Financial Terms Glossary - F
facilitator
A qualified facilitator (also known as an intermediary or an independent third party) provides a method of transferring funds and property titles so that a taxpayer can qualify for a tax-deferred (Code Section 1031) exchange.
See also Section 1031.
fair market value
The value placed on an item or service by an informed buyer and seller, neither being under pressure to buy or sell. Items that are not traded frequently may require an expert appraisal to determine fair market value.
Fannie Mae (FNMA)
Federal National Mortgage Association. As with the Freddie Mac program, FNMA packages individual mortgages into loan packages attractive to investors. The sale of mortgage packages to investors makes more mortgage money available. As with Freddie Mac, earnings on Fannie Mae securities are fully taxable.
See also Ginnie Mae (GNMA).
FDIC (Federal Deposit Insurance Corporation)
Most banks are FDIC-insured. But even if your bank has FDIC insurance, all of your funds in that bank may not be insured. Unlike traditional deposit products, nondeposit investment products are not insured. Examples of uninsured investment products include stocks, bonds, annuities, mutual funds, government securities, and U.S. Treasury securities. Check with your bank to learn what is insured and what is not.
federal employer identification number (EIN) Form SS-4
EINs are used to identify the federal tax accounts of businesses. You need to obtain an EIN if you have employees or operate your business as a partnership or corporation. An EIN is also needed if you have a Keogh retirement plan or file certain tax returns. Form SS-4, "Application for Employer Identification Number," is used to request an EIN.
Federal Land Bank
Part of the Federal Farm Credit System. The Federal Land Bank provides long-term loans to farmers and ranchers for agricultural purposes. They provide mortgage loans and lines of credit as well as loans for other business purposes, such as buying equipment.
Federal Reserve
The Federal Reserve, the central bank of the United States, was founded by Congress in 1913. Their duties fall into four general areas: (1) conducting the nation's monetary policy, (2) supervising and regulating banking institutions and protecting the credit rights of consumers, (3) maintaining the stability of the financial system, and (4) providing certain financial services to the U.S. government, the public, financial institutions, and foreign official institutions.
Federal Trade Commission (FTC)
A federal agency established in 1914. It oversees unfair trade practices, such as false advertising and business practices that lead to monopoly and other unfair business competition.
fee simple
A term describing the complete right to real estate. The owner can dispose of the property during his or her lifetime or at death.
FICA (Federal Insurance Contributions Act)
The Federal Insurance Contributions Act (FICA) consists of both a social security (old age, survivors, and disability insurance) payroll tax and a Medicare (hospital insurance) tax. The tax is levied on employers, employees, and self-employed individuals.
See also self-employment tax.
fidelity bond
An insurance policy purchased by a company to protect against losses from dishonest employees. It can cover the theft of money or other company assets.
fiduciary (fiduciary relationship)
A person or company entrusted with the custody or overseeing of the property of someone else. A trustee has a fiduciary relationship with the beneficiaries of that trust.
field auditor
An auditor for the Internal Revenue Service who performs most of his or her examination of records at the place of business that is being audited. The field audit is more complete than an office audit which is done at an IRS office or a correspondence audit which is usually a matter of sending documents by mail to the IRS office.
FIFO (first in, first out)
A method of tracking inventory or other transactions. The first item purchased is considered to be the first item sold. Contrast this with the LIFO method, under which the last item purchased is considered to be the first item sold. There are also other methods used to track transactions, including specific identification of each item sold.
financial statement
Any of several reports generated from an accounting system including a balance sheet, income statement, cash flow statement, etc.
First in, first out
See FIFO.
fiscal period (year)
A twelve-month accounting period ending on the last day of a month other than December. Often used by companies that are very busy in December and choose to use a less busy time to close their books.
501(c)(3) organization
See charitable organization.
fixed asset
Tangible assets such as furniture and fixtures, equipment, land, and buildings reflected on the books of a company at cost (cost less depreciation).
fixed cost
See direct cost.
fixed-rated mortgage
A mortgage on which the interest rate stays the same for the entire life of the loan despite what is happening to the going interest rate for new mortgages.
flat tax
A flat tax system of taxing income means that all taxpayers would pay the same percentage of tax regardless of their level of income.
flexible spending plan
See cafeteria plan.
float
The time delay between when a check is written and when it clears the bank. Used by some to create an interest-free loan by writing a check now and making the deposit later to cover the amount of the check before it hits the bank.
See also kiting.
FOB (free on board)
Used to designate the delivery point of an item being purchased. "FOB seller's warehouse" means that the buyer is responsible for all shipping cost and risk after the item leaves the seller's warehouse.
Form 1099
The IRS uses Form 1099 to track payments from a trade or business to others. If your trade or business pays certain amounts to others (other than wages reportable on Form W-2), you may be required to provide a Form 1099 to the recipient and a copy to the IRS. The IRS will use their copy to determine if the person who received the payments reported them on his or her income tax return. There are several forms in the 1099 series, each designated by a suffix, such as Form 1099-Misc for miscellaneous income , or Form 1099-R for retirement plan distributions, etc.
Form K-1
See schedule K-1.
Form SS-4
See EIN.
Form W-2 (employee's wage statement)
By January 31 of each year, employers must provide employees with a statement of how much they earned in wages and the amount of tax withheld from those wages.
Form W-4 (employee's withholding allowance certificate)
If you have a job, you probably completed this form on your first day of work. This form determines how much of your paycheck is withheld for federal income taxes. You need to complete a new W-4 anytime you have a change in your withholding status (for example, a change in the number of dependents you can claim).
Freddie Mac (FHLMC)
Federal Home Loan Mortgage Corporation. FHLMC buys mortgages and bundles them into investment packages attractive to investors. This process helps create more funds available for mortgages. Earnings on Freddie Mac securities are fully taxable.
See also Fannie Mae.
front-end load
Mutual funds that charge a fee (load) will either charge the fee at the time shares are purchased (a front-end load) or at the time shares are sold (a back-end load).
FTC
See Federal Trade Commission.
funds flow statement
A financial report showing the source and use of funds for a specific accounting period such as a month, quarter, or year.
See also cash flow statement.
fungible (goods)
Products such as grains that lose their identity when stored together.