Reference
Glossary
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- 338(h)(10) election
- A joint election treating a stock sale as an asset sale for tax purposes.
- At-risk rules
- Limits that cap deductible losses at the amount you could actually lose.
- C corporation
- A corporation that pays its own tax, with a second tax on dividends.
- Capitalization rate
- Net operating income divided by price — the yardstick for commercial value.
- Captive insurance
- An insurance company formed by a business to cover its own risks.
- Cash-out refinance
- A new, larger loan that returns equity to you without a taxable sale.
- Custodian
- The firm required to hold assets inside a self-directed retirement account.
- Disregarded entity
- A single-owner LLC whose income is reported directly on the owner's return.
- Distribution
- Cash paid out by a partnership; it usually reduces basis rather than being taxed.
- Leverage
- Using borrowed money to control a larger asset than your cash alone would buy.
- Net operating income
- Rental income minus operating expenses, before debt payments.
- Opportunity Zone
- A designated area where reinvested gains receive deferral and long-term exclusion.
- Pass-through
- An entity that pays no entity-level tax; income lands on the owners' returns.
- Prohibited transaction
- Dealing between a retirement account and a disqualified person, which can void the account.
- QBI deduction
- A deduction of up to 20% of qualified business income, including some rentals.
- Qualified Opportunity Fund
- The vehicle that must hold the investment for Opportunity Zone benefits.
- Reasonable compensation
- The salary an owner-employee must take before taking distributions.
- S corporation
- A corporation whose profit is taxed once, on the shareholders' returns.
- Safe harbor
- A documented path the IRS accepts, such as the 250-hour rental enterprise test.
- Schedule K-1
- The form a partnership sends each investor reporting their share of results.
- Syndication
- A pooled investment where a sponsor buys property with many investors' capital.
- Tax credit
- A dollar-for-dollar reduction of tax owed, more valuable than a deduction.
- Triple-net lease
- A lease where the tenant pays taxes, insurance, and maintenance.
- UBIT
- Tax owed inside a retirement account on income from debt-financed property.