In this episode of “Tax Blueprints”, we dive deep into the world of “phantom income,” a complex yet crucial concept for anyone dealing with taxation. We tackle the ins and outs of phantom income, exploring its appearance in various situations such as imputed income, depreciation recapture, debt forgiveness, profit shares from partnerships and S corporations, and non-cash benefits. Our host, Daniel Rohr, CPA/PFS, EA, M.S. Tax, provides real-world examples to demystify these abstract concepts, making them easier to grasp. We also navigate exclusions and exceptions, exploring topics like Section 108 of the Internal Revenue Code, the American Rescue Plan Act’s implications for student loan debt forgiveness, tax distributions, and more. Whether you’re a business owner, an employee, or simply an interested listener, this episode is an essential guide to understanding and planning for the potential impact of phantom income on your tax liabilities. Tune in to arm yourself with knowledge and be better prepared for tax season.
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