phantom income

Phantom income

Income from a limited partnership that creates taxability without generating cash flow.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Avoidance of "phantom income" -- Because earnings accumulate in a tax-free environment, investors avoid paying taxes on income that's not distributed to them.
While this result is not ideal, noncorporate taxpayers could endure an even worse fate--double taxation on this phantom income.
''The appreciated value of land is phantom income. The value is locked in the asset, so if there's no intent to sell the land, there's no real income to tax other than the income the land actually produces, and that's already taxed,'' said Sen.
This taxable but noncash income is often referred to as "phantom income" and can create tax problems for the investor who has not saved for the inevitable "crossover" from sheltered cash flow to taxable income in excess of cash flow.
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.
Most investors in such schemes have paid capital gains taxes on phantom income for the duration of their investments; consequently, the discovery that these profits were fictitious raises a slew of questions about whether and how to recoup any taxes remitted.
(43) One "gift" from the IRS to defrauded investors who either do not elect or qualify for safe harbor treatment is the IRS's newly pronounced position on "phantom income." 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 risks are (a) to the elderly insured's health and safety if the investors are not carefully screened; (b) that he would have to report and pay tax on a large amount of "phantom income" (reportable income not accompanied by cash flow); (c) that the investors would sue him or his estate; (d) that he might be accused of insurance fraud and/or commission rebating; and (e) that upon his or her death some or all of the policy proceeds must be included in his gross estate.
Deferred compensation that is subject to the new rule, [section]457A of the Internal Revenue Code, must be included in income when the compensation is no longer subject to a so-called "substantial risk of forfeiture" (meaning that the tax deferral will not be respected and the service provider may have phantom income).
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.