Phantom Income

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Dictionary Says

Definition of 'Phantom Income'

Income paid to a taxpayer during the tax year that is not constructively received at the taxpayer's end. Phantom income is not terribly common, but does manifest itself in such investments as limited partnerships, where the earnings are taxed but not received, and zero-coupon bonds, which are issued at a discount and mature at par. The interest payments for zeros are credited to the taxpayer but no check is actually cut for them. The bondholder effectively receives the payments at maturity, when the bond is redeemed at the higher par value.
Investopedia Says

Investopedia explains 'Phantom Income'

Loan forgiveness is another form of Phantom Income. The creditor essentially "pays" the delinquent borrower the amount of debt forgiven, which is why creditors send Form 1099-C to the borrow showing the amount of "income" that he or she received as forgiven debt. For obvious reasons, Phantom Income is something most taxpayers generally tend to eschew if at all possible. Unfortunately, Phantom Income is unavoidable in some cases.

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Search results for

'Phantom Income'

  • The 4 Safest Investments Right Now - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0511/The-4-Safest-Investments-Right-Now.aspx
    ... To avoid this "phantom income" problem, it is often advisable to hold TIPS in tax
    advantaged retirement accounts where the tax man cannot reach them. ...

  • Series 6 Study Guide - Investment Securities - Other Types of ...

    http://www.investopedia.com/exam-guide/finra-series-6/investment-securities/other-types-of-bonds.asp
    ... In the case of corporate and US government zeros, the income received upon redemption,
    sometimes referred to as phantom income or accreted interest, is taxable ...

  • Spotting Creative Accounting On The Balance Sheet

    http://www.investopedia.com/articles/fundamental-analysis/10/creative-accounting-balance-sheet.asp
    ... goods sold, and therefore an artificially higher net income, assuming actual ... inventory
    was Laribee Wire Manufacturing Co., which recorded phantom inventory and ...

  • Curbing The Effects Of Inflation

    http://www.investopedia.com/articles/05/061605.asp
    ... You will, however, have to pay income taxes each year on the increased value of
    the principal. But you can avoid this "phantom tax" when you hold the TIPS in a ...

  • The Ghouls And Monsters On Wall Street

    http://www.investopedia.com/articles/06/monstersonwallstreet.asp
    ... And just as the Phantom of the Opera's mask hid his disfigured face ... the balance sheet
    as an asset, instead of expensing them, which increases reported income. ...

  • Naked Call Writing: A Risky Options Strategy

    http://www.investopedia.com/articles/optioninvestor/122701.asp
    ... the underlying stock is not owned and options are written against this phantom stock
    position. ... a lot more risk, but it can be used to generate income as part ...

  • Option ARMs: American Dream Or Mortgage Nightmare?

    http://www.investopedia.com/articles/pf/07/optionarms.asp
    ... that know they are soon going to experience a significant change in income may also ...
    These phantom revenues are perfectly legal, look good on the books and do ...

  • Haunting Wall Street: The Halloween Terminology Of Investing

    http://www.investopedia.com/articles/03/102903.asp
    ... Phantom Stock and Ghosting It is generally believed that ghosts are the wandering
    souls of the departed, bound to earth by unresolved matters or penance they ...

  • CFP Study Guide - Financial Planning: Process and Rules ...

    http://www.investopedia.com/exam-guide/cfp/financial-planning-process-rules/default.asp
    ... 19.5 Plan Types and Other Group Arrangements; 19.6 Benefits and Income Tax Implications. ...
    Stock Plans: 23.1 Introduction; 23.2 Restricted and Phantom Stock Plans. ...

  • CFP Study Guide - Property, Casualty and Liability Insurance ...

    http://www.investopedia.com/exam-guide/cfp/property-casualty-liability-insurance/cfp4.asp
    ... 19.5 Plan Types and Other Group Arrangements; 19.6 Benefits and Income Tax Implications. ...
    Stock Plans: 23.1 Introduction; 23.2 Restricted and Phantom Stock Plans. ...

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