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The excess of business expenses over income. A business may apply a net operating loss to get a refund of past taxes (or a reduction of future taxes) by carrying it back to profitable years as an additional deduction (or by carrying it forward as a deduction to future years).

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The system for computing depreciation for most business assets.

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Property listed in the tax code or by the IRS that must comply with special rules before depreciation may be claimed. Cars and personal computers are examples of listed property. The special rules are designed to prevent deductions where the property is used for personal rather than business purposes.

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A legal structure that allows a business to be taxed like a partnership but function generally like a corporation. An LLC offers members (among other things) protection against liability for claims against the business that is not available in a partnership.

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Tax-free swaps of investment property. Commonly used for real estate.

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A rule that applies to the sale of part of a group of similar items in an inventory that assumes the last ones acquired were the first ones sold. This is important if the items in the group were acquired or manufactured at different times or for different costs. (See “First-in, first-out (FIFO).”)

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A retirement plan available to self-employed individuals.

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An optional filing status available to married taxpayers that offers generally (but not always) lower taxes than “married filing separately.”

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The conversion of property into money under circumstances beyond the control of the owner. For example: (1) property that is destroyed and “converted” into an insurance settlement or (2) property that is seized by the government and “converted” into a condemnation award. Owners may avoid tax on any gain that may result (if the insurance […]

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A credit against tax available for investment in a limited range of business property. The general investment credit was repealed in 1986, but this type of credit has been enacted and repealed repeatedly throughout history.

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