What Is “Incentive Stock Option”?
06/01/2026
What Is an Incentive Stock Option (ISO)? An Incentive Stock Option (ISO) is a type of corporate benefit that gives employees the right to buy company shares at a fixed, usually discounted price. Unlike regular stock options, ISOs offer significant tax advantages because their profits can be taxed at lower capital gains rates if certain
What Is “Household Employment Tax”?
06/01/2026
What Is Household Employment Tax? Household employment tax, often nicknamed the “Nanny Tax,” refers to the federal taxes you must pay and report if you hire someone to perform work in or around your home. These taxes typically include Social Security, Medicare, and federal unemployment taxes. 1. Meaning of “Household Employment Tax” In plain English,
What Is “Half-year convention”?
06/01/2026
What Is the Half-Year Convention? The half-year convention is a tax rule that treats all business property placed in service during a tax year as if it were started exactly at the midpoint of that year. This means that regardless of whether you bought a piece of equipment in January or October, you generally claim
What Is “Goodwill”?
06/01/2026
What Is Goodwill? In the tax world, goodwill is an intangible asset that represents the value of a business above and beyond its physical parts. It is the “extra” amount a buyer pays for things like a loyal customer base, a strong brand name, a great location, or a talented team that isn’t easily measured
What Is “Form 8960”?
06/01/2026
What Is Form 8960? Form 8960 is the official IRS document used to calculate and report the Net Investment Income Tax (NIIT). This is a 3.8% surtax that applies to individuals, estates, and trusts that have investment income and a total income that exceeds specific legal thresholds. 1. Meaning of “Form 8960” In plain English,
What Is “Form 6252”?
06/01/2026
What Is Form 6252? IRS Form 6252 is the document used to report income from an installment sale, which is a sale where you receive at least one payment after the tax year in which the sale occurred. It allows you to spread out the tax on your profit over several years as you actually
What Is “Form 4797”?
06/01/2026
What Is Form 4797? IRS Form 4797, officially titled “Sales of Business Property,” is the tax form used to report the sale, exchange, or involuntary conversion of assets used in a trade or business. It helps taxpayers calculate the gain or loss from the disposal of items like machinery, equipment, or rental real estate. 1.
What Is “Fixed Asset”?
06/01/2026
What Is a Fixed Asset? A fixed asset is a piece of tangible property that you own and use in your business or income-producing activity to help generate revenue over a long period. Unlike inventory, which you buy to sell quickly, a fixed asset is something you intend to keep and use for more than
What Is “Fair market value of stock”?
06/01/2026
What Is Fair Market Value (FMV) of Stock? Fair market value (FMV) of stock is the price that a share of stock would sell for on the open market between a willing buyer and a willing seller. For tax purposes, it acts as the “official sticker price” used to calculate your income, investment gains, or
What Is “Exercise price”?
06/01/2026
The exercise price, also commonly known as the “strike price,” is the fixed price per share at which you can buy the underlying stock in a stock option contract. It is the specific dollar amount you must pay to turn your “option” into actual shares of ownership. 1. Meaning of “Exercise price” In plain English,