THE WORKING GLOSSARY
Start with the vocabulary.
Short definitions to make the guides easier to use. These are orientation notes, not complete statements of tax or legal rules.
- Owner-occupied property
- Property used by the owner's business. Legal ownership and tax ownership may involve different entities and require careful coordination.
- Adjusted basis
- Tax basis after required adjustments, such as capital improvements and depreciation. It differs from market value and loan balance.
- Land allocation
- The portion of acquisition basis assigned to land. Land generally is not depreciable.
- Placed in service
- The point when property is ready and available for its intended use, which can differ from ordering, payment, or delivery.
- Capital improvement
- An expenditure requiring capitalization under applicable rules rather than an immediate deduction. The analysis depends on facts and the relevant unit of property.
- Depreciation recapture
- Rules that can change the tax character of gain when depreciated property is disposed of. Accelerated deductions should be evaluated with the exit.