A corporation that dissolves before realizing a substantial portion of the taxable income to be derived from its properties. The Internal Revenue Service (IRS) treats the gain on the sale or liquidation of a collapsible corporation as ordinary income to the stockholder.
In finance, a dealer is an individual or entity involved in the buying and selling of financial securities or other commodities, often at their own risk, for personal sales or to customers.
Depreciation Recapture refers to the portion of taxable capital gain from the sale of an asset, which represents the depreciation previously deducted for that asset.
Excess (accelerated) depreciation refers to the accumulated difference between accelerated depreciation claimed for tax purposes and what straight-line depreciation would have been. Generally, excess accelerated depreciation is recaptured as ordinary income upon a sale, instead of receiving more favorable capital gains treatment.
Ground rent is the revenue generated by leasing out a piece of land. It is considered ordinary income for tax purposes but can be reclassified in some circumstances.
Ordinary income refers to normal income earned by individuals, such as wages, interest, and rents, which is fully subject to regular income tax rates. This contrasts with capital gains, which often benefit from reduced tax rates.
Ordinary income property refers to property whose sale at fair market value on the date of the contribution would have resulted in ordinary income or in short-term capital gain. It includes inventory, works of art or manuscripts created by the donor, and capital assets held one year or less.
An ordinary loss for income tax purposes is a type of loss that can be deductible against ordinary income. This is usually more beneficial to an individual taxpayer compared to a capital loss, which has limitations on deductibility.
A partner is a member of a partnership, which could be a syndicate, association, pool, joint venture, or another unincorporated organization. Partners generally report their pro rata share of partnership income and deductions on their personal tax returns.
Personal property, also known as personalty, refers to movable items that are not attached to real estate and can include goods used in trade or business. Gains on the sale of personal property may be taxed favorably under Section 1231 of the Internal Revenue Code.
Unimproved property refers to land that has not received any development, construction, or site preparation. It qualifies for capital gain or loss treatment, unlike improved property which is subject to ordinary income tax treatment.
