| As a courtesy to our clients, we have compiled a comprehensive list of common tax terms and definitions for quick reference. | Tax Lingo Troubles? |
Accrual method of accounting |
A business method of accounting requiring income to be reported when earned and expenses to be deducted when incurred. However, deductions generally may not be claimed until economic performance has occurred. |
| Term | Definition |
|---|---|
| Ordinary and necessary |
A statutory requirement for the deductibility of a business expense. |
| Ordinary income |
Income other than capital gains. |
| Ordinary loss |
A loss other than a capital loss. |
| Original issue discount (OID) |
The difference between the face value of a bond and its original issue price. OID is reported on an annual basis as interest income. |