Tax consequences of liquidating


22-Jan-2016 04:03

AUDIT -- Examination and verification carried out by an outside agency (such as an accountancy firm or the tax authorities) of a taxpayer’s books and accountants and/or the general accuracy of returns and declarations, either as a routine operation, or where evasion is suspected.

AUXILIARY ACTIVITIES -- A fixed place of business through which an enterprise exercises solely an activity which has, for the enterprise, a preparatory or auxiliary character, is, under tax treaties generally, deemed not to be a permanent establishment.

ALIENATION OF INCOME -- Term generally used to describe the transfer of the right to receive income from a source while not necessarily transferring the ownership of that source to the same person.

ALLOCATION -- The apportionment or assignment of income or expense for various tax purpose, e.g., between permanent establishments in various jurisdictions ALLOWANCE -- Deduction or exemptions generally made in computing income taxes, inheritance and gift taxes and some forms of sales taxes.

ALIEN, TAX TREATMENT OF -- A person who is not a citizen of the country in which he or she lives.

In general, most countries do not distinguish between nationals and aliens for tax purposes; rather tax liability is based on residence and/or domicile.

ADMINISTRATIVE OFFICE -- Office frequently located in a country other than that of the headquarters office, the parent company or country of operation.

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AGGREGATION -- Term used to denote the adding together of the taxpayer's income from all sources in order to determine the applicable tax rate for income tax purposes.

ARM'S LENGTH TRANSACTION -- A transaction among parties, each of whom acts in his or her own best interest.

ASSESSMENT -- Act of computing the tax due ASSOCIATED ENTERPRISES -- Generally speaking, enterprises are associated where the same persons participate directly or independently in the management, control or capital of both enterprises, i.e. ATTRIBUTION RULES -- Rules that create ownership by attributing stock to one party even though the shares are legally owned by another party; often called constructive ownership of stock.

ARBITRAGE -- Process of buying a commodity (which may include currency or securities) and simultaneously selling it in another market in order to profit from price differentials.

ARBITRAGE, TAX -- Process of entering into a tax motivated transaction (i.e.to obtain profit from the application of tax rules).