Accumulated Adjustments Account (AAA):
An accumulated Adjustment Account is a ‘tax’ account of an S corporation that generally reflects the accumulated undistributed net income of the corporation for the corporation’s post-1982 years. It is an account of the S corporation and is not apportioned among shareholders.
Accumulated Earnings and Profits:
Accumulated earnings and profits (E&P) are an accounting term applicable to stockholders of corporations. Accumulated earnings and profits are a company’s net profits after paying dividends to the stockholders, serving as a measure of the economic ability of a corporation to pay such cash distributions.
Coronavirus Aid, Relief, and Economic Security Act (CARES Act):
The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, is a $2.2 trillion economic stimulus bill passed by the 116th U.S. Congress and signed into law by President Donald Trump on March 27, 2020, in response to the economic fallout of the COVID disease.
Employee Retention Credit:
The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make.
Fair Market value:
The term “fair market value” is used throughout the Internal Revenue Code among other federal statutory laws in the USA including Bankruptcy, many state laws, and several regulatory bodies. In litigation in many jurisdictions in the United States, the fair market value is determined at a hearing.
Fringe Benefit:
A fringe benefit is any nonwage payment or benefit (e.g., pension plans, profit-sharing programs, vacation pay, and company-paid life, health, and unemployment insurance programs) granted to employees by employers. It may be required by law, granted unilaterally by employers, or obtained through collective bargaining.
Net Operating Loss:
Under U.S. Federal income tax law, a net operating loss occurs when certain tax-deductible expenses exceed taxable revenues for a taxable year. This loss is carried forward in the future to set off future profits. Hence, it reduces the tax liability of the business.
Pass-through Entity:
A flow-through or pass-through entity is a legal entity where income flows through an investor or owner. This means that the income of the entity is treated as the income of the investors or the owners. It is also known as fiscally transparent entities.
Paycheck Protection Program (PPP):
The Paycheck Protection Program is a loan program established by the United States federal government in 2020 through the CARES Act to help certain businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses continue paying their workers. It allows entities to apply for low-interest private loans to pay for their payroll and certain other costs.
Qualified Business Income (QBI) Deduction:
Qualified business income deduction is also called Section 199A deduction. This deduction is available to sole proprietorships, partnerships, S corporations, and some trusts and estates. This deduction allows the eligible taxpayers to deduct up to 20% of their qualified business income, plus 20% of their qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income.
S-Corporation:
An S-Corporation is referred to a corporation that meets specific internal revenue code requirements. It is a closely held corporation that makes a valid election to be taxed under subchapter S of chapter 1 of the Internal Revenue Code.
