| Term |
Definition |
| Bad Debts |
Business
accounts receivable that have been
included in income in a prior year that
are uncollectible, legally binding debts
owed to the taxpayer that are totally
worthless and uncollectible, and debts
the taxpayer must pay that he or she
guaranteed in connection with his
business or for a profit may be
deductible as bad debts. |
| Bankruptcy |
For tax
purposes, a formal petition filed in a
Bankruptcy Court under Chapter 7, 11, 12,
or 13 of Title 11 of the U.S. Code. |
| Basis |
The amount
assigned to an asset from which gain or
loss is determined for income tax
purposes when the asset is sold. For
assets acquired by purchase, basis is
cost. Special rules govern the basis of
property received by virtue of another's
death or by gift, the basis of stock
received on a transfer of property to a
controlled corporation, the basis of the
property transferred to the corporation,
and the basis of property received upon
the liquidation of a corporation. |
| Basis of
Stock |
If purchased,
the amount paid for the stock. If the
stock is received as a gift, basis is
generally the basis of the previous owner
or the fair market value when received.
The basis of inherited stock is usually
its fair market value on the date of the
decedent's death. |
| Bearer Bond |
A bond that has
no owner's name registered on the books
of the issuing company and is therefore
payable to the holder. |
| Bequest |
A gift by will
of personal property. A bequest is not
includable in the income of the recipient.
Basis is usually the value of the
property at the decedent's death. If a
bequest of money is to be paid at
intervals, then to the extent that it is
paid out of income from property, it is
taxable income to the recipient. |
| Bond |
A note obliging
a corporation or governmental unit to
repay, on a specified date, money loaned
to it by the bondholder. The holder
receives interest for the life of the
bond. If a bond is backed by collateral,
it is called a mortgage bond. If it is
backed only by the good faith and credit
rating of the issuing company, it is
called a debenture. |
| Boot |
Cash or property
of a type not included in the definition
of a nontaxable exchange. The receipt of
boot will cause an otherwise tax-free
transfer to become taxable to the extent
of the lesser of the fair market value of
the boot or the realized gain on the
transfer. Examples of nontaxable
exchanges that could be partially or
completely taxable due to the receipt of
boot include transfers to controlled
corporations and like-kind exchanges. |
| Business
Assets |
Assets used in a
trade or business or used to produce
rental or royalty income. |
| Business Bad
Debts |
Business
accounts receivable that have been
included in income that are
uncollectible, legally binding debts owed
to you that are uncollectible, and debts
you must pay that you guaranteed in
connection with your business or for a
profit may be deductible as bad debts. |
| Business
Gifts |
The cost of
qualified business gifts is deductible to
a maximum of $25 per year per client or
customer. The $25 limit does not apply to
promotional items costing $4 or less on
which the taxpayer's name is clearly
imprinted. |
| Business-Use
Property |
Property used
for the production of income. Examples
include rental houses, machinery,
factories, office buildings, and similar
items. |
