Accounting & Tax Definitions -- M

Main Home: Regular, permanent place of abode.

Management Accounting: Accounting concerned with providing information to managers; that is, to those who are inside an organization and who direct and control operations. Management Accounting includes cost accumulation for product costing, budgeting and financial statement analysis.

Manager: An LLC may be operated by a group of managers who act much like a board of directors. If an LLC is to be controlled by mangers this fact must be stated in the articles of organization.

Margin: A percentage of the full price of a security that must be paid as a down payment by an investor buying on credit. The required margin fluctuates subject to federal regulations.

Market Value: The highest price that an owner could realize in an open market transaction. See Fair Market Value.

Marriage: A legal union between one man and one woman as husband and wife.

Married Filing Jointly: The filing status used by a couple who are married at the end of the tax year and not legally separated under a final decree of divorce or separate maintenance and who record total income, exemptions, and deductions of both spouses on one tax return.

Married Filing Separately: The filing status used by a married couple who choose to record their respective incomes, exemptions, and deductions on separate individual tax returns.

Material Participation Income: Active income, as distinguished from passive income, from employment as well as business and other for-profit activities in which the taxpayer takes a significant and active role.

Materiality: A term used to describe the significance of financial statement information to decision makers. An item of information is material if it is probable that its omission or misstatement would influence or change a decision.

Medical Expenses: Qualified medical expenses of an individual, spouse, and dependents are allowed as an itemized deduction to the extent that such amounts (less reimbursements) exceed 7.5 percent of adjusted gross income.

Medical Savings Account (MSA): A trust or custodial account created or organized exclusively for the purpose of paying the qualified medical expenses of a high deductible health plan of the account holder. Eligible individuals or small employers can establish MSAs with qualified trustees or custodians. Contributions to MSAs are deductible, within limits, as an adjustment to income.

Medicare: The Medicare program funds the federal health program for people over 65. It helps out people at a time in their lives when they may have health problems but may not have a lot of money.

Medicare Part A: The Medicare tax withheld from an employee's wages, or the same tax paid by a self-employed person on net self-employment income. The medicare A tax rate is 1.45 percent (2.9 percent for self-employed individuals).

Medicare Part B: The Medicare insurance premium withheld from the benefits of social security recipients. The basic premium is $50.00 per month ($600 for the entire year).

Medicare Tips: Tips reported to an employer by a tipped employee. Such tips are subject to Medicare withholding.

Medicare Wages: Total wages paid to an employee that are subject to Medicare tax. This amount doesn't include tips, which are reported separately.

Member: A member is a person who is an owner of a Limited Liability Company. The members make the business decisions of an LLC unless the articles of organization provide that the LLC will controlled by a manager or managers.

Merger: Merger occurs when one corporation is taken over by another.

Midpoint Class Life: The "average" period for depreciating an asset under the CLADR System. Midpoint class life is used to determine the asset's recovery period under ACRS and MACRS.

Mileage Rate (Optional Method): The method of deducting automobile expenses based on business miles driven. The standard mileage rate for 2004 is 37.5 cents per mile.

Minority Interest: The equity of all shareholders who do not hold a controlling interest in a company.

Minutes: A written record which details the events of the corporation. These records should be kept in the corporation's record book.

Modified AGI (MAGI): Modified adjusted gross income. For purposes of computing a specific deduction or credit, MAGI begins with the taxpayer's regular adjusted gross income which is then modified to account for certain types of losses, exclusions, and deductions. For example, for child tax credit purposes, the MAGI is regular AGI plus any excluded foreign, U.S. possession, or Puerto Rican income.

Modified Accelerated Cost Recovery System (MACRS): The method of depreciation introduced by the Tax Reform Act of 1986. MACRS is not an entirely new system of depreciation, but rather a series of significant modifications to the ACRS system. (See Accelerated Cost Recovery System.) MACRS is mandatory for most depreciable assets placed in service after December 31, 1986, and was available on an optional basis for assets placed in service after July 31, 1986, and before January 1, 1987. Under MACRS, costs of qualified property are written off over predetermined periods.

Money Market: Financial markets in which short-term debt instruments such as Treasury bills, commercial paper and CD's are traded.

Mortgage Credit Certificate: Qualified taxpayers who receive a mortgage credit certificate from a state or local government to buy, rehabilitate, or improve their main homes may claim a credit for a percentage of their home mortgage interest. The percentage is set by the government and ranges from 10 to 50 percent. If the percentage exceeds 20 percent, the maximum credit is $2,000 per year. The itemized deduction for home mortgage interest must be reduced by the amount of the credit. The credit is not refundable, but any portion that is unused because it exceeds tax liability may be carried over to the following three years where it can be added to any credit for the current year. The credit is computed on Form 8396. Mortgage credit certificates may be subject to a recapture rule if the home is sold within nine years.

Moving Expenses: An adjustment to income permitted to employees and self-employed individuals who move for work-related reasons, providing certain requirements are met. Form 3903 is used to compute deductible moving expenses.

Multiple Support Agreement: If two or more persons who would otherwise be entitled to an exemption for a dependent, together furnish more than half the dependent's support (but no one individual provides more than half), any one of them who furnishes more than 10 percent of the support is entitled to the exemption if all the others who furnished more than 10 percent of the support file written declarations that they will not claim an exemption for the individual for that taxable year. Form 2120 is used for this purpose.

Mutual Fund: An open-ended investment company that invests money of its shareholders in a usually diversified group of securities of other corporations.