Author Archives: Basil Wilson

Section 1231 Property

Section 1231 Property

Description and Definition of Section 1231 Property

Long term depreciable property used in a trade or business such as equipment, vehicles, and rental real estate. Provided Section 1231 assets are held for the required period of time capital gain treatment is available on a profit upon the sale of the asset while a loss is deductible as an ordinary loss. All Section 1231 gains and losses must be netted.

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401 (k) Plan

401 (k) Plan

Description and Definition of 401(k) Plan

A 401(k) Plan is a tax deferred savings plan which is authorized by section 401(k) of the Internal Revenue Code. Under Section 401(k) a percentage of your salary is withheld and placed in a savings account or the company's profit-sharing plan. Your employer may match a percentage of the amount you have withheld. You are not taxed on the amount deducted from your pay, your employer's matching amount, or any interest or gains until you receive distributions, usually at retirement. Most plans allow employees to borrow from their accounts.

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Medical Savings Account

Medical Savings Account

Description and Definition of Medical Savings Account (MSA)

A tax favored medical savings account (MSA) is intended to help the self-employed and employees of certain small businesses that employ 50 or fewer workers save for and pay their medical expenses that are not covered by health insurance. Contributions are deductible and earnings inside the account are not taxed as they build up. Withdrawals are not taxed if the money is used to pay medical expenses. To qualify for an MSA you must have a health insurance policy that requires you to pay at least the first $1,500 (if you are single) or $3,000 (if it's a family policy) of medical bills before your insurance starts paying.

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