Industry Related Definitions
Back to the Index
S
Safe Harbor
Tax regulations that allow a (usually) simpler method of determining a
tax consequence than is available following the precise language of
the Code or regulations. An example is the simplified method for
determining the taxable portion of pension distributions.
Salvage Value
The
estimated value that will be realized upon the sale or other
disposition of an asset at the end of its useful life.
Schedules
Official IRS forms used to report various types of income, deductions,
and/or credits.
Scholarships and Fellowships
Scholarships
and fellowships received by degree candidates for the payment of
tuition, fees, books, supplies, and equipment are generally excluded
from gross income. Amounts received for room and board as well as
scholarship and fellowship money received by non-degree candidates
must be included in income.
S Corporations
An elective provision permitting certain small business corporations
and their shareholders to elect special income tax treatment. Of major
significance is the fact that S corporation status usually avoids the
corporate income tax and corporate losses can be claimed by the
shareholders.
Section (followed by a number)
The section of the tax Code in which particular laws are given.
Securities
In
general, any evidence of (1) an interest in corporate stock or stock
rights or (2) an interest in any note, bond, debenture or other
evidence of indebtedness issued by a government or corporation. For
certain tax purposes, however, the definition is more limited.
Self-Employed Individuals
Taxpayers
who work for themselves. They decide when, how, and where to work,
obtain their own jobs or sales, pay their own expenses, and receive
social security and Medicare coverage through payment of
self-employment tax.
Self-Employment Income
Self-employed individuals are taxed on their net income from
self-employment and are entitled to social security and Medicare
benefits through the payment of self-employment tax.
Self-Employment Tax
For 1999,
self-employed persons are subject to social security tax of 12.4
percent on net earnings of up to $72,600 and Medicare tax of 2.9
percent on all net earnings. If a self-employed individual receives
wages from an employer that are subject to social security tax, the
amount of self-employment income subject to social security tax may be
reduced. Self-employment tax is computed on Schedule SE.
Separate Maintenance Payments
Amounts
paid to one spouse by the other spouse under a court order or
agreement while they live apart.
Service Business
A business
in which income is produced chiefly by personal services rendered.
Severance Damages
Payment
received because part of a property is condemned and the value of the
retained part is thereby decreased.
Shareholder
An
individual or entity that owns shares of capital stock.
Short Sale
A sale in
which the seller borrows the stock certificates or other property
delivered to the buyer. At a later date, the seller either purchases
similar stock or property necessary to "cover" the sale, and
delivers it to the lender or delivers to the lender stock or property
that he or she already held but did not wish to transfer at an earlier
date. For income tax purposes, there is no gain or loss on the
transaction until the short sale is covered by purchase and transfer.
Special rules apply in determining whether the gain or loss on a short
sale is a long-term or short-term capital gain or loss.
Short-Term Gain or Loss
Gain or loss on the sale or exchange of a capital asset held one year
or less.
SIMPLE Retirement Plan
Small
employers may establish a savings incentive match plan for employees
retirement plan. A SIMPLE plan can be either an IRA for each employee
or a cash or deferred arrangement, such as a 401(k) plan.
Simplified Employee Pension (SEP)
An
arrangement whereby an employer makes contributions to an employee's
individual retirement account (IRA), or a self-employed person
contributes to his own plan.
Single
The filing
status used by an unmarried taxpayer who does not qualify for any
other filing status.
Single-Purpose Agricultural Building
An
agricultural structure used for only one purpose. Examples are milking
sheds and greenhouses. Such buildings may be contrasted with, for
example, barns. Barns are generally used for a variety of farming
purposes.
Social Security and Medicare Taxes Withheld
The
employee's share of these taxes that was withheld and submitted along
with the employer's share to the IRS by the employer.
Social Security Tips
The amount
of tips reported to an employer by an employee that is subject to this
tax. Tips are also subject to Medicare tax.
Social Security Wages
Total
wages paid to an employee that are subject to this tax. This amount
does not include tips. Wages are also subject to Medicare tax.
Sole
proprietorship
A
business enterprise, the equity of which belongs entirely to one
person.
Source
document
A
business paper, such as an invoice, that is the original record of a
transaction and that provides the information needed when accounting
for the transaction.
Standard Deduction
A base
amount of income not subject to tax. The regular standard deductions
for 1999 are $4,300 for single taxpayers, $6,350 for heads of
household, $7,200 for married couples filing joint returns and
qualifying widowers, and $3,600 for married persons filing separately.
Taxpayers who are blind and/or age 65 or older have higher standard
deductions. Taxpayers who may be claimed as dependents on other
taxpayers' returns may have reduced standard deductions.
Standard Business Mileage Rate
For 1999,
two rates apply: The rate was 32.5 cents per mile for the period from
January 1 through March 31, and 31 cents per mile for the remainder of
the year.
Statements
Explanations
of various types of income, deductions, and/or credits reported on a
schedule or directly on Form 1040. Statements may or may not be
official IRS forms.
State and Local Income Tax Withheld
The
amounts withheld from an employee's pay and submitted to the state or
local tax division as an advance payment of the employee's state or
local income tax.
Statutory Employee
A worker
who is treated as an employee for social security and Medicare tax
purposes and as self-employed for income tax purposes. The
"Statutory employee" box on such a worker's Form W-2 should
be marked.
Stock Dividend
Additional
shares of stock distributed to shareholders at no cost. The number of
shares received are a percentage of the shares owned. The basis of the
original shares is generally apportioned equally to the total shares
owned after the distribution.
Stock in Trade
Property
held primarily for sale to customers in the ordinary course of
business.
Stock Split
Additional
shares of stock distributed to shareholders at no cost. The number of
shares received are a ratio of the shares owned. The basis of the
original shares is generally apportioned equally to the total shares
owned after the split.
Straddle
A
combination of a call and a put (both of which are defined elsewhere
in this glossary) written at the same time on the same number of
shares of a security at the same price during the same period of time.
The call and put parts of a straddle are generally bought by different
holders.
Straight-Line Depreciation Method
The most
commonly used method of depreciation prior to 1981. Basis less salvage
value or land value divided by useful life equals depreciation
deduction.
Student Loan Interest Deduction
An
adjustment to income (limited to $1,500 for 1999) for interest paid
during the year on qualified higher-education loans. Qualified
interest payments are those made during the first 60 months in which
such payments are required.
SUB Pay
Supplemental
unemployment benefits. These benefits are generally received from a
company-financed fund and are fully taxable as wages.
Support
The total
amount provided on behalf of an individual. Support includes food,
lodging, and other necessities as well as recreation and other
nonessential expenditures. Support is not limited to necessities and
can be as lavish as the taxpayer can afford.
Go
back to the Definition Index page
Also, check out our
certification explanation page here!
Would you like us to
add a word or phrase? Email us at
glossary@bookkeeperlist.com
