Taxes you owe. For individuals, we generally pay our taxes quarterly, so we carry a very short-term liability on what we owe and then...just pay it to The Man. Or The Wom.
For corporations, things get more complex, and the numbers bigger. They sell a division in Q1 and owe on the $100 million gain. They pay 30% marginal tax, so they carry a tax liability of $30 million for...a while. Maybe they pay it all as a quarterly, but more likely they pay at the end of the year, showing as a tax liability..."Taxes Owed" of something like $30 million (plus whatever other taxes they owe).
Like this noodling? Then check out our CPA career guide. It's calling your name.
Related or Semi-related Video
Finance: What is Capital Gains Tax?7 Views
Finance a la shmoop what is capital gains tax? alright people you've invested
your hard-earned savings from working 72 hours a week all year you put 10 grand
to work seven years ago in buying Heinz ketchup stock at 50 bucks a share
200 shares then this year along comes Warren Buffett and Berkshire Hathaway to [Warren and Berkshire appear]
confirm what a brilliant investor you were and they buy for all cash the
company Heinz ketchup for $200 a share you've made four times your money in
seven years nice work well you have a gain of 150 bucks a share which you are
gonna fully realize like you'll realize that capital gain in the form of
receiving cash like oh I realize I have cash in my bank account yay me!
so all this was so good such a nice day until you realize that you live in a [Woman frollocking in a meadow]
blue state with massive taxes and that you'll now give back about a third or
more of your investment gains that is you invested 10 grand it became 40 grand
the old-fashioned way you had 30 grand of profits and now uncle sam says i want [Uncle Sam demanding I want your cash]
your cash and you now pay about 10 grand roughly a third of it in taxes of
your gains of that 30 grand back to Uncle S, sadly you are paying back in
taxes about the same amount you invested in the first place yep lots of hard work
lots of taxes how's that feel?
Up Next
What is a Consumption Tax? A consumption tax is one that is charged at the time of purchase for a product or service. Consumption taxes can include...
A tax haven is a nation that offers special tax incentives for corporations doing business there.
What is tax loss carry-forward? We promise it's a real thing, not just a bunch of words strung together.