phantom income

Phantom income

Income from a limited partnership that creates taxability without generating cash flow.

Phantom Income

Taxable income that does not result from cash flow. Examples include zero-coupon bonds, which are taxed as if they had a coupon, and house value increases that result in higher property taxes. See also: Phantom Gain.

phantom income

Reportable or taxable income that does not generate cash flows to pay the taxes on the income. A disclosure that “taxable income may exceed economic income” is the clue that an investor may receive phantom income.

References in periodicals archive ?
Taxpayers would generally not favor having phantom income from a Ponzi scheme classified as a return of capital because the statute of limitation on refunds may have expired for the early years of the scheme and because the courts are divided on this issue.
Fortunately, precedent originating in Depression Era tax cases offers relief from taxation of this phantom income.
In these two states, taxpayers should consider filing amended returns for the last three years, taking the position that the amounts reported as dividends and interest were either phantom income or a return of capital and therefore not taxable.
Phantom income is income reported as income by the fraudulent arrangement, but not income in reality because the monies labeled "income" were derived from other investors and not from a return on the investment.
The IRS has provided guidance that allows victims to go back five years to recoup taxes paid on phantom income, but what about those who paid taxes for many years beyond five?
Besides eliminating the phantom income tax for three years, the Senate's debt relief bill also extends the tax deductibility of private and FHA mortgage insurance premiums through 2010.
Phantom Income (Rick Violette) won a Belmont maiden race by more than ten lengths on her debut, while More Happy (Bob Baffert) was a maiden winner at Del Mar on her only previous outing.
The imputation of phantom income and expense with respect to such CLAs would lead to absurd results in the case of taxpayers that enter into multiple CLAs in highly competitive industries.
The result is that properties with lesser economic value are at risk of deterioration as the investors have no incentive to invest funds in a property that has little or no cash flow and often generates phantom income for the investors.
If these assets aren't shed, owners and their partners start earning phantom income.
Many sponsors and boards of directors may get a moderate wake-up call when they realize their true cash position from operations, excluding phantom income and other non-operating income sources.
6) Also, the current tax treatment of the phantom income from inflation adjustment may serve to focus public attention on how current U.