CRI Glossary of Terms - Accounting & Otherwise 

These definitions of accounting terms are provided for your convenience to tie together the accounting information provided on CRI's website. If you have any additional questions, please call your local CRI office directly.

Accredited in Business Valuation (ABV): Credential in business valuation awarded by the AICPA to individuals who have met prescribed requirements and passed an examination.

Alternative Minimum Tax (AMT): an income tax imposed on individuals, corporations, estates, and trusts. AMT is imposed at a nearly flat rate on an adjusted amount of taxable income above a certain threshold (exemption). This exemption is substantially higher than the exemption from regular income tax.

American Institute of Certified Public Accountants (AICPA): National professional membership organization that represents practicing Certified Public Accountants (CPAs). The AICPA establishes ethical and auditing standards as well as standards for other services performed by its members. Through committees, it develops guidance for specialized industries. It participates with the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) in establishing accounting principles.

Amortization: Gradual reduction of a debt by means of equal periodic payment sufficient to meet current interest and liquidate the debt at maturity. When the debt involves real property, often the periodic payments include a sum sufficient to pay taxes and hazard insurance on the property.

Aggregate Reportable Cost: Health care cost related to health care coverage reporting that includes both the portion paid by the employer and the employee, regardless of whether the employee's contributions were made pre-tax or after-tax, or whether the cost is includable in the employee's gross income. Aggregate reportable cost does not include salary reductions for flexible spending accounts (FSAs), Archer Medical Savings Accounts (MSA) contributions, or health savings account (HSA) contributions.

Bank Fraud: Type of fraud related to customers defrauding financial institutions.

Billings In Excess of Cost: Often termed "over-billings." In the percentage-of-completion method for construction accounting, the billings are greater than the income earned on uncompleted contracts, a liability results.

Bonding Capacity: The maximum amount of credit coverage the surety will extend to the company.

Bonus Depreciation: An additional amount of deductible depreciation that is awarded above and beyond what would normally be available. Bonus depreciation is always taken right away, in the first year that the depreciable item is placed in service. This type of incentive is offered either as an additional incentive or as a measure of relief for small businesses that want to buy additional equipment.

Budget Control Act of 2011: The Budget Control Act of 2011 provides immediate relief from the debt ceiling (authorizing a $900 billion increase) and makes more than $900 billing in spending cuts over the next decade. The Act also prescribes expedited procedures from implementing another $1.5 trillion in deficit reductions, combined with an additional increase in the debt ceiling of between $1.2 trillion and $1.5 trillion.

Buy-Sell Agreement: also known as a buyout agreement, is a binding agreement between co-owners of a business that governs what happens if a co-owner dies or is otherwise forced to leave the business, or chooses to leave the business.

Capital Lease: Type of lease that is treated like a purchase on a balance sheet. It is one of the current lease types that is being discussed as a part of the updating of lease accounting guidelines.

Capitation: A contractual term that is unique to certain insurance contracts, whereby the insurer pays the provider a set fee per covered person per month, often regardless of services provided.

Carryover Basis: An estate tax term. A recipient inherits the decedent's tax basis. For example, if someone dies owning $100,000 worth of stock with a $20,000 tax basis, that basis carries over to the recipient. If the recipient sells the stock, he/she realizes an $80,000 gain.

Certified Fraud Examiner (CFE): A CFE is a designation awarded by the Association of Certified Fraud Examiners (ACFE) after an individual has passed a stringent set of criteria and a rigorous exam. Additionally, the professional must meet the ACFE's character, experience, and education requirements while demonstrating knowledge in four areas critical to combating fraud: fraudulent financial transactions, criminology and ethics, legal elements of fraud, and fraud investigation.

Certified Valuation Analyst (CVA): A CVA is a specialist in business valuation standards certified by the National Association of Certified Valuation Analysts (NACVA) after completion of in-depth training related to business and intangible asset valuation services and financial forensic services - including damages determinations and fraud detection and prevention.

Cloud Computing: A technology alternative whereby a network of remote servers hosted on the internet (the "cloud") runs applications and stores, manages, and processes data instead of a local server or personal computer. Much of the burden of managing and maintaining IT resources is shifted to an external provider. You are effectively leasing the space on their servers and therefore lessening your hardware and personnel burden and costs.

Comfort Letter: Letters that the company's accountant issues to the underwriter to assist with the underwriter's due diligence process. These letters discuss the results of agreed-upon procedures, as specified by the underwriter, on financial information included in the prospectus.

Comment Letter: The SEC's response to the initial or subsequent filings, stating the areas of the registration statement that have been found to be incomplete or which require further explanation.

Common Interest Realty Associations (CIRA): A CIRA is an association of persons who own condominiums or other type of housing with common property. The CIRA is responsible for maintaining the common property and providing certain services - such as lawn maintenance and guard services.

Contractual: The difference between standard "gross" charges from the healthcare provider and the amount to be received from a payor, typically determined by a contract between the provider and payor.

Co-pays: The portion of a bill not covered by the patient's insurer.

Cost Accounting: It is a managerial accounting activity designed to help managers identify, measure, and control operating costs. It is used most often in a manufacturing environment.

Cost in Excess of Billings: Often termed "under-billings." In the percentage-of-completion method for construction accounting, the billings on uncompleted contracts are less than the income earned to date. These under-billings result in increased assets.

Cost Report: An annual report required for all providers who accept Medicare beneficiaries. Form and complexity vary based on type of provider (hospital, nursing home, hospice, etc.)

Cost Segregation: Cost segregation is an IRS-approved method of re-classifying improvements to a commercial building that is often utilized by accounting firms in a manufacturing environment.

Coverdell Education Savings Account (ESA): The ESA is a retirement saving product allowing up to a $2,000 after-tax contribution annually into an investment trust account designated for your beneficiary until he or she turns 18.

Cyberforensics: A specialized form of e-discovery performed by CRI's forensic accountants that are investigating the contents of the hard drive of a specific computer.

Defense Contract Audit Agency (DCAA): The DCAA is responsible for performing all contract audits for the United States Department of Defense. Additionally, the DCAA provides accounting and financial advisory services regarding contractors and subcontractors responsible for procurement and contract administration.

Deficiency Letter: See Comment Letter.

Defined Benefit Plans: A promise to pay participants specified benefits that are determinable and based on such factors as age, years of service, and compensation.

Defined Contribution Plans: Provide an individual account for each participant and benefits based on items such as amounts contributed to the account by the employer and employee and investment experience.

Due Diligence: The practice of asking required questions and completing the appropriate research necessary to insure the correct preparation of a document or process.

Dilution: The decrease from the IPO prior per share to the per-share book value of the company after the IPO net proceeds are received.  Can also refer to the decrease in the percentage of ownership held by the original shareholders.

Due To/From Third Parties: An estimate of amounts to be received or paid as a result of annual cost report filing, audits or settlements.

Earned Income Tax Credit (EITC): A refundable tax credit for eligible low income workers, subject to computations based on qualifying children and phase in and phase out income levels.

Education Savings Account (ESA): is an investment account designed to encourage savings to cover future education expenses (elementary, secondary or college), such as tuition, books, uniform, etc.

Electronic Discovery (e-Discovery): Term for the obligation of parties to a lawsuit to exchange documents that exist only in electronic form such as emails, voicemails, instant messages, e-calendars, audio files, data on handheld devices, metadata, graphics, photographs, spreadsheets, websites, drawings, and other areas.

Electronic Health Records (EHR):  A record in digital format that is capable of being shared across different health care settings, by being embedded in network-connected enterprise-wide information systems.

Employee Fraud: Type of fraud that is theft or embezzlement by company employees.

Employee Stock Ownership Plan (ESOP): Stock bonus plan of an employer that acquires securities issued by the plan sponsor.

Employment Retirement Income Security Act of 1974 (ERISA): A federal statute that established minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans. ERISA was enacted to protect the interests of employee benefit plan participants and their beneficiaries by requiring the disclosure to them of financial plan information and establishing standards of conduct for plan fiduciaries. ERISA may sometimes refer to the full body of laws regulating employee benefit plans, which are found mainly in the Internal Revenue Code and ERISA itself.

Excise Tax: An excise tax is a tax on use or consumption of certain products. Excise taxes are sometimes included in the price of a product and may be imposed by the federal government or by state.

Fiduciary Fraud: Type of fraud that is theft or embezzlement by someone in a position of trust for another's assets.

FIFO (First In First Out): When the cost of your oldest piece of inventory is recorded as the cost of your latest sale.

Financial Accounting Standards Board (FASB): Independent, private, non-governmental authority for the establishment of accounting principles in the United States.

Financial Industry Regulatory Authority (FINRA): A self-regulatory organization in the United States that enforces federal securities laws and writes and enforces rules governing the securities industry. FINRA regulates trading in stocks, mutual funds, variable annuities, corporate bonds, and futures and options contracts on securities. The organization has jurisdiction over all broker-dealers and registered representatives, as well as discipline authority over rule violators.

Financial Interest: A person owning or holding legal title, or representing the owner or title-holder, of any bank, security or financial account is considered to have a financial interest in that holding. This would mean that both the holder of record, and the beneficial owner meet the test for financial interest, and both must file the FBAR form.

Financial Statement Fraud: Type of fraud whereby a company misrepresents results within published financial statements.

Flexible Elimination Period: The time that elapses between the designation of eligibility and the onset of benefits.

Florida Statute 718: Condominium association statute dictating management regulations such as meeting guidelines, notice requirements, insurance, expenses, and repairs.

Foreign Account Tax Compliance Act (FATCA): Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return.

Foreign Bank Account Report (FBAR): A United States person must file an FBAR report if that person has financial interest in, signature authority or other authority over any financial account (s) in a foreign country and the aggregate value of these account(s) exceeds $10,000 at any time during the calendar year

Form 990-T: IRS Form 990-T is an exempt organization business income tax return.

Form 1023: IRS Form 1023 is the Application for Exempt Status Under Section 501(c)(3) of the Internal Revenue Code for completion by new not-for-profit organizations.

Form 1024: IRS Form 1024 is an application for recognition of exemption, under section 501(a) of federal law.

Form 1099-A (Acquisition or Abandonment of Secured Property): IRS Form 1099-A is used to report information about the acquisition or abandonment of property that is security for a debt for which you are the lender.

Form 1099-B (Proceeds From Broker and Barter Exchange Transactions):IRS Form 1099-B is used to report sales or redemptions of securities, futures transactions, commodities, and barter exchange transactions.

Form 1099-C (Cancellation of Debt):IRS Form 1099-C is used to report cancellation of a debt owed to a financial institution, the Federal Government, a credit union, RTC, FDIC, NCUA, a military department, the U.S. Postal Service, the Postal Rate Commission, or any organization having a significant trade or business of lending money.

Form 1099-CAP (Changes in Corporate Control and Capital Structure):IRS Form 1099-CAP is used to report information about cash, stock, or other property from an acquisition of control or the substantial change in capital structure of a corporation.

Form 1099-DIV (Dividends and Distributions): IRS Form 1099-DIV is used to report distributions, such as dividends, capital gain distributions, or nontaxable distributions, that were paid on stock and liquidation distributions.

Form 1099-G (Certain Government Payments):IRS Form 1099-G is used to report unemployment compensation, state and local income tax refunds, agricultural payments, and taxable grants.

Form 1099-H (Health Coverage Tax Credit (HCTC) Advance Payments): IRS Form 1099-H is used to report health insurance premiums paid on behalf of certain individuals.

Form 1099-INT (Interest Income):IRS Form 1099-INT is used to report interest income.

Form 1099-K (Merchant Card and Third Party Network Payments): IRS Form 1099-K is used to report payments made with a credit card or payment card, including third party network transactions

Form 1099-LTC (Long-Term Care and Accelerated Death Benefits):IRS Form 1099-LTC is used to report payments under a long-term care insurance contract and accelerated death benefits paid under a life insurance contract or by a viatical settlement provider.

Form 1099-MISC (Miscellaneous Income):IRS Form 1099-MISC is used to report rent or royalty payments; prizes and awards that are not for services, such as winnings on TV or radio shows. Also, use to report direct sales of $5,000 or more of consumer goods for resale.

Form 1099-OID (Original Issue Discount and Payment Types to Report):IRS Form 1099-OID is used to report original issue discounts.

Form 1099-PATR (Taxable Distributions Received From Cooperatives):IRS Form 1099-PATR is used to report distributions from cooperatives passed through to their patrons including any domestic production activities deduction and certain pass-through credits.

Form 1099-Q (Payments From Qualified Education Programs -Under Sections 529 and 530):IRS Form 1099-Q is used to report earnings from qualified tuition programs and Coverdell ESAs.

Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.):IRS Form 1099-R is used to report distributions from retirement or profit-sharing plans, any IRA, insurance contracts, and IRA recharacterizations

Form 1099-S (Proceeds From Real Estate Transactions):IRS Form 1099-S is used to report gross proceeds from the sale or exchange of real estate and certain royalty payments.

Form 1099-SA (Distributions From an HSA, Archer MSA, or Medicare Advantage MSA):IRS Form 1099-SA is used to report distributions from an HSA, Archer MSA, or Medicare Advantage MSA.

Form 5500: IRS Form 5500 is required annually by the IRS and Department of Labor and provides statistical information about the plan and plan sponsors while reporting financial information about the plan and demonstrating compliance with 401(k) rules.

Form 8850: IRS Form 8850 is used in implementation of the federal government's Work Opportunity Tax Credit (WOTC) program.

Form 8938: IRS Form 8938 is used to report your specified foreign financial assets if the total value of all specified foreign financial assets in which you have an interest is more than the appropriate reporting threshold.

Form 8939:IRS Form 8939 is an information return used to report information about property acquired from a decedent and to allocate basis increase to certain property acquired from a decedent.

Form 8940: IRS Form 8940 is a form that tax-exempt organizations will use to request determinations (other than initial exemption applications) about their tax-exempt status. In addition to foundation status issues, organizations will use Form 8940, Request for Miscellaneous Determination, to obtain advance approval of certain activities and exemption from Form 990 filing requirements.

Form 9061: U.S. Department of Labor Individual Characteristics Form (ICF). This form is used together with IRS Form 8850 to help state workforce agencies determine eligibility for the Work Opportunity Tax Credit (WOTC) program.

Form 9062: U.S. Department of Labor Conditional Certification (CC) Form. This form serves as an official record of the pre-certification, alerts prospective employers to the availability of the tax credit if this person is hired, and provides a means for employers to request a WOTC certification for this person.

Franchise Tax: A franchise tax is charged by a state to corporations and other business entities (LLCs in some states), for the privilege of incorporating or doing business in that state. The franchise tax is not based on income but rather on net worth, capital stock, assets, capital or property - depending on the state.

Front-End Loaded: In construction accounting, an adjective used to describe a construction job in which it is heavily billed in the beginning - often in an effort to infuse the construction company with cash for the job.

General Basis Increase: A basis increase to assets in the estate. Consists of up to  $1.3 million of increases, plus certain carryovers (capital loss or net operating loss carryovers) and unrealized losses possessed by the deceased. The general basis increase can be allocated to any assets.

Generally Accepted Accounting Principles (GAAP): Generally accepted accounting principles are rules that are used to record accounting transactions on an accrual basis of accounting versus a cash or comprehensive basis.

Gross Receipts Tax: A gross receipts tax or gross excise tax is a tax on the total gross revenues of a company, regardless of their source. A gross receipts tax is similar to a sales tax in some forms, but it is levied on the seller of the goods and services rather than the consumer. A gross receipts tax has a pyramid effect that increases the actual taxable percentage as it passes through the product or service life-cycle.

Health Information Technology for Economic and Clinical Health Act (HITECH): New federal law providing various incentives for use of medical records and increased requirements and penalties related to patient privacy.

ICE Report: Required spreadsheet report titled "Incurred Cost Electronic" provided by the DCAA for businesses managed under a contract with any government agencies, such as the Department of Defense, are required to annually pass a Cost-Incurred Proposal (CIP) under strict compliance with the requirements of the Defense Contract Audit Agency (DCAA).

Implied Fair Value of Goodwill: A type of goodwill generally computed by deducting the fair value of the reporting unit's assets less liabilities from the fair value of the reporting unit itself.

Income Tax: Income tax is a state tax based on the income of a business.

Innocent Spouse Relief: Innocent spouse relief provides relief from additional tax you owe if your spouse (or former spouse) failed to report income, reported income improperly, or claimed improper deductions or credits - and you filed a joint tax return.

International Financial Reporting Standards (IFRS): Guidelines and rules set by the International Accounting Standards Board (IASB) that companies and organizations can follow when compiling financial statements. The creation of international standards allows investors, organizations and governments to compare the IFRS-supported financial statements with greater ease. Over 100 countries currently require or permit companies to comply with IFRS standards. The International Financial Reporting Standards were previously called the International Accounting Standards (IAS). Organizations in the United States are required to use the Generally Accepted Accounting Principles (GAAP).

Investment Letter: A statement obtained from the purchases of an exempt offering affirming that the securities are being bought for investment and nor for redistribution.

LIFO (Last In First Out): When the cost of your most recently purchased inventory is used for the cost of your latest sale.

Long Term Care Insurance: Insurance that helps provide for the cost of long-term care beyond a predetermined period. Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid.

Market Valuation: The total amount of a company's outstanding shares of common stock multiplied by the current share price.

Miller Act: The Miller Act, enacted in 1935, requires that any construction contractor performing a federal construction contract post a payment bond along with a performance bond. This Act ensures that all federal buildings remain free of liens filed by unpaid suppliers.

Mobilization: In construction accounting, a term used to describe monies allotted to the construction company by the client to move needed equipment to the job site.

Offsetting: The practice of using a net amount for an asset and a liability to show a single amount on a balance sheet — as opposed to showing separate gross figures for both the asset and the liability.

Operating Lease: Type of lease that is treated like an actual lease on a balance sheet. It is one of the current lease types that is being discussed as a part of the updating of lease accounting guidelines.

Opportunity Cost: An addition to actual cost that describes what the spender misses out on by not taking advantage of alternative uses for that same money.

OMB Statement A-133: OMB Circular A-133 requires that Federal administrative rules be followed in procuring audit services, which can be found on OMB's web site. Factors to consider in evaluating proposals for audit services include responsiveness to the request for proposal, availability of staff with professional qualifications and relevant experience, results of quality reviews and price.

Payor: An insurer or the party that will ultimately pay the bill.

Periodic Interim Payments (PIP): A Medicare payment system providing a stable revenue stream via bi-weekly average payments.

Personal Property Tax: Personal property tax is a tax levied on the owner of a property and equipment (such as furniture, machinery, equipment, computer, etc.) Personal property tax is generally levied locally, and the business must report to the assessor once a year the personal property owned.

Price-Earnings Ratio: The price of a share of common stock divided by the earnings per share.

Pro Forma: A financial statement presentation that reflects the anticipated effects of a particular transaction (e.g., merger, acquisition or divesture) on a company's historical financial statements.

Provider: An entity that provides healthcare services.

Public Company Accounting Oversight Board (PCAOB): Created by the Sarbanes-Oxley Act of 2002, the PCAOB is a private-sector, non-profit corporation that oversees the auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports.

Qualified Charitable Distribution (QCD): A provision allowing individuals age 70 or over to exclude from gross income up to $100,000 that is paid directly from their individual retirement accounts (excluding SEP or SIMPLE IRAs) to a qualified charity.

Real Estate Property Tax: Real estate property tax is a tax levied on the owner of real property (land, buildings, etc.)

Red Flag Program Clarification Act of 2010: The measure limits the definition of a ""creditor" under the Fair Credit Reporting Act to only those entities that use consumer reports, furnish information to consumer reporting agencies, or advance funds to or on behalf of a person. This definition could exclude law firms, health care practices, retailers, and other small businesses from complying with the Red Flags Rule.

Red Flags Rule: Requires many businesses and organizations to implement a written identity theft prevention program designed to detect the warning signs - or "red flags" - of identity theft in their day-to-day operations.

Regulation S-K: The standard instructions for preparation of the non-financial statement portions of forms filed with the SEC under the 1933 and 1934 acts.

Regulation S-X: Established the requirements for financial statements, independent audits and financial information included in the registration statements, other than for qualifying small business issuers.

Reportable Accounts: A formal relationship with a foreign financial institution, providing regular services, is considered a reportable account, even if the relationship lasts only a short period of time. Using an institution to wire money or a purchase a money order does not qualify as a reportable account.

Reporting unit: An operating unit with its own financial information - separate from the overall company.

Required Minimum Distribution: minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 years of age or, if later, the year in which he or she retires.

Reserve Components: A separate portion of the condominium association or homeowner association budget used to fund the future major repairs and replacements of the association's common elements where the replacement cost will exceed $10,000 (e.g. roof, pool, tennis courts, painting, paving, etc.)

Roth IRA: Contributions are made with after-tax assets, earnings are tax-free, and withdrawals are usually 100% tax-free. For many people, the Roth IRA yields better overall performance than a traditional IRA.

Rule 144: A rule that allows the sale of restricted stock in the public market under certain circumstances.

Sales Tax: Sales tax is a consumption tax charged at the point of purchase for certain goods and services. Most sales taxes are collected from the buyer by the seller, who remits the tax to a government agency.

SAS 70: A report that provides guidance on the factors an independent auditor should consider when auditing the financial statements of an entity that uses a service organization to process certain transactions.

SBIR: The Small Business Innovation Research (SBIR) program is administered by the U.S. Small Business Administration Office of Technology. Coupled with the STTR program, these programs are designed to ensure that small, high-tech businesses comprise a significant portion of the federal government's research and development efforts. Eleven federal departments participate in the SBIR program.

Securities Act of 1933: Regulates the initial public offering and distribution of securities (1933 Act).

SEP IRA: Designed for the self-employed person or for small businesses, this account permits the establishment of a retirement plan allowing the employer to contribute in the employee's name instead of the company's name.

Service Auditor: The auditor who reports on control of a SO that may be relevant to a user organization's internal control as it relates to an audit of financial statements.

Service Organization (SO): The entity that provides services to a user organization, which is part of the user organization's accounting information systems.

Service Organization Controls (SOC): SOC reports are designed to help service organizations build trust and confidence in their service delivery processes and controls through a report by an independent Certified Public Accountant. Formerly known as SAS70 reports.

Schedule C (Form 1040): Schedule C is used to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity or regularity.

Schedule E (Form 1040): Schedule E is used to report income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.

Schedule F (Form 1040): Schedule F is used to report farm income and expenses. File it with Form 1040, 1040NR, 1041, 1065, or 1065-B.

Signature or Other Authority:  Any person given authority to control the disposition of money, funds or other assets, communicated in writing or otherwise, to the person with whom the financial account is maintained. Certain exceptions apply, but only if the officer or employee can be shown to have no financial interest in the account. An example of this would be a foreign financial account held jointly by spouses. Only one FBAR would be required for the joint account.

Simple IRA: A simplified employee pension plan similar to a 401(k), the Simple IRA allows both employer and employee contributions but with lower contribution limits and less costly administration.

SOC 1: A report on controls at a service organization relevant to user entities' internal control over financial reporting.

SOC 2: A report on controls at a service organization relevant to security, availability, processing integrity, confidentiality or privacy.

SOC 3: A trust services report for service organizations.

Single Audit: Most non-Federal entities annually prepare financial statements and have them audited. A single audit combines the annual financial statement audit with additional audit coverage of Federal funds. The single audit is intended to meet the basic audit needs of both the non-Federal entity and Federal awarding agencies.

Small Business Issuers: A term defined by part of the SEC's Small Business Initiative Act of 1992 as companies with annual revenues less than $25 million and whose voting stock does not have a public float ( the market value of stock held by non-affiliates) of more than $25 million. Excluded from this definition are investment companies and subsidiaries of non-small business issuers. Small business issuers may enter the optional S-B system depending on its revenue in its last full fiscal year, and its public float as of a date within 60 days prior to an offering or filing under the 1933 Act.

Spousal Basis Increase: A basis increase to assets in the estate. Consists of up to an additional $3 million in increased basis allocable to assets left to a surviving spouse. Increased basis allocated to an asset can't exceed the asset's date-of-death fair market value.

SSAE 16: Statement on Standards for Attestation Engagements (SSAE) No. 16, Reporting on Controls at a Service Organization, was finalized by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA) in January 2010.  SSAE 16 effectively replaces SAS 70 as the authoritative guidance for reporting on service organizations. SSAE 16 was formally issued in April 2010 with an effective date of June 15, 2011

State Tax Credits: The definition of a tax credit is an item that reduces your actual tax. It differs from a tax deduction that reduces only your taxable income. A tax credit is generally much more valuable than a deduction. The tax credit reduces the actual amount of tax that must be paid.

State Tax Incentives: Similar to the purpose of tax credits, state tax incentives are deductions, exclusions, or exemptions from a tax liability that are offered as an enticement to engage in a specified activity for a certain period. Tax incentives are often tools that state, counties and/or cities utilize to encourage businesses to relocate, expand, or build in their area.

STTR: The Small Business Technology Transfer (STTR) program is administered by the U.S. Small Business Administration Office of Technology. Coupled with the SBIR program, these programs are designed to ensure that small, high-tech businesses comprise a significant portion of the federal government's research and development efforts. Five federal departments participate in the SBIR program.

Succession Plan: A formal, written document outlining the steps and process for changing control of a business when the owner(s) decide or otherwise step down from leadership that is - hopefully - least disruptive to the value of the business.

Surety Bond: A written agreement whereby a surety makes guarantees on behalf of another party, a principal. Within this agreement, the surety makes guarantees to a third party, the obligee.

Taft-Hartley Act: The Taft-Hartley Act of 1947 is a Federal law monitoring the activities and powers of labor unions. It prohibits certain union practices and requires improvement in union disclosure of financial and political dealings. The law was sponsored by Senator Robert Taft and Representative Fred Hartley, Jr. and amended the National Labor Relations Act (NLRA).

Traditional IRA: Contributions are often tax-deductible, earnings within the IRA are tax-free, and withdrawals at retirement are taxable. And the recipients usually find themselves in a lower tax bracket during retirement that helps extend their funds.

Transfer Pricing: The price at which divisions of a company transact with each other. Transactions may include the trade of supplies or labor between departments. Transfer prices are used when individual entities of a larger multi-entity firm are treated and measured as separately run entities. 

United States Person: A citizen or resident of the US, or a domestic entity (including corporations, LLCs, partnerships and trusts) organized under the laws of the US is considered a United States Person, and eligible for FBAR filing. A resident is essentially the same as defined by the Internal Revenue Code.

Underwriter: The underwriter (also referred to as the investment banker) with whom your reach an agreement to market your common stock.

Unrelated Business Income Tax (UBIT): Tax on unrelated business income which comes from an activity engaged in by a tax-exempt organization that is not related to the tax-exempt purpose of that organization.

Use Tax: Use tax is imposed directly on the consumer of goods purchased without sales tax, generally items purchased from a vendor in another state and delivered to the purchaser by mail or common carrier.

User Auditor: The auditor who reports on the financial statements of the user organizations.

User Organization (UO): The entity that has engaged a service organization and whose financial statements are being audited.

Value Added Tax (VAT): A type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale. Value-added tax (VAT) is most often used in the European Union. The amount of value-added tax that the user pays is the cost of the product, less any of the costs of materials used in the product that have already been taxed

Waiting Period: The time between the initial filing of the registration and the effective date.

Wash Sale Rule: An Internal Revenue Service (IRS) rule prohibiting a taxpayer from claiming a loss on the sale of an investment when the same investment was purchased within 30 days before or after the sale date.

Work Opportunity Tax Credit (WOTC): A Federal tax credit incentive that the Congress provides to private-sector businesses for hiring individuals from nine target groups who have consistently faced significant barriers to employment.

Working Capital: Working capital is the difference between current assets and current liabilities. It measures the margin of protection for current creditors. Working Capital reflects the ability of a company to finance current operations.

Yellow Book: The generally accepted government auditing standards produced by the Government Accountability Office (GAO) that apply to both financial and performance audits of government agencies. Five general standards are included - independence, due care, continuing professional education, supervision, and quality control.