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S corporation

A type of corporation that chooses to pass corporate income, losses, deductions, and credits directly to its shareholders for federal tax purposes. This avoids double taxation of corporate income.

Internal Revenue Code of 1986

The primary body of federal tax law in the United States, which the IRS enforces. This bill proposes changes to this code.

Basis (Section 1014(a))

For tax purposes, the original cost of an asset, adjusted for various factors. Section 1014(a) refers to the rule where the basis of inherited property is 'stepped up' or 'stepped down' to its fair market value on the date of the deceased's death.

Built-in gain amount

The difference between the fair market value of an S corporation's assets and their tax basis at a specific point in time, typically when the corporation transitions to S status or, in this bill, upon the death of a shareholder.

Amortizable property

Assets that lose value over time and whose cost can be gradually deducted as an expense for tax purposes, similar to depreciation for physical assets, but for intangible assets or certain types of property.

Non-amortizable property

Assets that generally do not lose value over time or cannot be gradually deducted as an expense for tax purposes, such as land or stock.