What Is “Bargain Element”?
06/01/2026
What Is a Bargain Element? A bargain element is the difference between the fair market value of a stock and the price you actually paid to purchase it, typically through an employee stock option plan. In the eyes of the IRS, this “discount” often represents a form of compensation that may be subject to income
What Is “Amortization”?
06/01/2026
What Is Amortization? Amortization is a tax method used to spread the cost of an intangible asset over its useful life. Instead of deducting the entire cost of a non-physical business asset in the year you buy it, you deduct a portion of that cost each year for a set number of years, as determined
What Is “Alternative Minimum Tax Adjustment”?
06/01/2026
What Is an Alternative Minimum Tax (AMT) Adjustment? An Alternative Minimum Tax (AMT) adjustment is a specific change made to your regular taxable income to arrive at your income under the AMT system. These adjustments recalculate certain tax items—like stock options or depreciation—to ensure that taxpayers who use various tax breaks still pay a minimum
What Is “Airbnb tax”?
06/01/2026
“Airbnb tax” is a shorthand term used by hosts to describe the various federal, state, and local tax obligations that come with renting out a property on a short-term basis. It generally involves reporting your rental earnings as taxable income to the IRS while also complying with local “occupancy” or “lodging” taxes required by your
What Is “Accelerated Depreciation”?
06/01/2026
What Is Accelerated Depreciation? Accelerated depreciation is a tax method that allows you to deduct the cost of a business asset more quickly in the early years of its useful life than in the later years. By front-loading these deductions, you can significantly reduce your taxable income and improve your cash flow shortly after making
What Is a Section 734(b) Adjustment?
06/01/2026
A Section 734(b) adjustment is a technical partnership tax calculation that corrects the value of remaining business assets after a partner receives a property or cash distribution. It ensures that the remaining partners do not suffer unfair tax consequences, like losing tax deductions or inheriting ghost capital gains, when a partner exits or takes a
What Is a Section 743(b) Adjustment?
06/01/2026
A Section 743(b) adjustment is a special tax calculation that updates a new partner’s share of a partnership’s asset values to match what they actually paid for their stake. It ensures that the incoming partner does not pay taxes on gains or receive deductions for losses that built up before they joined the business. This
What Is a “Section 754 Election”?
06/01/2026
A Section 754 election is a special tax choice made by a partnership or multi-member LLC that synchronizes the tax value of its internal assets with the purchase price paid by a incoming partner. It allows the business to adjust its internal tax basis upward or downward when a partnership interest is sold, transferred, or
What Is “Section 704(c) Gain”?
06/01/2026
A Section 704(c) gain is a tax rule that tracks the pre-existing, unsold profit attached to a piece of property at the exact moment a partner contributes it to a partnership or multi-member LLC. The IRS uses this rule to ensure that the specific partner who owned the property while it grew in value is
What Is a “Section 704(b) Capital Account”?
06/01/2026
A Section 704(b) capital account is a specialized financial record used by partnerships and multi-member LLCs to track each partner’s true economic stake in the business based on market values. The IRS uses this account to ensure that the way a business divides its profits and losses on paper matches the actual financial reality of