Vocabulary for Investment and Taxation Flashcards
purchase price plus value of capital improvement minus depreciation
Adjusted Basis
original purchase price plus capital improvement
Adjusted Purchase Price
sale price minus sale costs
Adjusted Sales Price
actual price paid for property
Basis
state laws regulating the sale of investment securities
Blue Sky Laws
anything of value given to make up the difference in equities between two properties exchanged
Boot
limits liability; pays taxes twice
C- Corp
the taxable gain received from a capital assets
Capital Gain
the loss realized from the sale of capital asset
Capital Loss
a deduction taken for an investment
Depreciation (tax)
accounting procedure used for investment;
Straight Line Depreciation
the numer of years a property will contribute value to the land;can deduct 27.5 years on residential and 39 years for commercial
Economic Life
Each partner is responsible and liable for total P&L
General Partnership
the intangible value of a business due to the habit of patronage; a capital asset but not depreciable
Good Will
a tax method of reporting only the amount of income received as it is received; seller carries back financing and money is paid over time; tax deferment strategy
Installment Sale
using borrowed funds to finance investments with little or no personal cash invested; what you can borrow against; use a smaller investment to generate a larger rate of return
Leverage
has general mgr, limits liability but no decision making; responsible only for $ investment
Limited Partnership
in a tax deferred exchange, the assumption of a mortgage of lesser value than an existing mortgage; debt relief is taxable; like kind properties in tax deferred exchanges
Mortgage Relief
when selling a principal residence there is no tax up to $250K indiv. and $500K married
Principal Residence
a corporation with a minimum of 100 investors and %95 of profit passes to shareholder
REIT (Real Estate Investment Trust)
no more than 100 U investors, taxed once and limits liability; can write off any loss
S- Corp
personal liability but all decision making
Sole Proprieter
multiple ownership of an investment as in a REIT; as a group you may buy securities
Syndicate
a real estate investment that postpones the paying of taxes
Tax Deferment
using investments to postpone payment of income tax
Tax Shelter
wages from employer
W-2
self employed
1099
taxes on interest earned
1099 Int
partnership income
K1
