Investor Glossary-tax shelterInvestor Glossary-tax shelterInvestor Glossary-tax shelterInvestor Glossary-tax shelterInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Tax Shelter

The HTML to link to this page
 

A tax shelter is a legal means of lowering or deferring a taxpayer's taxable income, and by extension the amount of tax owed. Taxpayers in a high tax bracket are most likely to make use of a tax shelter or tax shelters. A tax shelter is often an investment, such as an IRA, 401(k) plan, municipal bond, or life insurance. Other types of tax shelters include the depletion allowances for resource extraction and exploration. Depreciation of equipment, real estate, or other assets can also be used as a tax shelter. Even when owned real estate generates income, it can function as a tax shelter if losses from interest payment on debt and depreciation exceed income. However, the tax reform bill that Congress passed in 1986 placed limitations on the extent to which taxpayers could use passive losses of this kind as a tax shelter; it stipulated that passive losses could only be deducted from passive income. A tax shelter is not the same as tax evasion, which entails misrepresenting one's income.



Rate this tax shelter definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: required rate of return, ex-dividend, Zero Cost Collar, debt service coverage, quality assurance, class C shares, LIBOR, command economy, stock market close, per diem, VIX, reverse mortgage, 401a, current ratio, implied volatility, labor relations, stock split, deferred tax, APR, cancelled check, 1035 exchange, phantom income, deferred revenue, liquidity ratio, minority interest, in escrow, real GDP, irrevocable trust, average price per share, covered put, inflation, open position, 1031 exchange, Key Rate Duration, margin rate, EBITDA, risk management, retained earnings, 144a, wholly-owned subsidiary, FTSE, dividends payable, limit order, ex-dividend date, balance sheet, FICO score, annual return, option premium, diluted share


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use