A collapsible corporation refers to a specific type of corporation that is dissolved typically within three years, with the IRS treating any gain from the sale or liquidation as ordinary income rather than capital gain for the stockholders.
In real estate, a dealer (tax) is an individual or entity that buys and sells property for their own account, with such property considered as inventory. Consequently, any gains from the sale are treated as ordinary income for tax purposes.
Excess accelerated depreciation refers to the accumulated difference between accelerated depreciation claimed for tax purposes and what straight-line depreciation would have been. It's typically recaptured as ordinary income upon sale instead of receiving more favorable capital gains treatment.
Imputed interest is the interest that tax authorities assume to be paid on a loan, even if no actual interest payment has been made or if the interest rate is below market levels.
Ordinary income refers to any type of income that is taxed according to the standard income tax rates established by taxing authorities. This category includes wages, salaries, commissions, interest, and other types of income that do not receive special tax treatment like long-term capital gains.
An ordinary loss is a loss that is deductible against ordinary income for income tax purposes and is generally more beneficial to a taxpayer than a capital loss, which has limitations on deductibility.
Section 1245 of the Internal Revenue Code (IRC) pertains to gains from the sale of depreciable personal property and mandates that depreciation recapture occurs, treating a portion of the capital gains as ordinary income.
A short-term capital gain refers to the profit from the sale of a capital asset that was held for less than 12 months. Unlike long-term capital gains, these gains are typically taxed at higher rates corresponding to ordinary income.
