Hi Bhuvana VenkateshThanks for A2AA deferred share is normally a share wherein a shareholder is not entitled to exercise any claim over a bankrupt company’s assets until the preferred & common shareholders are paid[1].It can also be issued to the promoters so that they do not cash-in prior to dividend distribution.Fig 1. Different types of Shares[2]These shares have do not have voting rights and can also be issued during a capital restructuring exercise[3].Hope this is helpful.Join my FB Page: Investing in India's Financial MarketReferences:Deferred Sharehttps://slideplayer.com/slide/47...Deferred shares - Securities & Funds - Moneyterms: investment, finance and business explained
Deferred tax is the tax impact of the mismatch between the incomes/expenses you show in your books of accounts and the income/expenses you are allowed to claim in your tax returns.While books of accounts are prepared on the basis of generally accepted accounting principals (GAAPs) of the jurisdiction of the entity, which are usually open to interpretation and hence, manipulation, tax returns are prepared on the basis of strict income tax laws, which leads to a more uniform tax incidence across entities under the tax laws.Suppose you have accounted for certain expenses in your books in the current year on an accrual basis, following the GAAP of matching (matching incomes to expenses), but the income tax law only allows such expenses as a deduction from your income on the actual payment of such expenses. A Deferred Tax Asset (DTA) would arise in such a case because you would end up paying tax on higher profit than shown in your books.Similarly, you could try coming up with cases in which a Deferred Tax Liability (DTL) could arise. A situation in which you are paying tax on lower profit than shown in your books.An important point to remember is that a DTA or DTL will arise only if the condition which gave rise to such DTA or DTL will reverse in the future. That is to say, the DTA will decrease your future tax burden or a DTL will increase your future tax burden.This all sounds link an unnecessary complication, but the reason why accountants record DTAs or DTLs in the books of accounts goes back to the GAAP of matching the income of a period to the expenses of that period.
How useful is deferred compensation?
The basic rules are defer income and accelerate deductions. I would not use an accountant who does not believe in the basic rule. Think about compound earnings. Does your accountant think that paying tax now and then investing results in a better overall return than investing now and paying taxes later when there will be more money earning more money? Oh yea, since you are the one deferring the income you can time when you make the income taxable. Maybe in a year with no other wage income so you may in fact drop a tax bracket or two! The poster to the duplicate to this questions does raise the very good point about age. It is an excellent point that should be considered. In addition if you are already retired, and do not need the income, see if by chance whether it would continue to be tax deferred after death. Maybe someone in your will could benefit from it. Built in capital gains will not be taxed and a bequest of appreciated property gets a step up in basis. I still say dump the accountant
Hi,Deferred Tax refer to tax effect in your Balance sheet due to timing differences in recognizing income.There are 2 types of timing differences viz. Temporary and Permanent.While Permanent differences are the one's between taxable income and accounting income for a period that originate in one period and do not reverse subsequently whereas the Temporary differences are the one's between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods.Timing differences arise because the period in which some items of revenue and expenses are included in taxable income do not coincide with the period in which such items of revenue and expenses are included or considered in arriving at accounting income. For example, machinery purchased for scientific research related to business is fully allowed as deduction in the first year for tax purposes whereas the same would be charged to the statement of profit and loss as depreciation over its useful life. The total depreciation charged on the machinery for accounting purposes and the amount allowed as deduction for tax purposes will ultimately be the same, but periods over which the depreciation is charged and the deduction is allowed will differ. Thus giving rise to Deferred tax liability.Hope the above clarifies.BR, Pratikcapratikmaniyar@gmail.com
Someone else gave an explanation of corporate financial reporting when income taxes paid due to the IRS code are different than what is required by SEC accounting rules.I am guessing you mean personal accounts. These occur when people put income into accounts such as a 401k. That money isn’t taxed when earned so that more money can be invested today to have in later years, typically in retirement. Some people defer part of their salaries until retirement — their employer literally owes them the cash later. This is typically done by highest-tax bracket people so that their income is paid after they quit working (possibly lowering the tax rate). It’s another form of tax-deferred accounts.Obviously, the name comes from deferring tax on current income into later years.
Tax-deferred retirement plans are a type of?
For the best answers, search on this site https://shorturl.im/KKlub Is your question 1) how to have less WITHHELD from your paycheck--because you usually get a big refund at the end of the year? or 2) how to actually pay less tax in total over the year? If you want less withheld, you can change your W-4 with your employer, so less is withheld. If you want to pay less in total, then putting up to $5,000/year into a traditional IRA may defer taxes on that amount. If you are covered by a retirement plan at work, your income has to be less than $53,000 for a single person (or $85,000 for married filing jointly) to take the full deduction. Check your W-2 Box 13 to see if the IRS considers you "coverd by a retirement plan at work". Before you open up a traditional IRA, you should also consider a ROTH IRA. For most people, the ROTH IRA is better than a traditional IRA in the long run, but contributions to a ROTH are not tax deferred. Putting money into an IRA will not change the amount withheld unless you change your W-4. Other ways to reduce your total tax are by making significant donations to charity, paying mortgage interest, or paying tuition. But these things will just reduce your tax--not increase your pocket money.
Yes, you can, though for the majority of 401(k) investors the tax withholding is performed by their employer’s payroll department. To confirm you fall into this category, simply take a look at your payroll stub or login to your employer benefits portal. Sole proprietors - you know who you are - take the business deduction on Schedule C.As relates to an IRA, keep in mind that while an IRA is a separate tax-deferred investment account, the tax code looks to see whether you are covered by an employer-sponsored retirement plan. IRA deductibility is impacted by participation in a 401(k) plan, and other employer retirement plans. The rules are covered in IRS Publication 590-A,Contributions to Individual Retirement Arrangements.Specifically, page 12 (2015) states:“the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. Your deduction is also affected by how much income you had and by your filing status.”For example, you can make $1,000,000/yr and take a deduction for your IRA provided you are not considered a participant in an employer retirement plan (e.g. 401(k)). Note - participation can also mean contributions for your benefit made by your employer, independent of whether you actually made payroll deductions from your own compensation.On the other hand, if you do participate then you are subject to income limitations. For 2016 the limits are: 1. IRA - $5,500 ($6,500 if you are age 50 or older). 2. 401(k) - $18,000 ($24,000 if you are age 50 or older, the additional $6,000 called a “catch-up" contribution.) The IRA can still be a good way to accelerate your retirement savings, even if you are not eligible for the tax deduction. Tax-deferred savings, for most investors, is generally considered to be a better tax planning strategy than paying the ongoing tax incurred in a non-tax deferred account. However, a more tailored answer would include current and projected incomes, future tax rates (anyone’s guess, but many experts predict an upward trend), as well as other financial considerations and goals. Finally, the IRS has provided a table for 2016 IRA contributions and deductions here.
1098-E on interest for deferred, unsubsidized student loans?
typically if you are not paying your student loan you cannot deduct the interest. However, you can deduct tuition, books, supplies you paid for during the school year along with getting a lifetime learning credit
Foreign currency transactions are considered separate from the actual transaction that is denominated in a foreign currency. For US tax reporting purposes foreign currency is NOT cash, but rather a separate asset. Recognition of gain or loss is covered by Section 988 of the Internal Revenue Code, so you will see foreign currency transactions referred to as Sec 988 transactions. In simpler terms you record the transaction based on US dollar value and foreign currency gain or loss is realized when there is a change in value between the date the transaction is booked and the date the payment is received in foreign currency.In general, the character of a foreign currency exchange gain or loss from any of the following Section 988 transactions, denominated in nonfunctional currency, is ordinary and is determined separately from the underlying transaction. The acquisition of a debt instrument or becoming the obligor under a debt instrument. Accruing any item of expense or gross income or receipts which will be paid or received after the accrual date. Entering into or acquiring any forward contract, futures contract, option or similar financial instrument. − There is an exception for regulated futures contract or non-equity options subject to the marked to market rules under IRC 1256