Glossary Archives - Action Tax

Z

Action Tax — Sun, 25 Aug 2013 15:22:53 +0000

Zero Coupon Bond

A bond that makes no periodic interest payments, but sells at a deep discount from its face value. At the maturity date, the investor receives the face value of the bond plus the interest that has accrued.

The post Z appeared first on Action Tax.

Y

Action Tax — Sun, 25 Aug 2013 15:20:37 +0000

*Yield*	An investment’s annual gain or loss. Yield is generally expressed as a percentage.
*Yield to Maturity (YTM)*	The total return on a long-term interest-bearing investment, such as a bond, that is held until its maturity date.

The post Y appeared first on Action Tax.

W

Action Tax — Sun, 25 Aug 2013 15:18:24 +0000

*Waiver of Premium*	An insurance policy rider that waives premium payments if the insured becomes permanently disabled.
*Walk-In Electronic Filing*	If you need help preparing your taxes visit the Volunteer Income Tax Assistance (VITA) office nearest you. Many VITA offices have IRS representatives who can help you fill out your forms and then transmit the information on your forms electronically.
*Whole Life Insurance*	A type of life insurance that provides coverage for the insured’s entire life as long as the policyholder pays the premiums. Whole life insurance also has a cash value component that can be drawn upon to meet financial needs.
*Withholding (‘Pay-as-you-earn’ taxation)*	A system that takes a certain amount from an employee’s paycheck to pay for, completely or partially, that employee’s income tax for the year. This money is used to pay for federal income taxes, state and local income taxes, federal social security and Medicare taxes.
*Withholding Allowance*	An allowance an individual claims on a W-4 Form. It is mainly used to assist an employer in calculating the amount of income tax to withhold from an employee’s paycheck. The more allowances you wish to claim, the less income tax will be withheld from your paycheck. You can claim one allowance for yourself, one for your spouse, and one for each of your dependents.
*Working Capital*	Money that ensures a business’s ability to operate on a daily basis.
*Write-off*	To transfer an item that was an asset to an expense account. For example, to transfer an uncollectable account receivable to bad debts expense.

The post W appeared first on Action Tax.

V

Action Tax — Sun, 25 Aug 2013 15:16:09 +0000

*Valuation Day*	A date established by law as the basis of one method of valuation for the calculation of capital gains or losses for income tax purposes.
*Variable Interest Rate*	An interest rate that fluctuates according to a measure or an index. Variable rates on loans are usually capped to protect borrowers from dramatic increases in the interest rate.
*Variance*	Difference between standard cost and actual cost. Also, the difference between an actual revenue or expense item and the budget for that item, or budget variance.
*Vertical Equity*	Vertical equity states that people in different income groups pay different rates of taxes. Our current tax system is one of vertical equity.
*Vesting*	The process leading to a future time when money or property held in trust will belong to a person. This usually refers to the scheduled confirmation of ownership rights in qualified employee benefit plans.
*Volatility*	The relative rate at which the price of a security moves up and down, derived by calculating the annualized standard deviation of daily changes in price.
*Voluntary Compliance*	Your mom might order you to clean up your room but the IRS doesn’t have time to tell every single taxpayer to file taxes correctly and on time. There are millions of taxpayers in this country, after all. This system relies on citizens to report their income, calculate tax liability and file tax returns on time. Everyone has to grow up sometime. Check it out.
*Voluntary Employee Contribution*	A contribution by an employee to a retirement plan in excess of mandatory contributions to his or her plan account.
*Volunteer Income Tax Assistance*	Available in most communities are Volunteer Income Tax Assistance (VITA) sites to help with tax return preparation. People volunteer their time to help their neighbors. The service is free to those with limited or moderate income people, non-English speaking, the elderly and the disabled. Some VITA sites even offer free electronic filing. If you want to know more about a VITA site in your community or volunteering your time, call the IRS at 1-800-829-1040. Check out IRS e-file.

The post V appeared first on Action Tax.

U

Action Tax — Sun, 25 Aug 2013 15:08:55 +0000

*Ultra Vires*	Traditionally, the purpose of a corporation was closely spelled out in its articles of incorporation. If the corporation acted beyond its described purposes these actions were unenforceable against the corporation or by the corporation. However, most modern statutes allow corporate purposes to be any lawful activity. Therefore, the importance of this doctrine has greatly diminished.
*Unanimous Written Consent*	Nearly all states allow directors to act without a meeting if they each give their consent
*Underwriting*	The process by which an insurance company determines whether it can assume the risk of a specific life insurance policy. Alternatively, this can refer to the business of investment bankers, who purchase new issues of securities and resell them to the public.
*Unemployment*	The state of being “not in gainful employment,” in which a person may be eligible for some state and federal benefits.
*Uniform Gift to Minors Act (UGMA)*	The law that allows an adult to contribute to a custodial account in a minor’s name without having to establish a trust or name a legal guardian. The UGMA is called the Uniform Transfer to Minors Act (UTMA) in some states.
*Universal Life Insurance*	A type of life insurance policy that allows the holder to vary the amount and timing of premiums and change the death benefit based on the policyholder’s changing needs and circumstances. It usually includes a cash value savings feature.
*Unsecured Debt*	Debt that is not guaranteed by collateral.

The post U appeared first on Action Tax.

T

Action Tax — Sun, 25 Aug 2013 15:01:11 +0000

*Tangible Asset*	Anything that has a value and physically exists, such as land, machines, equipment or currency.
*Tariff Duty*	A tax on imports collected by state custom authorities.
*Tax Avoidance*	Legal minimization of the impact of taxation.
*Tax Credit*	A dollar-for-dollar reduction in the amount of taxes an individual owes.
*Tax Credits*	The amount of money that tax payers can deduct directly from their taxes.
*Tax Deductions*	The amount that a person or business can subtract from their taxable income. The more you can deduct, the less you pay.
*Tax Evasion*	Illegal attempt to escape the impact of taxes.
*Tax Exempt*	Not subject to general taxation.
*Tax Liability*	The total amount of tax that a person must pay. Taxpayers pay this through withholdings, estimated tax payments and payments attached to their yearly tax forms.
*Tax Lien*	A claim against property for unpaid taxes, which lasts until the claim is satisfied or a statute of limitations takes effect.
*Tax Shelter*	Investment to acquire something of value with the expectation it will produce income and reduce or defer taxes.
*Tax Shift*	One lucky person or group is able to shift a tax that they’re supposed to pay to someone else.
*Tax Withholdings*	The portion that an employer takes from an employee’s paycheck to pay part or all of the employee’s taxes.
*Tax-Exempt Bond*	A bond issued by a municipal, county or state government with interest payments that are not taxed.
*Tax-Sheltered Annuity*	An annuity that allows employees of government and nonprofit organizations to make pretax contributions to a retirement plan up to a predefined annual limit.
*Taxable Income*	A taxpayer’s gross income minus all allowable adjustments.
*Taxes*	Taxes are required payments of money to the government. This money is used to make your life better. You might not even realize it, but tax money provides public goods and services for the community as a whole. Roads, schools, law enforcement and public libraries are just some of the many benefits of paying taxes. Show a little gratitude and pay your fair share.
*TeleFile*	TeleFile is a method of filing a tax return, in some states, using a touch-tone phone to send tax information directly to an IRS computer.
*Tenants by the Entirety*	A form of property ownership used by married couples where each spouse theoretically owns 100% of the property. After the first spouse dies, complete ownership passes to the surviving spouse without tax and probate.
*Tenants in Common*	Two or more owners who have undivided, but not necessarily equal, ownership of a property.
*Term Certain*	A payout option in an annuity contract that provides income for a specified period of time.
*Term Insurance*	A type of life insurance that pays benefits only if the insured dies within a specific period. Term insurance has no cash value, and premiums usually rise with the insured’s age.
*Time Horizon*	The length of time for which an investor plans to hold investments.
*Tips*	Gratuity paid by a customer to an employee in appreciation of service. Employees who earn more than $20 a month in tips must report the amount to their employer.
*Title*	A document that identifies legal ownership of property, used to transfer ownership from a seller to a buyer.
*Title Insurance*	A type of insurance that protects against loss due to a defect in a real estate title, such as an ownership dispute or a lien against property.
*Title Search*	An inspection of city, town or county records to determine the legal owner of a piece of real estate property and to find any applicable liens, mortgages or future interests.
*Total Disability*	Inability to complete most job requirements based on a physical or mental disability.
*Total Return*	The gross annual yield on an investment, including capital appreciation or distributions, interest, dividends and personal taxes.
*Transaction Fee*	A charge for a credit-related activity, such as receiving a cash advance or using an ATM.
*Transaction Taxes*	A levy on the sale of goods and services. See sales tax.
*Treasuries*	Negotiated debt obligations that the U.S. government regularly offers at public auction through the Federal Reserve Bank. Treasury bills, bonds and notes have varying maturities and yields.
*Treasury Bill*	A negotiable debt obligation issued by the U.S. government, also called a T-bill. Treasury bills mature in one year or less, are exempt from state and local taxes, and range in value from $10,000 to $1 million; they sell at a discount based on current interest rates.
*Treasury Shares*	Shares of stock that were issued and later acquired by the corporation.
*Trial Balance*	The listing and totaling of all balances in a ledger to verify that total debits equal total credits.
*Triple Net Lease*	A lease in which the lessee assumes payments for maintenance, taxes, utilities and insurance. The lessee bears the risks associated with these fluctuating expenses.
*Trust*	Fiduciary relationship under which property is held by one person, a trustee, for the benefit of another, the beneficiary.
*Trust Fund*	Money, property or valuables legally held by a person or company for the benefit of another.
*Trustee*	The party who manages a trust on behalf of a beneficiary or beneficiaries. Trustees may hold titles to property, distribute assets or oversee investments and payments, among other tasks.

The post T appeared first on Action Tax.

S

Action Tax — Sun, 25 Aug 2013 14:49:25 +0000

*S Corporation*	A small corporation which elects sub-chapter S tax treatment. This tax treatment allows the corporation to avoid federal level taxation. Corporate Profits and Losses are passed through to the shareholders.
*SIMPLE (Savings Incentive Match Plan for Employees) Plan*	A retirement plan that allows employee pretax contributions and requires employer matching contributions. All contributions are immediately vested, and the plan can be set up as a 401(k) or IRA.
*Salary Reduction Plan*	A qualified retirement program to which employees make tax-advantaged contributions on a pretax basis.
*Sales Taxes*	A tax collected by a retailer against the retail price of a commodity.
*Savings Account*	A account with a bank, or savings and loan company, that pays interest on money deposited.
*Schedule*	A form a taxpayer uses to itemize specific sources of income or expenses that are claimed as deductions.
*Section 162 (Executive Bonus) Plan*	A life insurance policy for which the insured’s employer pays premiums under Internal Revenue Code Section 162.
*Secured Card*	A credit card guaranteed by a deposit in a savings account, or certificate of deposit (CD), with a credit line usually equal to the deposit. If the cardholder defaults on payments, the issuer may apply the deposit toward the balance owed.
*Securities and Exchange Commission (SEC)*	The primary federal regulatory agency for the securities industry. The SEC is responsible for promoting full public disclosure and protecting investors against fraudulent and manipulative practices.
*Security*	Collateral for a debt. For example, accounts receivable may be pledged as security for a loan. Security is a generic term used to refer to a bond, share certificate or other medium or long-term investment evidencing debt or ownership.
*Security Deposit*	A payment required to secure a personal loan, a rental property or a later purchase.
*Self-Directed IRA (SDA)*	An individual retirement arrangement that allows a wider choice of investments than an IRA, including stocks, bonds, mutual funds and money market funds.
*Self-Employment Tax*	The Social Security tax imposed on self-employed individuals.
*Self-Select Pin*	A method of filing a of paperless return to the IRS.
*Seller Financing*	A financing technique in which an owner sells property directly to a buyer with no mortgage. The title or deed transfers only after full payment, and any foreclosure results in the property reverting to the seller.
*Settlement Costs*	The expenses involved in transferring real estate to a buyer from a seller, also called closing costs. These typically include charges for loan origination, discount points, appraisal, property survey, title search, title insurance, deed filing, credit reports, taxes and legal services. They do not include points or the cost of private mortgage insurance (PMI).
*Share*	One unit of ownership in a corporation, mutual fund or limited partnership.
*Shareholder*	Any holder of one or more shares in a corporation. A shareholder usually has evidence that they are a shareholder. This evidence is represented by a stock certificate.
*Simplified Employee Pension Plan (SEP)*	A retirement plan that allows both an employer and an employee to contribute to the employee’s IRA on a discretionary basis.
*Situs*	The location or position of a property. For intangible property, such as debt, the situs is considered to be the jurisdiction where the debt obligation was issued.
*Small Business Association (SBA)*	A federal organization that provides programs and opportunities to promote the growth and success of small businesses.
*Smart Card*	A prepaid card that can be used to purchase goods, services or admissions. They are often used at hotels, recreational facilities, and other businesses.
*Social Security*	Social Security is America’s government-run retirement plan. One day, when you’re your grandparents’ age, you’ll get the money back.
*Social Security Tax*	The tax that funds the Social Security system. It is paid by both employers and employees.
*Sole Proprietorship*	A business carried on by the owner as an individual. The owner of a sole proprietorship is personally liable for all business debts; thus, personal property could be taken to pay business debts. A sole proprietorship is an unincorporated business wholly owned by one individual.
*Split-Dollar Life Insurance*	A contract between employer and employee to share the obligations and benefits of a life insurance policy.
*Spousal IRA*	An IRA for a nonworking spouse. It is funded by contributions from the working spouse. The IRS limits the combined amount that married couples may contribute to traditional and spousal IRAs.
*Standard & Poor’s 500 Index (S&P 500)*	An index of 500 of the most widely held common stocks on the New York Stock Exchange (NYSE). It is used as a measure of the overall health of the U.S. stock market.
*Standard Deductions*	Some taxpayers choose to take a standard amount instead of itemizing all of their deductions. This is a fixed amount that is generally based on a person’s filing status.
*State Taxes*	There are all kinds of taxes which are used to pay for all sorts of things. Some of our money goes to the federal government, which pays for services like interstate highways, the armed forces, the FBI and a lot more. Your state also needs money for schools, roads and state troopers, to name just a few. At the end of the tax year you will need to send one form to the federal government and another to your state government.
*Stated Capital*	The par value of shares multiplied by the number of shares outstanding. The amount of stated capital may effect the ability to pay dividends.
*Statement*	Summary of an account for a period of time, usually one month, showing invoices, credits and balance due. A statement is provided to a customer by a supplier.
*Statement of Changes in Financial Position*	A financial statement showing the impact of operating, financing and investing activities effecting the cash position of the company. Also known as Cash Flow Statement, Statement of Cash Flow, Statement of Operating, Financing and Investing Activities or Statement of Changes in Cash Resources.
*Statement of Earnings*	See Income Statement
*Statement of Financial Position*	See Balance Sheet.
*Statement of Retained Earnings*	A financial statement summarizing the changes in retained earnings for a stated period. Also known as Statement of Changes in Capital Accounts or Statement of Changes in Retained Earnings and Reserves.
*Stock*	Capital of a corporation that is divided into portions or shares. Stock refers to an equity or ownership interest in a corporation. There may be several classes of stock in a corporation, each class divided into equal portions or shares. Ownership of shares is demonstrated by stock certificates. See Share.
*Stock Certificate*	A document substantiating the legal ownership of shares of stock.
*Stock Dividend*	A dividend paid by the issuance of shares of capital stock.
*Stock Market*	The organized trading of securities in the various market exchanges and the over-the-counter market.
*Stock Option*	The right to buy shares of capital stock at a stated price on or by a given date. A privilege often extended to executives or employees of a company.
*Stock Purchase Plan*	A mechanism for employees to purchase stock in their company.
*Stock Split*	A distribution of additional shares to each holder of a certain stock in proportion to the shares the individual already owns, with each share’s par value reduced to maintain the same total equity. For example, if a stock splits 2-for-1 and you own one share with a $100 par value before the split, you would own two shares with a $50 par value after the split.
*Stock Transfer Book*	A record book which lists the owners of shares of stock in a corporation.
*Stockholder*	See shareholder.
*Straight-Term Mortgage*	A mortgage in which the borrowed amount is due at the maturity date.
*Subsidiary*	A corporation controlled by another corporation that owns, directly or indirectly, an interest sufficient to elect a majority of the board of directors. See Parent Company.
*Survivorship Life Insurance*	A life insurance policy that covers the lives of two people and pays benefits when the second person dies. It is often used by couples to fund estate tax liability.

The post S appeared first on Action Tax.

R

Action Tax — Sun, 25 Aug 2013 14:37:21 +0000

*Rate of Return*	The gain or loss of an investment over a specified period of time, expressed as a percentage of the original investment cost.
*Rated Policy*	An insurance policy that covers a higher risk for a higher than usual premium.
*Ratio*	Relative size, expressed as the number of times one quantity is contained in another. For example, the ratio of assets to liabilities of a company having total assets of $200,000 and liabilities of $150,000 would be $200,000 / $150,000 = 1.33
*Real Estate Investment Trust (REIT)*	A security that is traded like a stock on the major exchanges and invests primarily in real estate.
*Recapitalization*	When a company changes its capital structure by exchanging preferred stock for bonds to reduce taxes or to avoid or emerge from a bankruptcy.
*Receivable*	An amount to be received at a future date.
*Redemption*	The repayment of a debt security or preferred stock, either for par value at maturity or for a premium before maturity.
*Refinancing*	Rescheduling of payments due. This usually resulting in smaller payments over a longer period of time.
*Refund*	When your employer deducts too much money from your paycheck, the government owes you that money back. When they pay it, it is called a refund.
*Registered Agent*	The agent named in the articles of incorporation. The agent will receive service of process on the corporation and other important documents. The agent must be named in the articles of incorporation.
*Registered Office*	The office named in the articles of incorporation. The registered office must be where the registered agent is located, and need not be the principal office or place of business of the corporation.
*Regressive Tax*	A tax that takes a smaller percentage from those with high income than from those with lower income.
*Required Minimum Distribution (RMD)*	The legally required minimum annual amount that must be distributed from a retirement account to an IRA holder or qualified plan participant.
*Resolution*	A resolution is a formal decision of the corporation that has been adopted by either the shareholders or the board of directors.
*Retained Earnings*	Cumulative net incomes of a corporation less losses and dividend distributions to shareholders, profits not distributed.
*Revenue*	Money that a company receives from the sale of goods and services, before expenses and taxes.
*Reverse Mortgage*	A loan used to turn home equity into tax-free cash payments to the homeowner, or borrower, usually to fund retirement needs.
*Review Engagement*	The unaudited review of financial statements of a business or organization by an independent accountant for the purpose of determining the plausibility of the information reported on. A review includes making inquiries concerning financial, operating and contractual information, applying analytical procedures and having discussions with appropriate officials of the enterprise.
*Review Engagement Report*	The accountant’s report that prefaces unaudited financial statements and provides negative assurance that the financial information conforms to generally accepted accounting principles.
*Risk*	Possibility that the actual return on an investment will be less than its expected return.
*Risk Tolerance*	An investor’s ability to handle declines in the value of his or her investment portfolio.
*Rollover*	A tax-free transfer of funds from one retirement plan to another.
*Roth IRA*	A type of Individual Retirement Account (IRA) in which contributions are nondeductible. Earnings in a Roth IRA grow tax-deferred and distributions are tax-free if you have owned the account for five years and are at least age 59½.
*Roth IRA Conversion*	The process of converting an existing IRA into a Roth IRA. There are specific income eligibility requirements, through 2009, and income tax consequences for this.

The post R appeared first on Action Tax.

Q

Action Tax — Sun, 25 Aug 2013 14:33:47 +0000

*Qualified Plan*	A retirement plan that meets the requirements of Section 401(a) of the Internal Revenue Code and is eligible for tax-favored treatment.
*Quorum*	The minimum attendance required to conduct business at a meeting. Usually, a quorum is achieved if a majority of directors are present, for directors meetings, or outstanding shares are represented, for shareholder meetings. The percentage needed for a quorum may be modified in the bylaws.
*Quotation*	The highest bid and lowest asked offering price currently available for a security.

The post Q appeared first on Action Tax.

P

Action Tax — Sun, 25 Aug 2013 14:32:49 +0000

*PITI*	The four components of a mortgage payment: principal, interest, property taxes and insurance.
*Paid in Capital Requirements*	A few states require corporations to have a specified amount of paid-in capital prior to starting business. These states include CT, DC, SD and TX and require that the company have $1,000 in paid-in capital before starting business.
*Paid-Up Additions*	Additional life insurance coverage. These are typically purchased with policy dividends.
*Par Value*	The face value of a stock or bond when issued, which may bear little relationship to the security’s current market value.
*Par-Value*	The stated minimum value of a share stock. Stock must be sold for at least this value or the owner of the stock can face liability. With low par value stock or no par value stock this liability is minimized.
*Parent Company*	A corporation that directly or indirectly owns a controlling interest in another corporation. See Subsidiary.
*Partnership*	A contractual association between individuals who share in the management and profitability of a business venture.
*Pass-Through Taxation*	Income to the entity is not taxed. Instead the income is “passed through” to the individual shareholders or interest holders. S corporations, Partnerships and LLCs are pass-through taxation entities.
*Past Due*	A payment that has not been received by the end of the lender’s grace period. Creditors may assess late fees for past due payments or report the account holder to a credit reporting agency.
*Patent*	An official license granted by the Patent Office that gives an individual or business the rights to the production or sale of a specific invention, process, or design for a specified period of time.
*Payable*	An obligation to pay a sum at a future date.
*Payroll*	A record of wages or salaries paid or payable. The actual wages and salaries paid during a given period.
*Payroll Taxes*	There are two main forms of payroll taxes. One is in the form of withholding and the other is paid directly by the employer. In the first case employers deduct a certain amount from employee paychecks to pay for taxes. In the second, employers pay a tax based on the number of employees and how much they are paid. This tax money funds many finance specific programs, including social security, health care and worker’s disability.
*Pension*	Arrangement whereby an employer agrees to provide benefits to retired employees. A pension is paid out in a series of regular payments or a lump sum of money to retired employees or their beneficiaries.
*Permanent Life Insurance*	A life insurance policy that does not expire and combines a death benefit with a savings portion that the insured can borrow against or withdraw for cash needs. The two main types of permanent life policies are whole life and universal life.
*Personal Income Tax*	Everyone pays a tax on his or her yearly total amount of taxable income. The personal income tax is not a tax on the taxpayer’s total income as the taxpayer can take deductions. Deductions are subtracted first from the taxpayer’s income and then he or she pays the tax on the remaining amount.
*Plan Administrator*	An individual who administers government regulations and procedures for an employee benefit program and confirms that all participating employees receive annual reports.
*Plan Sponsor*	An employer who establishes and perpetuates a qualified employee benefit pension plan.
*Points*	A measure that quantifies the initial fee charged by a mortgage lender, with each point being equal to 1% of the total loan principal. For example, on a $100,000 mortgage, four points would cost a borrower $4,000.
*Policy*	A legal document that states the terms of an insurance contract, or the contract itself.
*Policy Dividend*	A refund that reflects the difference between the life insurance premium charged and the insurer’s actual cost of providing coverage.
*Policy Exclusion*	An item specifically not covered by an insurance policy.
*Policy Loan*	A loan from an insurance company against the cash surrender value of a life insurance policy.
*Policy Reserves*	The funds that insurers are required to hold in order to cover all policy obligations.
*Policy Rider*	A provision that can be added to an insurance policy at an additional cost to increase or limit the benefits of the policy.
*Policyholder*	The person or entity that owns an insurance policy.
*Portability*	An employee’s ability to retain his or her benefits after employment ceases.
*Portfolio*	The combined security holdings of an investor or mutual fund.
*Posting*	Process whereby transactions are transferred from a journal to a general ledger or subsidiary ledger.
*Power of Attorney*	A legal document that gives one person the power to perform specified acts or make decisions on behalf of another person, should that person become incapacitated.
*Preemptive Rights*	Rights delineated in the articles of incorporation granting shareholders the first opportunity to buy a new issue of stock in proportion to their current equity. The shareholder has the right to buy the new issue of stock, but is not required to make the purchase. If the shareholder elects not to exercise this right, the shares can be sold on the open market.
*Preferred Stock*	A security representing partial ownership or equity in a corporation. Preferred stock does not give the stockholder voting rights, but takes precedence in claims against the company’s profits and assets.
*Premature or Early Distributions*	Withdrawals from qualified retirement plans before the age of 59½.
*Premium*	A periodic payment for an insurance policy.
*Premium Loan*	A loan made from an insurance policy to cover premiums.
*Prepaid*	An asset created by payment for economic benefits that do not expire until a later time. As the benefit expires, the asset becomes an expense. Such assets include prepaid rent and prepaid insurance.
*Prepayment*	Repaying installment credit before it is due or paying off a loan before its maturity date.
*Prepayment Penalty*	On a loan without a prepayment clause, the fee a borrower pays for repaying the loan before it is due.
*Present Value*	The amount that a future sum of money is worth today, given a specified rate of return.
*Price/Earnings Ratio (P/E)*	A stock’s price divided by its earnings per share; this ratio tells investors how much they are paying for a company’s current earnings.
*Primary Beneficiary*	The named beneficiary who receives the proceeds of an insurance policy or annuity contract upon the death of the insured or annuitant.
*Prime Rate*	A standardized short-term borrowing rate established by the Federal Reserve Board.
*Principal*	The original amount of money invested in a security, the face value of a bond, or the remaining amount owed on a loan, separate from interest. “Principal” can also refer to the owner of a private company or the main party in a financial transaction.
*Private Letter Ruling*	The Internal Revenue Service’s interpretation of a tax situation in light of a particular individual’s circumstances. Private letter rulings are nonbinding and do not set precedent for other cases.
*Private Mortgage Insurance (PMI)*	Insurance that protects the lender in case of default on a mortgage.
*Professional Corporation*	A corporation that is organized for the purpose of engaging in a learned profession such as law, medicine or architecture. Professional corporations must file articles of incorporation with the state which meet the state’s requirements for professional corporations.
*Profit*	The excess of total revenue over total expenses for a period of time.
*Profit and Loss Statement*	A statement that summarizes a company’s revenues, costs and expenses incurred during a specific time period.
*Profit-Sharing Plan*	A defined contribution plan to which employers contribute a percentage of the company’s profits, usually based on the employee’s earnings.
*Progressive Tax*	A tax that takes a larger percentage of income from higher income groups than from lower income groups.
*Prohibited Transaction*	A transaction involving an IRA that is forbidden by the Internal Revenue Code, such as borrowing against an IRA, using an IRA as collateral or investing IRA funds in collectibles.
*Property*	Anything that has a value and is owned whether it is tangible, intangible, personal, public or common.
*Property Tax*	A tax imposed upon the owner of real property. This type of tax is also known as a millage tax.
*Proportional Tax*	Proportional taxes take the same percentage of income from all groups. This type of tax is not currently in use.
*Prospectus*	An official document that must be provided by the issuer to potential purchasers of a new security. A prospectus will contain reports on the financial status of the issuer and the specifics of the issue itself.
*Proxy*	If a shareholder can not attend a meeting, the shareholder is allowed to vote by proxy. A proxy grants another individual the power to vote on their behalf.

The post P appeared first on Action Tax.