CPA Pilot Glossary

Tax and AI terms, explained clearly.

Practical definitions for CPA firms working with tax automation, return review, AI workflows, and client operations.

published terms

1031 Exchange Adjusted Basis/Tax Basis Adjusted Gross Income (AGI)

A

2 terms

Adjusted Basis/Tax Basis

Tax basis is the amount assigned to property or an ownership interest for tax purposes, while adjusted basis reflects that starting amount after required increases and reductions. Basis affects depreciation, deductions, distributions, and gain or loss on disposition, with special rules applying to gifts, inheritances, entities, real estate, casualties, and Section 1031 exchanges.

Adjusted Gross Income (AGI)

Adjusted Gross Income (AGI) is gross income minus eligible tax adjustments used to calculate taxable income and tax benefits.

D

1 term

Depreciation Recapture

Depreciation recapture is a federal tax rule that can reclassify gain from selling depreciable property as ordinary income.

E

1 term

Excise Tax

Excise tax applies to specific products, services, or activities and may affect pricing, calculations, filing, exemptions, and business tax obligations.

M

1 term

Modified Adjusted Gross Income (MAGI)

MAGI is an IRS income measure used to determine eligibility for tax benefits, retirement contributions, and healthcare programs. It modifies AGI based on specific tax rules.

N

1 term

Net Investment Income Tax (NIIT)

Net Investment Income Tax (NIIT) is a 3.8% federal tax on certain investment income for taxpayers above specific MAGI thresholds.

P

1 term

Passive Activity Loss (PAL)

Passive activity loss (PAL) rules limit when taxpayers can deduct losses from passive activities. Learn how IRC §469, Form 8582, suspended losses, rental real estate rules, basis, at-risk limits, and participation requirements affect deductions.

S

2 terms

S-Corp Reasonable Compensation

S-Corp reasonable compensation is the wage paid to a shareholder-employee for services performed. This guide explains IRS factors, salary calculations, wage benchmarks, distributions, payroll taxes, QBI, documentation, and compliance considerations for CPAs.

Step-up in Basis

A step-up in basis generally adjusts the tax basis of inherited property to its fair market value on the applicable valuation date.

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1 term

1031 Exchange

A 1031 exchange lets investors defer capital gains taxes by exchanging qualifying real property. Learn key rules, deadlines, tax treatment, and reporting requirements.