Simple rate of return

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Simple rate of return

The return from investments figured by dividing income plus capital gains by the amount of capital invested. The effect of compounding is not taken into account.

Simple Rate of Return

An estimate of the return on an investment. It is calculated simply by finding the investment's profit before taxes and interest expenses. The simple rate of return is easy to calculate but is not always accurate because it considers the investment's profit rather than cash flow. It also does not take into account the effects of compounding. It is also called the accounting rate of return or the book value method.

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Thus, taxpayers using the fair market value method must switch to the tax book or alternative tax book value method for the taxpayer's first taxable year beginning after that date.

TEI Comments on Proposed Foreign Tax Credit Regulations

Similar to the book value method, however, the ease of use may be outweighed by the departure from determining an accurate economic value.

Considerations for Using Buy-Sell Agreements: The Advantages for Owners, Accountants, and Financial Advisors

An often-overlooked significant event is the use of the tax book value method (or alternative tax book value method) of apportioning interest expense under Sec.

Foreign corporation earnings and profits: common misconceptions and pitfalls

The adjusted book value method usually renders a value higher than reported book value.

Hey, partner, we need a buy-sell agreement

To support our approach we used the most common valuation methods of each class of methods, as follows: Based on balance-sheet methods--Adjusted Book Value method; Based on income methods--Discounted Cash Flow method (DCF), Capitalized Earnings Method and based on mixed methods--Indirect method, Goodwill method.

Convergences and divergences in the system of valuation methods

The book value method is based on the idea that a firm's value can be found in the reported net worth of its underlying assets (Kam, 1986).

Accuracy of appraisers and appraisal methods of closely held companies

It is more practical than the book value method and, according to the Uniform Partnership Act (UPA), is the preferred method if no buyout clause has been established in the original partnership agreement.

Partnerships: if there's a beginning... ...there's an end

1.861-9(i) provides for the election of the alternative tax book value method. All methods require a determination of average asset values within each statutory grouping and the residual grouping computed for the year on the bases of the values of assets at the beginning and end of the year, unless such averaging results in a substantial distortion of asset values (such as significant midyear acquisitions).

Allocation and apportionment of expenses for Sec. 199 purposes: for many taxpayers, calculation of the Sec. 199 deduction will require an enormous amount of work. This article focuses on one aspect of the deduction, the allocation and apportionment of expenses under the Sec. 861 regulations and the proposed Sec. 199 regulations

Some modifications of the book value method include the tangible book value method, which basically includes only assets, such as cash, inventory, equipment, and real estate.

Understanding buy-sell agreements

Department of the Treasury and Internal Revenue Service issued temporary and proposed regulations under section 861 of the Internal Revenue Code, relating to the use of an alternative tax book value method for allocating and apportioning interest expense.

Section 861: adoption of alternative tax book value method for depreciation expense: September 17, 2004

In the book value method, the company's valuation is deemed equal to the book value of the net assets at the date of the valuation.

What's a business worth? Valuation methods for accountants

1.861-9T(g)-(i), a taxpayer may elect to value assets on the basis of tax book value or fair market value (FMV), or on an alternative tax book value method, when allocating and apportioning interest expense.