| As a courtesy to our clients, we have compiled a comprehensive list of common tax terms and definitions for quick reference. | Tax Lingo Troubles? |
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| Term | Definition |
|---|---|
| Imputed interest |
Interest deemed earned on seller-financed sales or low-interest loans, where the parties' stated interest rate is below the applicable IRS federal rate. |
| Incentive stock option |
Option meeting tax law tests that defers tax on the option transaction until the obtained stock is sold. |
| Inclusion amount for leased cars |
Based on an IRS table, an amount that reduces a business deduction taken for payments on an auto leased for a minimum of 30 days. |
| Income in respect of a decedent |
Income earned by a person before death but taxable to an estate or heir who receives it. |
| Independent contractor |
One who controls his or her own work and reports as a self-employed person. |
| Individual retirement account (IRA) |
A retirement account to which up to $5,000 (or $5,500 if you are 50 or over) may be contributed for 2008, but deductions for the contribution are restricted if you are covered by a company retirement plan. Earnings accumulate tax free. |
| Installment sale |
A sale of property that allows for tax deferment if at least one payment is received after the end of the tax year in which the sale occurs. The installment method does not apply to year-end sales of publicly traded securities. Dealers may not use the installment method. Investors with very large installment balances could face a special tax. |
| Intangible asset |
Assets that have value but that cannot be physically touched, such as a brand, franchise, trademark, or patent. |
| Inter vivos or lifetime trust |
A trust created during the lifetime of the person who created the trust. If irrevocable, income on the trust principal is generally shifted to the trust beneficiaries. |
| Investment in the contract |
The total cost investment in an annuity. When annuity payments are made, the portion allocable to the cost investment is tax free. |
| Investment interest |
Interest on debt used to carry investments, but not including interest expense from a passive activity. Deductions are limited to net investment income. |
| Involuntary conversion |
Forced disposition of property due to condemnation, theft, or casualty. Tax on gain from involuntary conversions may be deferred if replacement property is purchased. |
| Itemized deductions |
Items, such as interest, state and local income and sales taxes, charitable contributions, and medical deductions, claimed on Schedule A of Form 1040. Itemized deductions are subtracted from adjusted gross income to arrive at taxable income. The amount of itemized deductions is also subject to a reduction when adjusted gross income exceeds certain limits. |