What Is Tax-Exempt Commercial Paper? Tax-exempt commercial paper is short-term unsecured debt where the bondholder does not pay federal, state, or local taxes on the interest payments. Key Takeaways Tax-exempt commercial paper is short-term unsecured debt where the bondholder does not pay federal, state, or local taxes on the interest payments.Tax-exempt commercial paper is issued
What Is Tax-Exempt Interest? Tax-exempt interest is interest income that is not subject to federal income tax. In some cases, the amount of tax-exempt interest a taxpayer earns can limit the taxpayer’s qualification for certain other tax breaks. The most common sources of tax-exempt interest come from municipal bonds or income-producing assets inside of Roth
What Is the Tax-Exempt Sector? The tax-exempt sector can refer to either a market niche comprising investment vehicles or nonprofit organizations that are exempt from federal taxes. The term is most often associated with a set of investments that pays tax-exempt interest or dividends. The sector includes bonds, notes, leases, bond funds, mutual funds, money
What Is a Tax Expense? A tax expense is a liability owed to federal, state/provincial, and/or municipal governments within a given period, typically over the course of a year. Tax expenses are calculated by multiplying the appropriate tax rate of an individual or business by the income received or generated before taxes, after factoring in
What is Tax Fraud? Tax fraud occurs when an individual or business entity willfully and intentionally falsifies information on a tax return to limit the amount of tax liability. Tax fraud essentially entails cheating on a tax return in an attempt to avoid paying the entire tax obligation. Examples of tax fraud include claiming false
What Is Tax Free? Tax free refers to certain types of goods and financial securities (such as municipal bonds) that are not taxed. It also refers to earnings that are not taxed. The tax free status of these goods, investments, and income may incentivize individuals and business entities to increase spending or investing, resulting in
WHAT IS Tax Freedom Day Tax Freedom Day refers to the day an average American has theoretically earned enough money to pay off his or her total tax obligations for the year. The calculation used to determine this date assumes that everyone in the nation works for eight hours a day beginning January 1, and
What Is a Tax-Free Savings Account? A tax-free savings account (TFSA) is a Canadian savings account in which contributions, interest earned, dividends, and capital gains grow tax free. Money withdrawn from it is also tax free. The money deposited in TFSAs is an after-tax contribution, meaning it’s made with money that’s already been taxed. Therefore
What Is a Tax-Free Spinoff? A tax-free spinoff refers to a corporate action in which a publicly traded company spins off one of its business units as an entirely new company without tax implications. This type of transaction is deemed to be “tax-free” because the parent company is still able to divest the business it
What Is Tax-Loss Harvesting? Tax-loss harvesting is the timely selling of securities at a loss to offset the amount of capital gains tax owed from selling profitable assets. This strategy is commonly used to limit short-term capital gains, commonly taxed at a higher rate than long-term capital gains, to preserve the value of the investor’s portfolio while
