What Is a Lump-Sum Distribution? A lump-sum distribution is a one-time lump-sum payment from an amount of money owed to some party, rather than via payments broken into smaller installments. In certain cases, lump-sum distributions may receive special tax treatment. Lump-sum distributions are commonly associated with choosing how to receive windfall earnings, such as from winning
What Is a Lump-Sum Payment? A lump-sum payment is a monetary sum paid in one single payment instead of allocated into installments. They are commonly associated with pension plans and other retirement vehicles, such as 401(k) accounts, where retirees accept a smaller upfront lump-sum payment rather than a larger payment issued in installments over time.
What Is a Luxury Tax? A luxury tax is a sales tax or surcharge levied only on certain products or services that are deemed non-essential or accessible only to the super-wealthy. The luxury tax may be charged as a percentage of the purchase price, or as a percentage of the amount above a specified level.
What Are Luxury Automobile Limitations? The Luxury Automobile Limitation is the annual limit on the amount of depreciation that can be taken on a luxury car used for business purposes. This amount is indexed each year for inflation. The purpose of luxury automobile limitations is to control the type and amount of money spent on luxury
What Is a Luxury Item? A luxury item is not necessary to live, but it is deemed highly desirable within a culture or society. Demand for luxury goods increases when a person’s wealth or income increases. Typically, the greater the percentage increase in income, the greater the percentage increase in luxury item purchases. Since luxury goods are
What Is a Locked-in Interest Rate? A locked-in interest rate is when a lender agrees to provide a set interest rate as long as the borrower closes by a set deadline. Locked-in interest rates are attractive to mortgage borrowers who think the rates may rise between their placing an offer and the final settlement dates. Locked-in rates are also
What is the Loonie? Loonie is a colloquial term for the Canadian dollar (CAD), the official currency of Canada, that originated in the forex dealer community and has subsequently gained popularity with foreign exchange (FX) traders. Key Takeaways Loonie is a colloquial term for the Canadian dollar (CAD), the official currency of Canada, that originated
What Is a Loophole? A loophole is a technicality that allows a person or business to avoid the scope of a law or restriction without directly violating the law. Used often in discussions of taxes and their avoidance, loopholes provide ways for individuals and companies to remove income or assets from taxable situations into ones
What Is Loose Credit? Loose credit is the practice of making credit easier to acquire, either through relaxed lending criteria or by lowering interest rates for borrowing. Loose credit often refers to the policies of a country’s central bank—whether it is looking to expand the money supply through the banking system (loose credit) or contract
What Is Losing Your Shirt? Losing your shirt is an idiom that, in the investment world, means to lose one’s money, savings, investments, resources, or more, if investments were made with borrowed funds. Losing your shirt is a 20th-century phrase that signals great financial loss. One may say, for example, “He lost his shirt in
