16 foundational terms
A working tax vocabulary.
Plain-language definitions for the ideas that recur throughout the research library. English terms remain visible across both languages.
- Adjusted gross income (AGI)
- Gross income after specified adjustments, before the standard or itemized deduction.
- Taxable income
- The income base remaining after applicable deductions, subject to the rules for the taxpayer and tax year.
- Marginal tax rate
- The rate applied to an additional slice of income under a specified model. It is not the rate on every dollar.
- Effective tax rate
- A tax amount divided by a clearly identified income measure. Different denominators produce different comparisons.
- Deduction
- An amount that reduces an income base when the relevant statutory requirements and limitations are met.
- Tax credit
- An amount applied against tax, subject to its own eligibility, limits and refundability rules.
- Outside basis
- The partner’s adjusted tax basis in the partnership interest. It differs from asset basis and capital-account balances.
- Inside basis
- The partnership’s tax basis in its assets. Each asset can have a separate basis and history.
- Book capital
- An economic capital-account concept, often studied under § 704(b), distinct from outside tax basis.
- Guaranteed payment
- A payment for services or use of capital determined without regard to partnership income under § 707(c).
- Distributive share
- A partner’s allocated share of partnership tax items. An allocation is distinct from receiving cash.
- Distribution
- Money or property transferred by a partnership to a partner in that capacity, subject to distribution and special rules.
- At-risk limitation
- A separate loss limitation based on the amounts the taxpayer is treated as having at risk under § 465.
- Passive activity
- A classification under § 469 whose loss and credit limitations require their own participation and activity analysis.
- Federal conformity
- Whether and how a state adopts a federal tax rule. A federal change does not automatically settle the state result.
- Safe harbor
- A rule that provides a defined treatment when its conditions are met. Estimated-tax targets also depend on payment timing.