Glossary

A loss that occurs when there are no options left to collect money owed you. The loss is allowed as a deduction the year it is determined it is no longer collectible.

The amount owed to the IRS after subtracting total tax payments from the total tax liability on a tax return.

Any person or an organization with members or clients that contract with each other (or with the barter exchange), to trade or barter property or services.

An exchange of property or services, instead of money, between two or more individuals or a barter exchange.

The amount of an individual's investment in property or other assets. This includes money spent to purchase and any improvements to the property or asset.

A person designated to receive all or a portion of a benefit after the owner dies.

Cash or fair market value of unlike property received in an exchange.

Money owed to a business that can not be collected.  The debt only occurs if the business has included the money as income previously. A business bad debt is created or acquired in the taxpayer's trade or business or closely related to the taxpayer's trade or business when it became partly or totally worthless (a debt is closely related to the taxpayer's trade or business if the taxpayer's primary motive for incurring the debt is business related).

The library of technical manuals; training manuals or programs; data files; accounting or inventory control systems; customer lists; subscription lists; insurance expirations; patient or client files; and lists of newspaper, magazine, radio, and television advertisers related to a business.

Costs that do not have to be capitalized or included in the cost of goods sold such as rent, utilities, office supplies, advertising, etc. To be deductible, business expenses must be both ordinary and necessary.