What Is “Mid-month convention”?
06/01/2026
What Is the Mid-Month Convention? The mid-month convention is a tax rule used to determine the start date for depreciating real estate. It assumes that a building was placed in service (or disposed of) exactly in the middle of the month, regardless of the actual date you closed on the property. 1. Meaning of “Mid-month
What Is the “Mark-to-Market Election”?
06/01/2026
What Is the Mark-to-Market Election? The mark-to-market election is a special tax choice under Internal Revenue Code Section 475(f) available to active traders. It allows them to treat their securities as if they were sold for their fair market value on the last business day of the year, turning capital gains and losses into “ordinary”
What Is “Market Discount”?
06/01/2026
What Is Market Discount? Market discount is the difference between the price you pay for a bond on the secondary market and its higher face value (par value) at maturity. The IRS generally treats this discount as a form of interest, meaning it is taxed at your regular ordinary income rates rather than lower capital
What Is “Margin Interest”?
06/01/2026
What Is Margin Interest? Margin interest is the interest charged by a brokerage firm on the money you borrow to purchase securities, a practice known as buying on margin. In the eyes of the IRS, this interest is generally classified as an investment interest expense and may be deductible if you itemize your deductions. 1.
What Is “Luxury auto depreciation limits”?
06/01/2026
What Are Luxury Auto Depreciation Limits? Luxury auto depreciation limits are IRS-imposed caps on the maximum dollar amount a business owner or self-employed individual can deduct for the annual wear and tear of a passenger vehicle. Even if a vehicle is very expensive, these rules restrict how much of the purchase price can be written
What Is “Like-Kind Exchange”?
06/01/2026
What Is a Like-Kind Exchange? A like-kind exchange, often called a Section 1031 exchange, is a tax-deferral strategy that allows you to swap one investment property for another without paying immediate capital gains taxes. Instead of paying the IRS when you sell, you “roll” your profit into the new property, allowing your investment to grow
What Is “Involuntary Conversion”?
06/01/2026
What Is Involuntary Conversion? An involuntary conversion occurs when your property is destroyed, stolen, condemned, or disposed of under the threat of condemnation, and you receive payment or other property in return. It is essentially a “forced sale” where you receive compensation, such as an insurance payout or a government award, for a loss you
What Is “Investment Interest Expense”?
06/01/2026
What Is Investment Interest Expense? Investment interest expense is the interest paid on money borrowed to purchase or carry assets that produce investment income, such as stocks, bonds, or non-rental real estate. Taxpayers can often deduct this expense to lower their tax bill, but the deduction is generally limited to the amount of net investment
What Is “Intangible asset”?
06/01/2026
What Is an Intangible Asset? An intangible asset is a piece of property that has value but lacks a physical presence—meaning you can’t touch it, hold it, or kick it. These assets represent legal rights or intellectual advantages that help a business earn money over time, such as patents, trademarks, or a solid reputation. 1.
What Is “Installment Sale”?
06/01/2026
What Is an Installment Sale? An installment sale is a sale of property where you receive at least one payment after the tax year in which the sale occurs. It is a tax-deferral strategy that allows you to report portions of your gain over several years as you actually receive the cash, rather than paying