Tax Glossary

An entity that invests primarily in real estate and mortgages and passes through income to investors.

An individual who, because of his or her real estate activity, qualifies to deduct rental losses from nonpassive income.

Land and the buildings on land. Buildings are depreciable.

The amount of gain or loss to be reported on a tax return. Gain may not be recognized on certain exchanges of property.

Tangible depreciable property placed in service after 1980 and before 1987 and depreciable under ACRS.

A credit that entitles you to a refund even if you owe no tax for the year.

Distributions that must be taken annually to avoid a 50% IRS penalty by a traditional IRA account holder starting with the year age 70?

Term for deductible mortgage interest on a principal residence and a second home.

Real property in which 80% or more of the gross income is from dwelling units. Under MACRS, depreciation is claimed over 27.5 years under the straight-line method.

Eligible taxpayers may claim a tax credit for 10%, 20%, or 50% of up to $2,000 of retirement plan contributions.

A distribution of your investment that is not subject to tax unless the distribution exceeds your investment.

A revenue ruling is the Commissioner’s “official interpretation of the interpretation of the law” and generally is binding on revenue agents and other IRS officials. Taxpayers generally may rely on published revenue rulings in determining the tax treatment of their own transactions that arise out of similar facts and circumstances.

A trust that may be changed or terminated by its creator or another person. Such trusts do not provide an income tax savings to the creator.

A tax-free reinvestment of a distribution from a qualified retirement plan into an IRA or other qualified plan within 60 days.

A nondeductible contributory IRA that allows for tax-free accumulation of income. Qualifying distributions are completely tax free.