Articles
This refers to a section of the Internal Revenue Code that permits taxpayers to expense (write off in one year) up to $125,000 (adjusted for inflation annually) of business equipment expenditures that would normally have to be depreciated over their us...
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Part of our increasingly complicated Federal income tax structure is a myriad of acronyms and abbreviations. Understanding the meaning of the more frequently encountered terminology can lead to a better comprehension of the complex tax situations that ...
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Part of our increasingly complicated Federal income tax structure is a myriad of acronyms and abbreviations. Understanding the meaning of the more frequently encountered terminology can lead to a better comprehension of the complex tax situations that ...
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A rollover is a tax-free withdrawal of cash or other assets from one retirement plan and its reinvestment in another retirement program. The amount rolled over is excluded from gross income in the year of the transfer. Generally, a rollover must be com...
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The “line” in this term refers to the line drawn when totaling the items that make up the taxpayer’s adjusted gross income (AGI). The term “deduction” is usually associated with itemized deductions, but an above-the-line deduction is one that...
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A term used for interest received on an obligation issued by a state or local government. Generally, this type of interest is not taxable (but see Private Activity Bonds) for Federal tax purposes. Most states, on the other hand, will treat municipal bo...
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This is the debt used to acquire, build, or substantially improve a taxpayer’s principal residence or a second home, and it is debt that is secured by the principal residence or second home. The interest on up to $1 million of acquisition indebtednes...
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This can mean income that is taxable as opposed to income that is not, such as tax-exempt interest from municipal bonds. Or, it can refer to taxable income on a tax return,
which is income less adjustments, deductions
and exemptions (the final incom...
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This may be the most important tax term since the tax code uses the AGI to limit a vast number of tax benefits. AGI is basically a taxpayer’s gross taxable income from all sources (gross income) reduced by certain allowable adjustments, sometimes ref...
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Section 1031 of the tax code allows a taxpayer to exchange like-kind business and investment assets. This type of transaction is frequently referred to as a tax-free exchange, which is misleading since the tax is not “free” but instead is deferred ...
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