The tax + wealth terms that matter.
30 terms across 8 categories. Plain-English, IRC-sourced, kept current. Search-friendly so you can land on the exact concept your CPA mentioned.
Equity compensation
QSBS
Section 1202 may exclude up to $10M (or 10x basis) of capital gain from federal tax on Qualified Small Business Stock held 5+ years.
Section 83(b) election
An 83(b) election lets you include restricted stock or a profits interest in income at grant (low value) rather than vest (potentially high value). 30-day deadline.
RSUs
RSUs are taxed as ordinary income at vest. Holding vested shares is voluntary diversification risk; selling is a tax-neutral diversification decision.
ISO AMT
Exercising and holding ISOs creates an AMT preference item equal to the spread between strike and FMV. Pre-paying AMT may unlock long-term capital gain treatment at sale.
Real estate
1031 Exchange
Section 1031 lets investors defer capital gain on the sale of investment real estate by reinvesting proceeds in like-kind property within tight windows.
Cost segregation study
A cost-seg study reclassifies components of a building into 5-, 7-, or 15-year recovery periods, accelerating depreciation and producing a large first-year deduction.
REPS
REPS qualifies a taxpayer (or spouse) to treat rental losses as non-passive, allowing them to offset W-2 or business income. 750+ hours required.
STR Loophole
Rentals with avg guest stay under 7 days are not 'rental activities' under IRC 469. Material participation lets losses offset active income — without needing REPS.
Business entities
S-Corp Election
Electing S-Corp tax treatment may convert net profit above a reasonable salary into distributions that avoid the 15.3% self-employment tax.
C-Corp
C-Corps are the standard entity for VC-backed startups. Profits are taxed at the corporate level (21%); distributions are taxed again as dividends.
Tax credits
R&D Credit
The federal R&D Tax Credit may offset income or payroll tax for businesses engaged in qualified research. OBBBA expanded the payroll-tax offset to $500K for early-stage companies.
Section 174
Since 2022, R&D expenditures must be capitalized and amortized over 5 years (domestic) or 15 years (foreign), rather than deducted immediately.
Retirement
Backdoor Roth IRA
High-income taxpayers can fund a Roth IRA indirectly via a non-deductible Traditional IRA contribution followed by an immediate conversion to Roth.
Mega-backdoor Roth
After-tax 401(k) contributions plus in-plan Roth conversion (or in-service rollover) can move tens of thousands of additional dollars into Roth each year.
Roth conversion ladder
Converting Traditional IRA to Roth across multiple years can fill lower tax brackets before required minimum distributions hit at age 73.
RMD
RMDs are mandatory annual withdrawals from Traditional IRAs and 401(k)s starting at age 73. Calculated from prior year-end balance and IRS life-expectancy tables.
Wealth planning
DAF
A DAF is a charitable account that lets you deduct the contribution now and direct grants to charities over time. Best funded with appreciated securities.
Asset location
Asset location is the practice of placing tax-inefficient assets in tax-deferred accounts and tax-efficient assets in taxable accounts to minimize long-run tax drag.
TLH
Tax-loss harvesting realizes losses in taxable accounts to offset capital gains and up to $3,000 of ordinary income per year. Subject to the wash-sale rule.
Wash-sale rule (IRC Section 1091)
Buying a substantially identical security within 30 days before or after selling at a loss disallows the loss for current-year deduction.
IPS
An IPS is a written document that defines a client's investment objectives, constraints, target allocation, and review cadence.
Long-term capital gain
Gains on assets held more than 12 months are taxed at preferential rates (0%, 15%, or 20%) — plus a 3.8% NIIT surcharge above income thresholds.
Deductions
QBI Deduction
Section 199A allows up to a 20% deduction on pass-through business income, subject to income phase-outs and Specified Service Trade or Business (SSTB) restrictions.
Augusta Rule (Section 280A — 14-day home rental)
Rent your personal residence to your business for up to 14 days per year. Rent income is tax-free; the business deducts the rent expense at fair-market value.
Accountable plan
An accountable plan lets a business owner reimburse personal expenses paid on the company's behalf — deductible to the business, tax-free to the owner.
Compliance
AMT
AMT is a parallel tax system designed to ensure high-income taxpayers pay a minimum amount. ISO exercises + large state-tax deductions are the most common triggers.
NIIT
A 3.8% surtax on investment income when modified AGI exceeds $200K (single) or $250K (MFJ). Capital gains, dividends, interest, and rental income may be subject.
IRMAA
IRMAA is a Medicare premium surcharge based on income from two years prior. Crossing thresholds can add hundreds per month to your premiums.
Reasonable compensation (S-Corp)
S-Corp owner-employees must take a reasonable salary before taking distributions. Documentation of comparable compensation is critical.
SSTB
SSTBs are excluded from the Section 199A QBI deduction above income thresholds. The definition catches most professional service businesses.