Income Basket

AAA

DEFINITION of 'Income Basket'

Categories for which various sources of income are allocated based on United States tax regulations. Each basket has a net gain or loss, which may not be applied to any other basket as a means to reduce taxable gains.

INVESTOPEDIA EXPLAINS 'Income Basket'

For example, let's look at a situation where you have a net loss in one income basket, with an equivalent net gain in another. Ignoring baskets, your net income is $0, as the loss offsets the gain, meaning you will not have to pay any taxes. However, because U.S. tax code specifies that baskets can't overlap, the net loss cannot be applied to the net gain. Unfortunately, you will have to pay any applicable income taxes on the basket with a net gain.

RELATED TERMS
  1. Recognized Gain

    When an investment or asset is sold for an amount that is greater ...
  2. Income Tax

    A tax that governments impose on financial income generated by ...
  3. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  4. Recognized Loss

    When an investment or asset is sold for less than its purchase ...
  5. Taxable Gain

    A profit on the sale of an asset that is subject to taxation. ...
  6. Deferred Tax Asset

    A deferred tax asset is an asset on a company's balance sheet ...
Related Articles
  1. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  2. Retirement

    Avoiding Too Much Tax On Your Distributions

    IRA assets can't be taxed twice - find out how to avoid paying the second time around.
  3. Savings

    Tax-Saving Tips For Canadian Taxpayers

    Find out how to get a bigger return.
  4. Taxes

    Surviving The IRS Audit

    Keeping thorough records and knowing the penalties make this experience easier than you'd expect.
  5. Stock Analysis

    Why Should Investors Read The Annual Reports?

    All investors should read each year the annual report from their top stocks, which contains valuable information and facts they weren't probably aware of.
  6. Taxes

    Taxes: H&R Block Vs. TurboTax Vs. Jackson Hewitt

    There are more and more tax services to help ease the pain of filing income taxes. Here's our take on three of the biggest.
  7. Taxes

    The Best Free Tax-Prep Software For April 15, 2015

    Filing state taxes online costs money, but many platforms let you file simple federal returns free. Some support more complex filings; others import data.
  8. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience โ€“ and all the tax benefits you're due.
  9. Taxes

    5 Smart Uses For Your Tax Refund

    Consider using the bulk of your refund to take care of long-term needs, like saving for retirement or college.
  10. Taxes

    Top 10 Tax Filing Mistakes โ€“ And How To Avoid Them

    What are the worst tax filing mistakes people make? Tax expert and attorney Barbara E. Weltman points out 10 common ones โ€“ and how to steer clear of them.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center