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Simple English definitions for legal terms
PTI
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A quick definition of PTI:
PTI stands for previously taxed income, which is money that has already been taxed by the government. Income is the money you earn from working, investing, or other sources. Gross income is the total amount you earn before any deductions or taxes are taken out, while net income is what you have left after those deductions and taxes. There are different types of income, such as earned income from working and unearned income from investments. Taxable income is what you have to pay taxes on, and there are also types of income that are exempt from taxes.A more thorough explanation:
PTI stands for previously taxed income under INCOME. It refers to an S corporation's undistributed taxable income that was taxed to the shareholders as of the last day of the corporation's tax year. This income could usually be withdrawn later by the shareholders without tax consequences. PTI has been replaced by the accumulated adjustments account.
For example, if an S corporation had $100,000 of taxable income in a year and distributed $50,000 to its shareholders, the remaining $50,000 would be considered PTI. This means that the $50,000 was already taxed at the corporate level and would not be taxed again when the shareholders withdraw it later.