax liability. In the United States, the Supreme Court decided that income is an accession to wealth, however capital gain is of different character from ordinary income. Ordinary income includes earned wage income and interest income from lending.
In tax accounting, adjusted basis is the net cost of an asset after adjusting for various tax-related items.
For federal income tax purposes, the doctrine of constructive receipt is used to determine when a cash-basis taxpayer has received gross income. A taxpayer is subject to tax in the current year if he or she has unfettered control in determining when items of income will or should be paid. Unlike actual receipt, constructive receipt does not require physical possession of the item of income in question.
Under Section 1031 of the United States Internal Revenue Code, a taxpayer may defer recognition of capital gains and related federal income tax liability on the exchange of certain types of property, a process known as a 1031 exchange. In 1979, this treatment was expanded by the courts to include non-simultaneous sale and purchase of real estate, a process sometimes called a Starker exchange.
Crane v. Commissioner, 331 U.S. 1 (1947), was a case heard before the United States Supreme Court concerning the value, for tax purposes, of inherited property with a nonrecourse mortgage encumbering it. According to Boris I. Bittker, Crane "laid the foundation stone of most tax shelters."
Taxpayers in the United States may have tax consequences when debt is cancelled. This is commonly known as COD Income. According to the Internal Revenue Code, the discharge of indebtedness must be included in a taxpayer's gross income. There are exceptions to this rule, however, so a careful examination of one's COD income is important to determine any potential tax consequences.
The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), enacted as Subtitle C of Title XI of the Omnibus Reconciliation Act of 1980, Pub. L. No. 96-499, 94 Stat. 2599, 2682, is a United States tax law that imposes income tax on foreign persons disposing of US real property interests. Tax is imposed at regular tax rates for the taxpayer on the amount of gain considered recognized. Purchasers of real property interests are required to withhold tax on payment for the property. Withholding may be reduced from the standard 15% to an amount that will cover the tax liability, upon application in advance of sale to the Internal Revenue Service. FIRPTA overrides most nonrecognition provisions as well as those remaining tax treaties that provide exemption from tax for such gains.
In United States income tax law, an installment sale is generally a "disposition of property where at least 1 loan payment is to be received after the close of the taxable year in which the disposition occurs." The term "installment sale" does not include, however, a "dealer disposition" or, generally, a sale of inventory. The installment method of accounting provides an exception to the general principles of income recognition by allowing a taxpayer to defer the inclusion of income of amounts that are to be received from the disposition of certain types of property until payment in cash or cash equivalents is received. The installment method defers the recognition of income when compared with both the cash and accrual methods of accounting. Under the cash method, the taxpayer would recognize the income when it is received, including the entire sum paid in the form of a negotiable note. The deferral advantages of the installment method are the most pronounced when comparing to the accrual method, under which a taxpayer must recognize income as soon as he or she has a right to the income.
Selig v. United States, 740 F.2d 572, is a case decided by the United States Court of Appeals for the Seventh Circuit related to the amortization of intangible property.
Inaja Land Co., Ltd. v. Commissioner, 9 T.C. 727 (1947) was a United States income tax case which discussed whether, and how much, basis the taxpayer could recover to offset a gain from compensation from the government for an easement on his land. HELD:
The Tobacco MSA with New York is the particular version of the Tobacco MSA that was signed in New York City, was enabled by means of legislation in New York State, and has been interpreted since then in New York State courts.
United States v. General Dynamics Corp., 481 U.S. 239 (1987), is a United States Supreme Court case, which hold that under 162(a) of the Internal Revenue Code and Treasury Regulation 1.461-1(a)(2), the "all events" test entitled an accrual-basis taxpayer to a federal income tax business-expense deduction, for the taxable year in which (1) all events had occurred which determined the fact of the taxpayer's liability, and (2) the amount of that liability could be determined with reasonable accuracy.
The Community Renewal Tax Relief Act of 2000 is a bill that was introduced into the United States House of Representatives during the 106th United States Congress. The Act was eventually passed as part of the Consolidated Appropriations Act, 2001.
The premium tax credit (PTC) is a refundable tax credit in the United States. It is payable by the Internal Revenue Service (IRS) to eligible households that have obtained healthcare insurance by a healthcare exchange (marketplace) in the tax year. It can be paid in advance directly to a healthcare insurance company to offset the cost of monthly health insurance premiums.
