Unit 6 Vocabulary

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

Schedule E

A form one files with the IRS to report the revenues and expenses from leasing of real estate, activities from S-corporations, REMICs, trusts, or estates, partnerships, or royalties.

Business License

A legal document that grants you the right to operate a business in your city.

1120

C Corps Income tax returns - does not have K-1s. Form 1120 is the U.S. corporation income tax return. It is an Internal Revenue Service (IRS) document that American corporations use to report their credits, deductions, losses, gains and income. It also helps corporations find out how much income tax they need to pay, according to the IRS.

DBA

DBA stands for "Doing Business As". This term refers to a trade name, trading name, or business name which is a pseudonym used by companies that do not operate under their registered company name. For example, business owner John Smith might file the Doing Business As name "Smith Roofing." Corporations and limited liability companies (LLCs) may register DBA names for specific lines of business. For example, Helen's Food Service Inc. might register the DBA "Helen's Catering." usually found in Schedule C Example: Melanie Koff DBA Melanie's Flowers for a flower shop

Articles of Incorporation

Document the creation of a corporation

25% Ownership

For borrowers who have less than 25% ownership of a partnership, S corporation, or limited liability company (LLC), ordinary income, net rental real estate income, and other net rental income reported on IRS Form 1065 or IRS Form 1120S. Schedule K-1 - may be used in qualifying the borrower provided the lender can confirm the business has adequate liquidity to support the withdrawal of earnings. If the Schedule K-1 provides this confirmation, no further documentation of business liquidity is required. If over 25% the lender must confirm the business has adequate liquidity to support the withdrawal of earnings. The lender may use discretion in the method used to confirm the business has adequate liquidity.

Distributions

Funds that are administered or issued to an individual or business.

Guaranteed Payments

Guaranteed payments are those made by a partnership to a partner that are determined without regard to the partnership's income. The partnership generally deducts guaranteed payments on Form 1065, line 10, as a business expense. They are also listed on Schedules K and K-1 of the partnership return. The individual partner reports guaranteed payments on Schedule E (Form 1040) as ordinary income, along with his or her distributive share of the partnership's other ordinary income.These kinds of payments eliminate the risk of a partner making personal contributions of time or property and then never getting compensated if the partnership does not prove to be successful. The word "guaranteed" refers to the fact that these kinds of payments—known as first-priority distributions—are made without regard to the partnership's profitability.

LLCs

Limited Liability Company. This is a private company that can structure its business as either a partnership or a sole proprietorship. Can file 1065, 1120S, or Schedule C. Typical LLCs include coffee shops, restaurants, gyms, bookstores, and clothing boutiques.

Cash Flow

Movements of money into and out of a business, typically categorized as cash flows from operations, investing, and financing.

Form 8825

Schedule E for corporations rental properties

Solvency

Solvency is the ability of a company to meet its long-term debts and financial obligations. The quickest way to assess a company's solvency is by checking its shareholders' equity on the balance sheet, which is the sum of a company's assets minus liabilities.

1120 S

Tax return to report the income, gains, losses, deductions, credits, etc., of a domestic corporation or other entity for any tax year covered by an election to be an S Corporation. The term "S corporation" means a "small business corporation". Earnings from an S Corp are distributed "pre-tax". Unlike C Corps, S Corps file an 1120-S but do not pay income tax at a corporate level. This corporate structure permits passing income, losses, deductions, and credits through to the shareholders. Each shareholder will receive a K1 which accompanies the 1120-S, for them to complete their 1040. From 1-100 individual shareholders.Shareholders pay for S-Corp income tax at the individual level via the K1

Balance Sheet

The Balance Sheet provides information such as the assets and liabilities of the business which allows us to perform the financial solvency analysis. (Required if Schedule L is not available or filed in the business tax returns)

1040

The IRS 1040 form is one of the official documents that U.S. taxpayers use to file their annual income tax return. The 1040 form is divided into sections where you report your income and deductions to determine the amount of tax you owe or the refund you can expect to receive. Depending on the type of income you report, it may be necessary to attach additional forms, also known as schedules. (Schedule 1,2,3,A,B,C,D,E,F,H,J,R, SE, and 8812)

Schedule C

The Schedule C (Form 1040 or 1040-SR) is used to report income or loss from a business a person operated or a profession a person practiced as a sole proprietor. An activity qualifies as a business if the primary purpose for engaging in the activity is for income or profit and a person is involved in the activity with continuity and regularity. " S business that legally has no separate existence from its owner. Income and losses are taxed on the individual's personal income tax returns.

P+L

The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a fiscal quarter or year. It should support the qualifying income.

1065

a Partnership tax return used to declare the profits, losses, deductions, and credits of a business partnership. In addition to the 1065 tax form that is filed, the partnership must also submit a Schedule K-1 for each of the partners. The form 1065 gives the IRS a snapshot of the company's financial status for the year. This form is typically filed by domestic partnerships such as, LLC's, foreign partnerships with income in the U.S. and nonprofit religious organizations.

K-1

an Internal Revenue Service (IRS) tax form issued annually for an investment in a partnership. The purpose of the Schedule K-1 is to report each partner's share of the partnership's earnings, losses, deductions, credits, and percentage of ownership. Schedule K-1 serves a similar purpose as Form 1099.

Depreciation

is the decrease in the value of assets and the method used to reallocate, or "write down" the cost of a tangible asset (such as equipment) over its useful life span. Businesses depreciate long-term assets for both accounting and tax purposes.

Business Bank Statements

statements from the account that is solely used for business transactions and the account holder is the business itself. Typically this document is used to support the profit and loss statement the borrower provides. It allows our underwriting team to do a cash-flow analysis as the bank statement provides an overview of what income is coming in and the current expenses of the business.

Liquidity

the availability of liquid assets to a market or company. Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price.Cash flow out of the business.


Kaugnay na mga set ng pag-aaral

final pt2QA Exercise #2 04/12/19, Practice Quiz 12.1 (RHIA & RHIT), Practice Quiz 12.2 (RHIA & RHIT), Practice Quiz 12.3 (RHIA & RHIT), Final Quiz 12.1 (RHIA & RHIT, Practice Quiz 11.1 (RHIA & RHIT), Practice Quiz 11.2 (RHIA), Final Quiz 11.1a (RHIT),

View Set

Human Sexual Behavior Chapter 11

View Set

Building Construction Chapter 10

View Set

SAU5 Rigid Motion Vocabulary and Key Concepts

View Set

Chapter 2: Hardware and Software

View Set

Issues In Physical Science Unit A and B

View Set