Net Of Tax

AAA

DEFINITION of 'Net Of Tax'

An accounting figure that has been adjusted for the effects of income tax. Net of tax is most commonly calculated by taking gross figures, like the cash collected from the sale of an asset, and subtracting the taxes paid. Net of tax could also be used to show the final amount after accounting for the tax savings, for example on a loss that allows a tax deduction.

INVESTOPEDIA EXPLAINS 'Net Of Tax'

In most cases, net of tax figures are used for the sake of clarity. If a company sells one of its factories for $1 million, but $400,000 of that is eaten up by taxes, the company may present the net of tax figure of $600,000 because that is the amount being added to the bottom line. The tax figure doesn't disappear, however, as it will be accounted for in the gross figure given for income tax expense, and may be referred to specifically if it was a significant contributor to an unusually high tax bill.

RELATED TERMS
  1. Net Operating Income - NOI

    A company's operating income after operating expenses are deducted, ...
  2. Accounting

    The systematic and comprehensive recording of financial transactions ...
  3. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
  4. Income Statement

    A financial statement that measures a company's financial performance ...
  5. Income Tax

    A tax that governments impose on financial income generated by ...
  6. Net Income - NI

    1. A company's total earnings (or profit). Net income is calculated ...
Related Articles
  1. Markets

    A Clear Look At EBITDA

    This measure has its benefits, but it can also present earnings through rose-colored glasses.
  2. Markets

    Operating Cash Flow: Better Than Net Income?

    Differences between accrual accounting and cash flows show why net income is easier to manipulate.
  3. Options & Futures

    Core Earnings Strip Away "Creative" Accounting

    This metric is an attempt to counteract creative accounting, but it poses its own set of challenges.
  4. Professionals

    Financial History: The Rise Of Modern Accounting

    Find out how these two have grown hand-in-hand throughout our modern history.
  5. Professionals

    Examining A Career As An Auditor

    Stricter government regulations have put auditing professionals in demand.
  6. Options & Futures

    Uncovering A Career In Forensic Accounting

    Does a job as a financial sleuth sound interesting to you? Dig in to learn more.
  7. Investing Basics

    When do companies publish P&L statements?

    Understand what a company's P&L statement represents, and find out when companies traditionally publish these statements.
  8. Active Trading Fundamentals

    What is liquidity management?

    Take a look at the different definitions of liquidity, and find out how investors and businesses attempt to reduce exposure to liquidity risk.
  9. Fundamental Analysis

    What is the difference between operating income and revenue?

    Understand the definitions of revenue and operating income, how they are calculated and interpreted, and how operating income is derived from revenue.
  10. Fundamental Analysis

    What is the difference between gross margin and gross profit?

    Understand the difference in definitions between gross margin and gross profit, and learn what each represents as a metric of a company's profitability.

You May Also Like

Hot Definitions
  1. Scarcity

    The basic economic problem that arises because people have unlimited wants but resources are limited. Because of scarcity, ...
  2. Trust Fund

    A trust fund is a fund comprised of a variety of assets intended to provide benefits to an individual or organization. The ...
  3. Christmas Tree

    An options trading strategy that is generally achieved by purchasing one call option and selling two other call options at ...
  4. Christmas Club

    A short-term savings account that usually pays out the full account balance to its account holders once each year, right ...
  5. Boston Snow Indicator

    A market theory that states that a white Christmas in Boston will result in rising stock prices for the following year. For ...
  6. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
Trading Center