Tag: Basis

  • Basis in Business

    Basis in Business

    Basis is a business term used to identify the value of an individual or entity’s investment in an entrepreneurial endeavor. It is customarily linked to taxation as this term is used by the Internal Revenue Code to determine gain or loss. To further compound its meaning  ‘basis’ is sometimes substituted for the term ‘equity’.

  • Negative Basis in Business – Tax Shelters

    Negative Basis in Business – Tax Shelters

    Negative basis in business refers to the value of the equity investment in the company. It literally means you have no actual equity investment and worse you owe somebody money because other parties have fronted the necessary capital to make the business viable.

  • Capital Gains – Introduction to Fundamentals

    Capital Gains – Introduction to Fundamentals

    When an individual or business sells an asset, the gain or loss is classified into one of two distinct tax groups – ordinary or capital. The tax classification is strictly tied to the nature of the asset sold. For most businesses, the assets sold are inventory.

  • Landlord – Business Dynamics and Economics

    Landlord – Business Dynamics and Economics

    I love the game of Monopoly. My sons enjoy playing it too. But we all have the same complaint about the game; it takes forever to accumulate all the wealth and ultimately win the game. Being a landlord means the same thing. It will take a long time to accumulate wealth. For those of you considering becoming…

  • Basis for Tax Purposes

    Basis for Tax Purposes

    Basis is a term used in computing gains and losses on the disposition of an asset. For any business owner or individual taxpayer it is important to understand what the Internal Revenue Service (IRS) is really seeking. What is your tax basis in an asset? 

  • At-Risk Rules – An Elementary Understanding

    At-Risk Rules – An Elementary Understanding

    Code Section 465 of the Internal Revenue Code defines ‘At-Risk’ as the financial value the taxpayer has in jeopardy related to the business activity the taxpayer is invested in as some form of an owner. Effectively, the taxpayer may only take losses on his tax return contingent on the loss being directly tied to invested dollars…