What Are the Three Broad Categories of Liabilities

question 46

Essay

What are the three broad categories of liabilities?

---

Definitions:

Depreciation Basis

The initial cost of an asset that is used to calculate depreciation expense over the asset's useful life.

Decedent's Basis

The value assigned to a deceased person's property for tax purposes, determining the basis for heirs or beneficiaries for capital gains tax calculations when they sell the property.

Ordinary Expense

Regular and necessary costs incurred in running a business that are tax-deductible.

Taxpayer's Business

Refers to any enterprise or activity undertaken by an individual with the intention of earning profit.