TAX GLOSSARY
401(k) Plan — A qualified retirement plan to which contributions from salary are made from pre-tax dollars.
Accelerated Depreciation — Computation of depreciation to provide greater deductions in earlier years of equipment and other business or investment property.
Accounting Method — Rules applied in determining when and how to report income and expenses on tax returns.
Accrual Method — Method of accounting that reports income when it is earned, disregarding when it may be received, and expense when incurred, disregarding when it is actually paid.
Acquisition Debt — Mortgage taken to buy, hold, or substantially improve main or second home that serves as security.
Active Participation — Rental real estate activity involving property management at a level that permits deduction of losses.
Adjusted Basis — Basis in property increased by some expenses (for example, by capital improvements) or decreased by some tax benefit (for example, by depreciation).
Adjusted Gross Income (AGI) — Gross income minus above-the-line deductions (such as deductions other than itemized deductions, the standard deduction, and personal and dependency exemptions).
Alimony — Payments for the support or maintenance of one's spouse pursuant to a judicial decree or written agreement related to divorce or separation.
Alternative Minimum Tax (AMT) — System comparing the tax results with and without the benefit of tax preference items for the purpose of preventing tax avoidance.
Amortization