A 15% penalty surcharge on earnings retained in a corporation to avoid the higher personal income taxes to which they would be subject if paid out as dividends to the owners.
A federal tax designed to ensure that wealthy individuals, estates, trusts, and corporations pay a minimum amount of tax regardless of deductions, credits, or exemptions.
A C Corporation is a type of corporation that is taxed separately from its owners under Subchapter C of the Internal Revenue Code. This structure allows the corporation to retain earnings and provides liability protection for its shareholders.
Items that are eliminated from separate taxable income, computed on a consolidated basis, and combined with the aggregated separate taxable income (for example, net operating loss, net capital gain or loss, total charitable contributions).
Consortium relief is a modified form of group relief that applies to consortia, which allows for the surrendering of losses between consortium members and the consortium company. This serves to optimize tax efficiency in complex corporate structures.
A tax concept that posits income earned by corporations is taxed at the corporate level and should not be subject to taxation again when distributed as dividends to stockholders, thereby avoiding double taxation of the same income.
A tax deduction allowed to a corporation owning shares in another corporation for the dividends it receives. The deduction is often 70%, but in some cases, it may be as high as 100% depending on the level of ownership the dividend-receiving company has in the dividend-paying entity.
Double Taxation refers to the process under federal tax law where earnings are taxed at the corporate level and then taxed again as dividends of stockholders.
Franchise tax is a state tax, usually regressive, imposed on a state-chartered corporation for the right to do business under its corporate name.
Understanding the concept of 'franked' in accounting, particularly within the context of dividends, and its implications on tax liabilities.
Long-Term Capital Gain (Loss) refers to the profit or loss earned from the sale of securities or capital assets held for more than 12 months. This gain or loss has special tax implications for individual and corporate taxpayers.
MCT can refer to an individual recognized as a Member of the Association of Corporate Treasurers or it can stand for mainstream corporation tax, a standard rate of corporate tax applied to profits of companies.
A mutual fund is a type of regulated investment company that pools money from shareholders to invest in a diversified portfolio of stocks, bonds, and other securities.
A Personal Holding Company is a corporation that derives a substantial portion of its income from passive sources and is closely held by a small number of individuals to avoid personal taxes on investment and personal service income.
A Regulated Investment Company (RIC) is a type of investment company in the United States that is eligible to pass through income to shareholders without having to pay taxes at the corporate level, provided it complies with certain regulatory requirements outlined by the Internal Revenue Code.
Surplus Advance Corporation Tax (ACT) refers to the excess amount of advance corporation tax paid within an accounting period that surpassed the maximum amount allowable for set-off against gross corporation tax. This taxation mechanism was abolished effective 1 April 1999.
A tax exemption refers to a statutory provision which reduces or eliminates the obligation to pay a financial charge (tax) that would otherwise be imposed by a governing body.
A tax loophole is an ambiguity or omission in the tax code that allows individuals or corporations to reduce their tax liabilities legally. These loopholes are often the result of complex tax laws and can be used to advantage through strategic financial planning.
Thin capitalization refers to an arrangement where a company is financed through a high level of debt compared to equity, typically involving intercompany loans within a multinational entity. This is often structured to gain tax advantages by exploiting interest payment deductions.
Understanding the concept of Unrelated Business Income (UBI) which refers to the income generated from activities unrelated to a not-for-profit organization's tax-exempt purpose. A corporate tax is applied to such income to ensure fair competition with taxable organizations.
