👉 In the context of accounting, a tax entity is defined as an entity that has taxable income and pays taxes on its income. These entities include individuals, corporations, partnerships, trusts, and estates. Taxable income includes both regular income and capital gains or losses. The term "taxable" refers to whether the entity is required to pay taxes based on its financial position. In the United States, for example, a corporation that pays taxes on its income must file an annual tax return, which is
