Chapter 16 - Corporate Operation

Any book-tax difference that requires an add-back to book income in computing taxable income. This type of adjustment is ... because it increases taxable income relative to book income.

A book-tax difference that results in a subtraction from book income in determining taxable income.

Items of income or deductions for either book purposes or tax purposes during the year but not both. ... differences do not reverse over time, so over the long run, the total amount of income or deduction for the item is different for book and tax purposes.

Book-tax differences that reverse over time such that, over the long term, corporations recognize the same amount of income or deductions for the items on their financial statements as they recognize on their tax returns.

The price at which holders of stock options may purchase stock in the corporation issuing the option.

The period or periods during which an employee is required to provide service in exchange for an award under a share-based payment arrangement.

The process of becoming legally entitled to receive a particular benefit without risk of forfeiture; gaining ownership.

A type of stock option that allows employees to defer the bargain element for regular tax purposes until the stock acquired from option exercises is sold. The bargain element is taxed at capital gains rates provided the stock is retained long enough to satisfy certain holding period requirements. Employers cannot deduct the bargain element as compensation expense.

A type of stock option requiring employees to treat the bargain element from options exercised as ordinary income in the tax year options are exercised. Correspondingly, employers may deduct the bargain element as compensation expense in the tax year options are exercised.

The difference between the fair market value of the employer's stock and the amount employees pay to acquire the employer's stock.

The date on which employees receive stock options to acquire employer stock at a specified price.

Period of employment over which employees earn the right to own and exercise stock options.

The amount of a corporation's net capital loss from one year that it uses to offset net capital gains in any of the three preceding tax years.

The amount of a corporation's or an individual's net capital loss from one year that it may use to offset net capital gains in future years.

The excess of allowable deductions over gross income.

The amount of a current-year net operating loss that is carried forward for up to 20 years to offset taxable income in those years (20 years for pre-2018 losses; unlimited for post-2017 losses).

The amount of a pre-2018 net operating loss that a corporation elects to carry back to the two previous years to offset taxable income in those years.

Any asset that would have generated a long-term capital gain if the taxpayer had sold the property for its fair market value.

Property that if sold would generate income taxed at ordinary rates.

Taxable income for purposes of determining the 10% of taxable income deduction limitation for corporate charitable contributions. Computed as taxable income before deducting (1) any charitable contributions, (2) the dividends-received deduction, and (3) capital loss carrybacks.

Taxable income for purposes of applying the taxable income limitation for the dividends-received deduction. Computed as the dividend-receiving corporation's taxable income before deducting the dividends-received deduction, the net operating loss deduction, and capital loss carrybacks.

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