tax shelter, n. A financial operation or investment strategy (such as a partnership or real-estate investment trust) that is created primarily for the purpose of reducing or deferring income-tax payments. • The Tax Reform Act of 1986 — by restricting the deductibility of passive losses — sharply limited the effectiveness of tax shelters. — Often […]
A tax on a legacy, often with the provision that the rate increases as the relationship of the legatee becomes more remote from the testator. • In English law, this tax was known as a legacy duty; it was abolished in 1949. Cf. collateral-inheritance tax. [Cases: Taxation 856.1. C.J.S. Taxation §§ 1783–1785, 1792.]
The place considered by law as the center of corporate affairs, where the corporation’s functions are discharged; the legal home of a corporation, usu. its state of incorporation or the state in which it maintains its principal place of business. • For purposes of determining whether diversity jurisdiction exists in federal court, a corporation is
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A return filed by each spouse separately, showing income and liability. • Unlike with a joint return, each spouse is individually liable only for taxes due on the separate return. [Cases: Internal Revenue 4481; Taxation 1079.1. C.J.S. Internal Revenue §§ 335, 637.]
prorate (proh-rayt or proh-rayt), vb. To divide, assess, or distribute proportionately (prorate taxes between the buyer and the seller). — proration, n.
A tax system in which different rates are assessed against different types of taxed property.
taxpayer-standing doctrine. Constitutional law. The principle that a taxpayer has no standing to sue the government for allegedly misspending the public’s tax money unless the taxpayer can demonstrate a personal stake and show some direct injury. [Cases: Constitutional Law 42.3(2); Municipal Corporations 987. C.J.S. Constitutional Law §§ 68–69, 76; Municipal Corporations §§ 1889–1890, 1893–1894, 1896–1897,
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tax-increment financing. A technique used by a municipality to finance commercial developments usu. involving issuing bonds to finance land acquisition and other up-front costs, and then using the additional property taxes generated from the new development to service the debt. — Abbr. TIF. [Cases: Municipal Corporations 953.]
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A tax on income derived from the sale of a capital asset. • The federal income tax on capital gains typically has a more favorable tax rate — for example, 20% for an individual and 34% for a corporation — than the otherwise applicable tax rate on ordinary income. See CAPITAL GAIN. [Cases: Internal Revenue