Glossary

The basis of property for purposes of calculating gain on a sale without taking into account any depreciation taken in earlier years but with adjustments for the section 179 deduction and any special depreciation allowance.

The amount of tax that has not been paid by either withholding or estimated payments but that has been properly reported on the tax return.

A penalty assessed for not paying enough tax through withholding or because estimated tax payments were not made in a timely manner.

The difference between the tax that should have been reported on the tax return (if all the income had been properly included and all the deductions correctly reported) and the lower tax that was actually reported on the return.

Investment income (such as interest, dividends, and capital gains) and other income that is not generated by personal service (such as unemployment compensation, taxable Social Security benefits, pensions, annuities, and alimony).

A person who is unmarried or legally separated from their spouse under a divorce or separate maintenance decree. State law governs whether a taxpayer is married or legally separated under a divorce or separate maintenance decree. A taxpayer is considered unmarried for the entire year if they can be considered unmarried as of the last day of the tax year.

The difference between realized gain or loss and recognized gain or loss.

The part of the stated principal amount of an installment sale contract that is treated as interest when the contract does not provide for adequate stated interest.

The estimated length of time it takes for property to wear out, decay, get used up, become obsolete, or lose its value from natural causes.