What Is “Section 1231 property”?
05/29/2026
Section 1231 property refers to real estate or depreciable property used in a trade or business that has been held for more than one year. It is unique because it offers a “best of both worlds” tax treatment: profits from sales are often taxed at lower capital gains rates, while losses can be fully deducted
What Is “Section 1231 loss”?
05/29/2026
What Is Section 1231 Loss? A Section 1231 loss occurs when you sell or exchange real estate or depreciable property used in your business—held for more than one year—for less than its adjusted basis. Unlike regular investment losses, a net Section 1231 loss is generally treated as an “ordinary loss,” which can be fully deducted
What Is “Section 1231 gain”?
05/29/2026
A Section 1231 gain is the profit made from the sale or exchange of real estate or depreciable property used in a trade or business that you have held for more than one year. It is widely considered one of the most taxpayer-friendly terms in the tax code because it allows certain business profits to
What Is “Section 1202 exclusion”?
05/29/2026
The Section 1202 exclusion is a federal tax provision that allows taxpayers to exclude a massive portion—often 100%—of their capital gains from the sale of Qualified Small Business Stock (QSBS). If you hold the stock for at least five years and meet specific IRS criteria, you can essentially walk away from a successful company exit
What Is “Schedule C business”?
05/29/2026
A Schedule C business refers to a sole proprietorship or a single-member LLC that reports its annual profit or loss on “Schedule C” of the individual tax return (Form 1040). It is the most common way for freelancers, gig workers, and independent contractors to tell the IRS how much money their business made or lost.
What Is “SE tax”?
05/29/2026
SE tax stands for Self-Employment tax. It is a social security and medicare tax primarily for individuals who work for themselves, representing both the employer and employee portions of these mandatory contributions. 1. Meaning of “SE tax” In plain English, SE tax is the freelancer’s version of the FICA taxes that regular employees see taken
What Is “Retained Earnings”?
05/29/2026
Retained earnings are the cumulative profits a business has earned that stay within the company rather than being paid out as dividends or distributions to owners. It essentially represents the business’s “savings account” of past profits used for future growth, debt repayment, or financial stability. 1. Meaning of “Retained Earnings” In plain English, retained earnings
What Is “Recognized gain”?
05/29/2026
What Is Recognized Gain? A recognized gain is the portion of a profit from the sale of an asset that must be reported on your tax return and is subject to tax. While you may “realize” a profit when you sell something, a recognized gain is the specific amount the IRS actually requires you to
What Is “Realized gain”?
05/29/2026
A realized gain is the profit earned from the sale or exchange of an asset, such as a stock, bond, or real estate. It occurs when you complete a transaction that “locks in” the increased value of the asset, resulting in a price higher than your original investment (tax basis). 1. Meaning of “Realized gain”
What Is a “Quarterly tax payment”?
05/29/2026
A quarterly tax payment is a scheduled installment of tax paid to the IRS four times a year. These payments are used to cover income tax and self-employment tax on earnings that aren’t subject to employer withholding, such as freelance income, rent, or investment gains. 1. Meaning of “Quarterly tax payment” In plain English, the