Tax Terminology

Tax Terminology

Here at PSVS we are in the trenches every day helping you navigate your way through the various complexities of your accounting-related activities. It is easy to forget that not everyone knows all the accounting-specific terminology we use daily.

We have created this fairly comprehensive glossary to supplement your knowledge and understanding and hopefully answer some of your questions.

Of course, if you have any questions send us an email or give us a call: (650) 578-1200.

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Real Estate Investment Trust (REIT)

A trust that primarily invests in real estate or real estate secured loans. Most of the assets in real estate mutual fund include REITs.

Real Property

Land and generally anything built on, growing on, or attached to land, such as buildings and their structural components (real estate).

Realized Gain or Loss

The difference between the adjusted basis of the property and the sales price. In a like-kind exchange, the total of all money received, net liabilities given up, and the fair market value of all property received, minus the basis of the property traded is the realized gain or loss.

Recapture

To include an amount in income that was deducted or excluded in a prior year.

Recharacterization

Treating a contribution to one type of IRA as having been made to another type of IRA.

Recognized Gain or Loss

The part of a realized gain or loss that is a taxable gain or deductible loss. For a like-kind exchange, it is the lesser of realized gain or boot. A recognized (or taxable) gain is also known as the amount recognized.

Reconversion

The process of converting funds in a traditional IRA to a Roth IRA after they have been recharacterized. A reconversion cannot occur in the same tax year (or within 30 days, whichever is later) as the original conversion.

Recourse Debt

A debt for which an individual is personally liable.

Recovered Basis

The basis of property has been fully recovered when the total of the section 179 and cumulative allowed or allowable depreciation deductions equals the cost or investment in the property.

Recovery

A return of an amount the taxpayer deducted or took a credit for in an earlier tax year.

Recovery Period

A period of years during which the cost of business assets is depreciated.

Recovery Period

A predetermined number of years over which the cost or other basis of a property is recovered.

Redemption

The payment or exchange of an obligation such as when stock is sold or converted or a bond is presented for payment.

Refund Offset

An item of existing debt that reduces the refund amount claimed on a tax return.

Refundable Credit

A credit that, when combined with a taxpayer's other tax payments, can reduce the amount of tax they owe, give them a refund, or increase their refund.

Regular Tax

The federal tax liability imposed for the year without regard to the alternative minimum tax.

Regulated Investment Company (RIC)

Commonly called a mutual fund, this type of investment company is required by law to distribute interest, dividends, and capital gains to its shareholders. The income avoids double taxation by only being taxed at the personal level, not at the corporate level.

Reimburse

To pay back for money spent for out-of-pocket expenses.

Rental Expenses

Ordinary and necessary expenses that may be deducted for rental property.

Rental Income

Any payment received for the use or occupation of property.

Repossession

The action of a lender or a seller taking property from an individual, usually because of loan default.

Required Beginning Date

The date at which an individual must begin receiving distributions from a qualified retirement plan.

Required Distribution Rules

Requirements for distributing qualified retirement plan funds. The requirements differ depending on whether the person is the owner or the beneficiary.

Required Minimum Distribution

The smallest amount that must be distributed from a qualified plan to prevent an additional tax on excess accumulation. Also called minimum required distribution.

Residential Rental Property

Any building or structure, such as a rental home (including a mobile home), for which 80% or more of its gross rental income for the tax year is from dwelling units.

Retiring Property

Permanently withdrawing property from use in a trade or business or from use in the production of income.

Rita GO Zone

The portion of the Hurricane Rita disaster area determined by the President before October 6, 2005, to warrant individual or individual and public assistance from the federal government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act by reason of Hurricane Rita.

Rollover

A tax-free withdrawal of cash or other assets from a qualified retirement plan that is reinvested into another qualified retirement plan within 60 days.

Roth IRA

A type of IRA that allows an individual (subject to certain income limits) to save for retirement while allowing the savings to grow tax-free.

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