What is Phantom's reception?

Phantom revenue is income that does not produce any cash for individuals or society, but is still taxable because it appears on income reports. This is particularly difficult for a person or person, as they may lack liquidity to pay these taxes. Individuals who are in charge of limited liability companies and other similar arrangements are often susceptible to income income, because all the money it does are connected to their personal accounts. Other causes of this phenomenon include bonds with zero coupon, loans that are forgiven or poor accounting techniques of enterprises. Smaller companies, such as limited liability companies that are often owned by a single person or a small partnership, can deal with the income tax problem without any liquiditityzaphap for it. This often happens because the company takes all its income and puts them back into business rather than saving some of the taxes.

For example, imagine a company that earns an annual receipt of $ 500,000 in the US (USD). Especially if it is an upcoming company, the main owner could take a small part for himself, such as $ 50,000, and then return the rest of the income back to business for operating costs, marketing or any other costs incurred. The problem arises when income taxes are due, because the owner is responsible for an income tax for $ 500,000, but now lacks cash.

In order to avoid this problem, these owners must make sure that it will be paid to pay sufficiently for income taxes. In the case of a minority partner, who lacks the decision -making power to decide what to be paid, should make sure that its original contract stipulates that it will be reserved for a certain amount of money to pay off income taxes. Companies must also be cautious to know what business expenditureThey may or may not be written off to avoid receiving reception to cause problems.

Zero coupon bonds are a common cause of fantasy intake. They give no interest to those who have them, but because they are sold with a discount, they are technically still profitable for their owners, and so taxable. Forgiven loans can also be problematic, as the tax is still usable, although the loan principle can be long gone. In general, individuals and business owners should be careful about any delay from the moment the income is received when the taxes pay due to this income.