What’s Included in Nonpassive Income? Nonpassive income refers to income that is earned through active participation in a business or investment activity. It is income that is not considered passive, meaning it is not generated from passive investments such as stocks, bonds, or rental properties. Nonpassive income can come from … …
Mechanics of Tax Loss Carryforward When a business incurs a net operating loss (NOL) in a particular tax year, it can carry forward that loss to offset taxable income in future years. This allows the business to reduce its tax liability and potentially receive a tax refund. To utilize tax … …
Schedule K-1 Federal Tax Form: Everything You Need to Know The Schedule K-1 federal tax form is an important document that individuals who are partners in a partnership, shareholders in an S corporation, or beneficiaries of an estate or trust need to be familiar with. It is used to report … …
Pigovian Tax: Definition and Purpose A Pigovian tax is a type of tax that is designed to correct market failures caused by negative externalities. It is named after economist Arthur Pigou, who first proposed the concept in the early 20th century. The purpose of a Pigovian tax is to internalize … …
What is LITHC? The Low-Income Housing Tax Credit (LITHC) is a federal tax credit program designed to incentivize the development of affordable housing for low-income individuals and families. It was established by the Tax Reform Act of 1986 and is administered by the Internal Revenue Service (IRS). Under the LITHC … …
Listed Property Meaning and Examples Listed property includes assets such as vehicles, computers, cameras, and other equipment that can be used for both business and personal purposes. These assets are often used by small business owners and self-employed individuals. The IRS has specific guidelines for determining whether a property is … …
Franchise Tax: Definition, Rates, Exemptions, and Example The franchise tax is a type of tax imposed on businesses by some states in the United States. It is not to be confused with the franchise fee, which is a fee paid by a business to operate under a franchisor’s brand. The … …
What is Form 2106 Employee Business Expenses? Form 2106 Employee Business Expenses is a document used by individuals who are employees and incur expenses related to their job. These expenses can include travel, meals, entertainment, and other work-related costs. The form is used to calculate and report these expenses to … …
Election: Tax Strategy and When to File The Importance of Timing Filing your taxes at the right time can help you optimize your tax strategy and take advantage of various benefits. Here are a few reasons why timing matters: Maximize deductions: Filing early allows you to identify and claim all … …