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Tax Glossary
What Is “Material participation”?
Material participation is a set of criteria used by the IRS to determine whether a taxpayer is actively involved in...
Tax Glossary
What Is “PAL rules”?
The term “PAL rules” stands for Passive Activity Loss rules. These are IRS regulations that prevent taxpayers from using losses...
Tax Glossary
What Is “Passive activity loss”?
A passive activity loss occurs when the expenses from a hands-off business or rental property exceed the income it generates....
Tax Glossary
What Is “Depreciation of rental property”?
Depreciation of rental property is a tax deduction that allows real estate investors and landlords to recover the cost of...
Tax Glossary
What Is “Rental expense”?
A rental expense is a cost incurred to manage, maintain, or operate a rental property, or a cost a business...
Tax Glossary
What Is “Repairs vs. improvements”?
The difference between “repairs vs. improvements” is a crucial tax concept that determines how quickly you can deduct the money...
Tax Glossary
What Is “Advance rent”?
Advance rent is any payment a landlord receives from a tenant for a future rental period before that specific rent...
Tax Glossary
What Is “Security deposit”?
A security deposit is a sum of money paid by a tenant to a landlord before moving into a rental...
Tax Glossary
What Is “Worthless security”?
A worthless security is an investment, such as a stock, bond, or option, that has lost all its value and...
Tax Glossary
What Is a “Wash sale”?
A wash sale occurs when you sell a security (like a stock or bond) at a loss and then buy...