Tag Archives | property

Unclaimed Property

See Also:
Flat Tax Rates
Marginal Tax Rate
Prepaid Income Tax
Tax Brackets
Deferred Income Tax

Unclaimed Property Definition

The unclaimed property definition is any funds, or asset, that is unclaimed by the rightful owner. A common example of unclaimed property is the unredeemed value of gift cards and gift certificates. Other typical examples include the following:

  • Outstanding checks that have not been reissued
  • Dormant bank accounts, unclaimed security deposits
  • Uncashed dividend checks
  • Unidentified remittances

State Departments of Revenue see unclaimed property as a revenue source: an alternative to higher state tax rates to generate additional revenue. State laws mandate the reversion of such property to the rightful state, after a presumed period of abandonment. This creates a compliance exposure for many commercial enterprises. Consider the reversion indebtedness, and is subject to unclaimed property tax laws in multi-state jurisdictions.

Some large companies are turning over millions of dollars to the states, even though they have tried to locate and give back the unclaimed funds to the rightful owner. Other companies are paying because they have never filed an unclaimed property tax report or even tried to pay back unclaimed funds.

Unclaimed property tax audits used to occur maybe once every fifteen to twenty years. But the frequency has escalated to every one to three years. With no statute of limitations on unclaimed property, a state’s window of opportunity is unlimited.

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Nonrecurring Items

See Also:
Restructuring Expense
ProForma Financial Statements

Nonrecurring Items

In accounting, report abnormal or infrequent gains or losses in the company’s annual report as nonrecurring items. They are rare events or activities that are not part of the company’s normal business operations. They may also be called extraordinary items. You must disclose the details of any extraordinary items in a footnote in the company’s financial statements.

Extraordinary Items

Extraordinary items can distort a company’s earnings. Therefore, analysts will often prepare a pro forma income statement, excluding the effects of the extraordinary items, to see what the company’s financial performance would’ve looked like without the distortion of the abnormal occurrence.

Nonrecurring Items Examples

Examples of nonrecurring items include losses due to fire or theft, the write-off of a company division, the acquisition of another company, or the one-time sale of a large piece of property.


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Nonrecurring Items

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Lease Agreements

Lease Agreements

A lease agreement is a legal contract between two parties for the usage of an asset or property over a set period of time in exchange for rent payments. The owner of the asset or property allows another party to use the asset or property for payments. Often a lease agreement includes an option to buy the leased asset or simply transfers ownerships to the lessee at the conclusion of the lease.

Parties in a Lease Agreement

The party that owns the asset is the lessor, or the landlord. The party that pays for using the asset is the lessee, or the tenant. The lessee is the party that pays for the usage of the property. The lessor is the party that owns the property and collects rent payments from the lessee.

Advantages of Leasing

A lease agreement can benefit the lessee by giving them access to and usage of an asset they might not be able to afford. For example, if a company is starting up and does not have the capital to purchase expensive equipment or machinery, the company would be better off leasing the equipment or machinery for monthly payments.

A lease agreement can benefit a lessor by turning an unused asset into a source of income. If the lessor owns a valuable asset but is not making use of it, they would be better off leasing it to another party who can make use of it, and in return receive the rental payments.

Types of Lease Agreement

In accounting, there are several types of lease agreements. The conditions of the lease agreement determine how the transaction is recorded in the company’s financial statements. The types of lease include capital lease, operating lease, and sale and leaseback.

In a capital lease, also called a financial lease, the lessee acquires all the benefits and responsibilities of ownership of the property. They must record the lease on their balance sheet as an asset with a corresponding liability.

An operating lease is also called a service lease. The lessor retains all the benefits and responsibilities of ownership. However, the property is not recorded on the lessee’s balance sheet.

Whereas in a sale-and-leaseback agreement, the owner of the property sells it to another party. Then, they immediately lease it back from that party. The owner becomes the lessee and the buyer becomes the lessor. Companies do this to free up cash that may be tied up in an illiquid fixed asset.

Lease Agreements

See Also:
Lessor versus Lessee
Sale and Leaseback
Capital Lease Agreement
Agency Costs
Make-or-Buy Business Decision

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Bankruptcy Chapter 13

See Also:
Bankruptcy Costs
Chapter 11 Bankruptcy
Bankruptcy Code
Chapter 12 Bankruptcy
Bankruptcy Courts
Bankruptcy Information
Chapter 7 Bankruptcy

Bankruptcy Chapter 13

Bankruptcy Chapter 13 is a type of bankruptcy proceeding outlined in the Bankruptcy Code. Furthermore, Chapter 13 is a financial reorganization procedure that applies to individual consumers and sole proprietorships.

When a financially distressed consumer or sole proprietor files for chapter 13 bankruptcy, the individual arranges to repay debt obligations with future income. Make monthly payments to a court-appointed trustee until you settle the debt. Usually, this occurs over a period of 3 to 5 years.

In addition, chapter 13 bankruptcy, individuals and sole proprietors are allowed to keep property they may have lost by filing for Chapter 7 bankruptcy.

There may have been destroyer lurking in your company, but you didn’t know they were there. If you are in a Chapter 13 or looking to be bankrupt, then download the Top 10 Destroyers of Value to maximize the value of your company.

bankruptcy chapter 13

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Bankruptcy Chapter 12

See Also:
Bankruptcy Information
Chapter 13 Bankruptcy
Bankruptcy Costs
Bankruptcy Courts
Chapter 11 Bankruptcy
Bankruptcy Code
Chapter 7 Bankruptcy

Bankruptcy Chapter 12

Bankruptcy Chapter 12 is a type of bankruptcy proceeding outlined in the Bankruptcy Code. Furthermore, Chapter 12 is a personal financial reorganization procedure that applies only to farmers and fishermen.

When a financially distressed farmer or fisherman files for chapter 12 bankruptcy, the individual arranges to repay debt obligations with future income. Make monthly payments to a court-appointed trustee until you settle the debt. This usually occurs over a period of 3 to 5 years.

In addition, under chapter 12 bankruptcy, individuals are allowed to keep property they may have lost by filing for Chapter 7 Bankruptcy.

If you want to add value to your company, then download the Top 10 Destroyers of Value.

bankruptcy chapter 12

Strategic CFO Lab Member Extra

Access your Exit Strategy Execution Plan in SCFO Lab. This tool enables you to maximize potential value before you exit.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

bankruptcy chapter 12

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Ad Valorem Tax

See Also:
Flat Tax Rates
Marginal Tax Rate
Tax Brackets
Tax Efficiency
Internal Revenue Service (IRS)
Special Tax Bond

Ad Valorem Tax Definition

Ad Valorem, which is Latin for “according to value“, refers to the taxes imposed on people usually by local or state municipalities. The two types are ad valorem property taxes and ad valorem tariff taxes.

Ad Valorem Tax Meaning

Some U.S. states and local governments main income comes from an ad valorem tax. The first of these is a ad valorem property tax. This tax requires an appraise to value a household or land on a periodic basis. Once the value is determined, the owner is taxed accordingly. The other ad valorem example is a tariff on imports to the state or local government. These ad valorem tariffs are imposed upon imports into the state or local government. Often times it is a percentage of value of the goods being imported. Thus, if the value of the good goes up according to domestic goods then there is very little need to protect the domestic market. However, if the price goes down for international goods as compared to domestic goods then the tariff protects the domestic producers and provides income to the local government.

Ad Valorem Tax Example

For example, Bob owns a household worth $300,000, and pays property taxes to the state government at 5% or $15,000. Recently, Bob’s house has an appraisal performed. Now, he has to pay $20,000 in ad valorem taxes. What is the new value of Bob’s land? See the following equation worked out:

Bob’s land = $400,000 = $20,000/.05

ad valorem tax, Ad Valorem Tax Definition, Ad Valorem Tax Example

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