What Is “Outside basis”?
06/01/2026
Outside basis is a tax term that represents a partner’s or LLC member’s tax investment in their ownership share of a business. It tracks the money and property they have put into the business, adjusted over time for profits, losses, and withdrawals. Knowing this running total is critical because it dictates how much tax you
What Is “Partner basis”?
06/01/2026
Partner basis (sometimes called “outside basis”) is a tax accounting measurement of your personal financial investment in a partnership or a multi-member LLC. It tracks how much money and property you have contributed to the business, plus your share of the profits, minus your withdrawals and losses. Knowing your basis is crucial because it determines
What Is “Guaranteed payment”?
06/01/2026
A guaranteed payment is a set amount of money paid by a partnership to a partner for their services or the use of their capital. Unlike a regular share of business profits, this payment is guaranteed regardless of whether the business actually makes money. It essentially functions as a salary for partners, since the IRS
What Is “Partner’s distributive share”?
06/01/2026
A partner’s distributive share is the specific portion of a partnership’s income, losses, deductions, or tax credits that is allocated to an individual partner for tax purposes. Even if the business keeps the profits in its bank account and never pays a dime out to you, you are still legally required to report and pay
What Is “Form 1065”?
06/01/2026
Form 1065 is the official IRS tax document used to report the financial performance of a business operated as a partnership. Officially titled the “U.S. Return of Partnership Income,” this form does not calculate the amount of tax the business owes. Instead, it is an “informational return” that calculates the total profits or losses of
What Is “Partnership tax return”?
06/01/2026
A partnership tax return is an informational tax document filed with the IRS to report the income, deductions, gains, and losses of a business owned by two or more people. Unlike a standard corporate return, a partnership tax return does not calculate tax owed by the business itself. Instead, it “passes through” the financial results
What Is “Cancellation of debt on home”?
06/01/2026
Cancellation of debt on a home happens when a mortgage lender legally forgives a portion or all of your home loan, meaning you are no longer required to pay it back. The IRS generally considers this forgiven amount as taxable income, even though you did not receive physical cash. However, there are several tax exclusions
What Is “Mortgage debt forgiveness”?
06/01/2026
Mortgage debt forgiveness happens when a lender legally relieves you of the obligation to pay back a portion or all of your home loan balance. While this provides immediate financial relief, the IRS generally views this forgiven amount as taxable income, which can trigger an unexpected tax bill. Fortunately, the tax code includes specific exclusions
What Is “Short sale tax consequences”?
06/01/2026
Short sale tax consequences refer to the potential tax liabilities you face when you sell a property for less than the outstanding mortgage balance, with the lender’s permission. The primary consequence is that the IRS generally treats any portion of your mortgage that the lender forgives as taxable income. However, the IRS also provides specific
What Is “Foreclosure tax consequences”?
06/01/2026
Foreclosure tax consequences refer to the potential tax bills you might face when a lender takes back your property due to an unpaid mortgage. Surprisingly, losing your home can trigger two separate tax events: taxes on “canceled debt” and taxes on “capital gains.” Fortunately, the IRS provides several exceptions that can legally protect taxpayers from