Basis is a business term used to identify the value of an individual or entity’s investment in an entrepreneurial endeavor. It is customarily linked to taxation as this term is used by the Internal Revenue Code to determine gain or loss. To further compound its meaning ‘basis’ is sometimes substituted for the term ‘equity’.
Every industry has some form of IRS code and regulation attached. Learn about these specialty taxes, from the local revenue tax to federal credits associated with particular industries.
An employer identification number (EIN) is the business equivalent of a Social Security number. A unique identifier is assigned to the business for use in communicating and complying with the Internal Revenue Service. Just like a Social Security number, it is a 9 digit number with the first two digits as the prefix.
Prior to initiating operations, every business spends money to develop the idea and create the legal entity. These types of costs are referred to as ‘Organizational Expenses’. There are several different types of organizational expenditures. These include research and development, legal and start-up costs.
Many people turn their hobbies into a business operation. Not so much to make a living or make big profits, but more to help offset the costs of the hobby. Whenever you go to one of those community fairs, the vendors at the respective booths are mostly folks selling a product that is direct outcome of their hobby. The bands that play on stage, they make some money, but never enough to offset the cost of instruments, gear and transportation. But they enjoy entertaining folks and they hope someday they’ll get discovered.
Section 6033 of the Internal Revenue Code requires tax exempt organizations to file an annual report. Form 990 fulfills this requirement. Many citizens utilize the information from Form 990 to evaluate the non-profit organization they donate to annually. The 990 covers much of the information any citizen desires to know about the charity of their choice.
When an individual passes away, his/her will or trust identifies a representative to administer his/her estate. This representative is referred to as the executor (male) or executrix (female) and is generally approved or assigned by the local circuit court. The Internal Revenue Service tasks this representative to file a final personal return and information returns until the estate is completely transferred to the heirs.
The fuel tax credit is a federal refundable tax credit for taxes paid on fuel purchased for off road use. Every gallon of fuel sold at the pump has an 18.3 cent tax assessed by the federal government designated to highway construction and maintenance. When that gallon of fuel is purchased for non-transportation purposes, the purchaser is allowed to receive a refund for the tax paid.