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Limited Liability Company (LLC) A limited liability company (LLC) is a flexible U.S. business structure that combines limited personal liability for owners with the tax and operational flexibility of a partnership or sole proprietorship. LLCs are widely used by small and medium businesses because they protect owners’ personal assets from most business debts and legal…

Limited Liability Limited liability is a legal principle that restricts an owner’s financial exposure to the amount they invested in a business. It separates personal assets from the business’s debts and obligations, so creditors normally cannot seize owners’ private property to satisfy company liabilities. Key points Limits owners’ losses to their investment in the business….

Limited Government A limited government is a political system in which the authority and powers of government are legally constrained to protect individual liberties and prevent concentration of power. Limitations typically come from constitutions, laws, separation of powers, and checks and balances that restrict what officials and agencies may do. How limited government works Powers…

What is a Limited Company (LC)? A limited company (LC) is a legal business structure that separates the company’s finances, assets, and liabilities from those of its owners. As a distinct legal entity, the company can own property, enter contracts, and be sued independently of its members. Owners’ financial exposure is typically limited to the…

Limited Common Elements Definition A limited common element is part of a condominium or planned-community property that is owned collectively by the association (HOA or condominium corporation) but designated for the exclusive use of one unit or a specific group of units. Examples include balconies, individual parking spaces, storage units, and some patios. Key takeaways…

Limit Order Book A limit order book is the exchange record of outstanding limit orders to buy or sell a security at specified prices. It lists all active buy (bid) and sell (ask) limit orders and is used to match orders when prices align. How it works A limit order specifies a maximum price to…

Limit Order A limit order is an instruction to buy or sell a security at a specified price or better. A buy limit executes only at the limit price or lower; a sell limit executes only at the limit price or higher. Unlike a market order (which fills at the prevailing price), a limit order…

Limit Down: Definition and How It Works for Stocks and Futures What is a limit down? A limit down is a predefined maximum decline in the price of a futures contract or a stock that triggers trading restrictions. These rules are designed to reduce extreme, self-reinforcing price moves, give market participants time to assess news,…

Lilly Ledbetter Fair Pay Act: Definition, History, Impact What the Act does The Lilly Ledbetter Fair Pay Act of 2009 restores and clarifies federal protections against wage discrimination. Under the Act, a new statute of limitations begins with each discriminatory paycheck — not only from the date the pay decision was made. That means an…

Like-Kind Property and Section 1031 Exchanges Like-kind property refers to real estate held for business or investment that can be exchanged for other qualifying real estate without immediate recognition of capital gains under Internal Revenue Code Section 1031. These exchanges defer tax liability when done according to IRS rules. What qualifies as like-kind property Must…

Like-Kind Exchange: Definition, Example, Pros & Cons What is a like-kind exchange? A like-kind exchange (commonly called a 1031 exchange or Starker exchange) lets an investor sell investment or business real estate and acquire another qualifying property without recognizing capital gains at the time of the sale. Taxes are deferred—not eliminated—and become payable when the…

Like-for-Like Sales: Definition and Practical Guide What it is Like-for-like sales (also called comparable-store sales, comps, same-store sales, or identical-store sales) measure revenue growth from a consistent set of products, stores, or business units over time. The goal is to isolate organic performance by excluding changes that would distort comparisons, such as newly opened locations,…

Lightning Network Key takeaways The Lightning Network is a Layer‑2 protocol built on top of Bitcoin to enable fast, low‑cost, off‑chain micropayments. It uses payment channels between parties to aggregate many transactions and settle a single on‑chain transaction when the channel closes. Proposed by Joseph Poon and Thaddeus Dryja in 2016, it aims to improve…

LIFO Reserve: Definition, Calculation, and Why It Matters What is the LIFO reserve? The LIFO reserve is the difference between inventory valued under the first-in, first-out (FIFO) method and inventory valued under the last-in, first-out (LIFO) method: LIFO reserve = FIFO inventory − LIFO inventory Explore More Resources › Read more Government Exam Guru ›…

LIFO Liquidation LIFO (last-in, first-out) is an inventory-costing method that assumes the most recently acquired inventory is sold first. A LIFO liquidation occurs when a company using LIFO sells more goods than it purchases in a period, forcing older (earlier) inventory layers—often recorded at lower historical costs—to be included in cost of goods sold (COGS)….

Lifetime Learning Credit (LLC) The Lifetime Learning Credit (LLC) is a U.S. federal tax credit that helps offset the cost of higher education by reducing your tax liability by up to $2,000 per tax return each year. It applies to qualified tuition and related expenses for undergraduate, graduate, and certain career-focused courses. The credit is…

What is lifetime cost? Lifetime cost (also called whole-life cost, life cycle cost, or total cost of ownership) is an estimate of how much an item will cost to own over its expected useful life. It includes the initial purchase price plus all ongoing and one-time expenses required to operate, maintain, protect, and eventually dispose…

Lifestyle Creep: How Small Spending Changes Can Hurt Long-Term Goals Lifestyle creep is the gradual rise in spending that follows an increase in discretionary income. What used to be a luxury becomes a regular part of life, often without you noticing. Left unchecked, it can erode savings, delay major goals, and leave you vulnerable if…

Life Settlement What it is A life settlement is the sale of an existing life insurance policy to a third party for a one-time cash payment. The payment is typically greater than the policy’s cash surrender value but less than the death benefit. After the sale, the buyer becomes the policy owner and beneficiary and…

Life Insurance: What It Is, How It Works, and How to Buy a Policy What is life insurance? Life insurance is a contract in which you pay premiums to an insurer in exchange for a death benefit paid to your named beneficiaries if you die while the policy is active. The death benefit can replace…

Life Income Fund (LIF): Definition and How It Works A Life Income Fund (LIF) is a Canadian registered retirement income vehicle designed to provide ongoing retirement income from locked‑in pension funds and similar assets. Typically created by transferring funds from a Locked‑In Retirement Account (LIRA) or a locked‑in RRSP that originated in a workplace pension…

Life Expectancy Definition and overview Life expectancy is a statistical estimate of the average number of years a person is expected to live based on actuarial and population data. It’s widely used in finance—for life insurance pricing, retirement planning, annuities, and tax-required distributions—and by governments and health agencies to track population health. How life expectancy…

Life Estate — A concise guide Definition A life estate is a legal arrangement that divides ownership of real property between: – a life tenant — the person who has the right to use and occupy the property for the remainder of their life; and – a remainderman — the person who will receive full…

Life-Cycle Hypothesis (LCH) The life-cycle hypothesis (LCH) is an economic theory that explains how people allocate consumption and saving over their lifetime. Developed by Franco Modigliani and Richard Brumberg in the early 1950s, it argues that individuals aim to smooth consumption — borrowing when young, saving during peak earning years, and dis-saving in retirement —…

Life-Cycle Fund What is a life-cycle (target-date) fund? A life-cycle fund—also called a target-date or age-based fund—is an asset-allocation fund that automatically shifts its mix of stocks, bonds, and other investments to reduce risk as a specified target date (usually retirement) approaches. The fund’s time horizon is embedded in its name (for example, “Target Retirement…

Life Cycle in Business Definition A life cycle in business describes the stages a product, company, or industry passes through from inception to decline. Common stages include development, growth, maturity, and decline. Understanding these stages helps managers and investors make better strategic and financial decisions. Key takeaways A business life cycle traces creation, growth, maturity,…

Life Annuity What is a life annuity? A life annuity is an insurance contract that pays a guaranteed stream of income to the annuitant for as long as they live. It is typically funded during an accumulation phase (periodic contributions or a lump sum) and then converts into an annuitization phase when regular payments begin….

Lien Waiver Key takeaways * A lien waiver is a written statement from a contractor, subcontractor, or supplier that they have been paid and will not file a mechanics’ lien on the property. * There are four common types: conditional and unconditional waivers for progress payments, and conditional and unconditional waivers for final payments. *…

What Is a Lien Sale? A lien sale is the sale of a creditor’s legal claim (a lien) against an asset to satisfy unpaid debts. Liens commonly attach to real estate, vehicles, business assets, storage unit contents, or agricultural property. When the debtor fails to pay taxes, rent, repair bills, or other obligations, the lienholder…

Understanding liens A lien is a legal claim that a creditor holds on a debtor’s property to secure payment of a debt or performance of an obligation. If the debtor defaults, the lien holder may be able to seize or force the sale of the asset to satisfy the debt. Liens affect the ability to…

Licensing Fees: Definitions, Uses, and How They Differ from Royalties What is a licensing fee? A licensing fee is a payment that grants the payer the legal right to use intellectual property or to engage in a regulated activity. Fees can be one-time or periodic and apply across two broad contexts: professional/regulatory licenses and intellectual…

Licensing Agreement What is a licensing agreement? A licensing agreement is a legal contract in which the owner of a property (the licensor) grants another party (the licensee) permission to use that property under defined conditions. Commonly this covers intellectual property—patents, trademarks, copyrights, trade dress, or proprietary technology—but can also apply to other assets. The…

Licensee: Definition and Types Key takeaways A licensee is an individual or entity granted legal permission to use or exploit assets owned by another party. Compensation to the licensor can be an upfront fee, royalties, or revenue sharing. Licensing arrangements appear across industries: media, technology, pharmaceuticals, consumer goods, and regulated businesses. Common licensee types include…

LIBOR Scandal Overview The LIBOR scandal involved coordinated manipulation of the London Interbank Offered Rate (LIBOR), a benchmark that formerly underpinned trillions of dollars in loans, mortgages, and derivative contracts worldwide. Beginning as early as the mid-2000s and exposed publicly around 2012, the scheme undermined confidence in financial markets, triggered major fines and prosecutions, and…

LIBOR Curve Key takeaways The LIBOR curve plots short-term LIBOR rates against their maturities, showing the term structure of interbank lending rates. Common LIBOR maturities range from overnight (spot next) up to 12 months. Curve shape (normal, inverted, flat) signals market expectations for future rates and economic activity. After manipulation scandals, regulators moved to replace…