What Is “Business use of car”?
05/29/2026
Business use of a car refers to using a vehicle for work-related tasks, such as visiting clients, picking up supplies, or traveling to a secondary job site. If you use your car for these purposes, the IRS allows you to deduct a portion of the vehicle’s operating costs to lower your taxable income. 1. Meaning
What Is “Book-Tax Difference”?
05/29/2026
A book-tax difference is the gap between the net income reported on a company’s financial statements (its “books”) and the taxable income reported to the IRS. It occurs because the rules used for standard accounting often differ from the specific laws found in the U.S. Tax Code. 1. Meaning of “Book-Tax Difference” In plain English,
What Is “Brokerage statement”?
05/29/2026
A brokerage statement is a periodic document provided by a financial institution that summarizes the activity, holdings, and market value of an investment account. It serves as the official record of your portfolio, detailing every buy, sell, and dividend payment received during a specific timeframe. 1. Meaning of “Brokerage statement” In plain English, a brokerage
What Is “Book Income”?
05/29/2026
Book income is the net profit a business reports on its own financial statements or “books” according to standard accounting rules. It represents the amount of money a company has earned after all expenses are subtracted, but before adjusting those numbers for IRS tax laws. 1. Meaning of “Book Income” In plain English, book income
What Is “Assets”?
05/29/2026
Assets are resources or items of value owned by an individual or a business that are expected to provide a future benefit. For tax purposes, assets are not just things you own; they are investments or property that can be depreciated, sold for a gain, or used to generate income. Meaning of “Assets” In plain
What Is “Balance Sheet”?
05/29/2026
A balance sheet is a financial “snapshot” that shows exactly what a person or business owns and owes at a specific moment in time. It provides a clear picture of your financial health by balancing your assets against your liabilities and equity. Meaning of “Balance Sheet” In plain English, a balance sheet is a report
What Is “Amount realized”?
05/29/2026
The amount realized is the total value you receive when you sell, exchange, or otherwise dispose of an asset. It includes not just the cash you walk away with, but also the fair market value of any property or services received and any of your debts that the buyer takes over. 1. Meaning of “Amount
What Is “Allocated tips”?
05/29/2026
Allocated tips are amounts that an employer assigns to tipped employees when the total tips reported by the entire staff fall below a specific percentage of the establishment’s gross sales. This process is a requirement for larger food and beverage businesses to ensure tip reporting meets IRS expectations. 1. Meaning of “Allocated tips” In plain
What Is “Adjusted basis”?
05/29/2026
Adjusted basis is the net cost of an asset after accounting for increases (like improvements) or decreases (like depreciation) during the time you owned it. It is the “true” investment amount the IRS uses to determine whether you made a profit or took a loss when you sell that asset. 1. Meaning of “Adjusted basis”
What Is “1099 income”?
05/29/2026
1099 income refers to money earned from sources other than a traditional employer who pays you a regular salary or hourly wage. It is “gross” income, meaning the person or entity paying you does not withhold any taxes for Social Security, Medicare, or income tax before sending you the money. 1. Meaning of “1099 income”