Industry Related Definitions
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L
Land Value
The value
of the land in a sale where the total sale price includes land as well
as any improvements to the land.
Last In, First Out (LIFO)
An
accounting method for valuing inventories for tax purposes. Under this
method, the last items purchased are treated as being the first items
sold. Ending inventory is valued using the cost of the items with the
earlier purchase dates.
Ledger
A
group or file of accounts that can be stored as pages in a book, as
cards in a tray, as tape on a reel, or magnetically on disk.
Legally Separated
Separated
under a decree of separate maintenance that requires the spouses to
live apart.
Lessee
One who rents property from another. In the case of real estate, the
lessee is also known as the tenant.
Lesser
One who
rents property to another. In the case of real estate, the lesser is
also known as the landlord.
Liability
A
debt of an individual, business, or other organization.
Lien for Taxes
The U.S.
Treasury, as part of its tax collection effort, may attach a lien (a
legal claim) on the property of a taxpayer who is delinquent in the
payment of amounts owed to the IRS and who has not made arrangements
to pay.
Lifetime Learning Credit
A
nonrefundable credit equal to 20 percent of the first $5,000 of
qualified higher education tuition and fees paid during the year on
behalf of the taxpayer, his or her spouse, or his or her dependents.
Like-Kind Exchange
An
exchange of property held for productive use in a trade or business or
for investment (except inventory and stocks and bonds) for property of
the same type. Unless different property is received (called boot),
the exchange is nontaxable in the current year. Any gain or loss is
not recognized until the property received in the exchange is sold or
disposed of. Like-kind exchanges are reported on Form 8824.
Like-Kind Property
Business
or investment properties that are the same type.
Liquidation
The
process of converting securities or other property into cash.
Liquidation Distributions
A return
of capital received because of a partial or complete liquidation
(going out of business) of a corporation. The basis of the stock on
which liquidation distributions are paid is reduced by the amount of
the distributions. Any amount received in excess of basis in the stock
is taxable. In a liquidation that results in cancellation of the
stock, a loss can be claimed the year the final distribution is
received if total distributions are less than the taxpayer's basis.
Report liquidation distributions on Schedule D, Form 1040.
Listed Property
Listed
property includes passenger autos and other property used for
transportation, property generally used for purposes of entertainment,
recreation, or amusement, computers not used exclusively at a regular
business establishment, cellular telephones, and other property to be
specified by the IRS. Restrictions apply to the depreciation of listed
property.
Load
The
portion of the price of buying shares in a mutual fund that goes for
the salesperson's fees and the costs of making the transaction and
maintaining the fund.
Lodging
A portion
of total support. Lodging includes the fair rental value of a room,
apartment, or house in which the dependent lives, a reasonable
allowance for the use of furniture and appliances, and all utilities.
Long-Term Capital Gains and Losses
Gains and
losses on the sale or exchange of capital assets that have been held
for more than 12 months. A net long-term capital gain is the excess of
long-term gains over long-term losses, or vice versa for a net
long-term capital loss.
Lower of Cost or Market Method of Inventory Valuation
Inventory
valuation considering the actual cost or the replacement cost of
merchandise on the inventory date. The lower value is used, creating a
reduced gross profit for the period in which the decline occurred. An
approximately normal gross profit is realized during the period in
which the item is sold.
Lump-Sum Distribution
Payment of
the entire amount due at one time rather than in installments. Such
distributions often occur from qualified pension or profit-sharing
plans upon the retirement or death of a covered employee. The
recipient of a lump-sum distribution may be eligible for special tax
treatment of the distribution.
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