Knowledge Base / Glossary

Browse our investment glossary and get introduced to key exchange, tax, financial, and investment-related terms.


Revenue Procedure 2002-22

Revenue Procedure 2002-22 lays out the guidelines by which an interest in a Tenant-in-Common property qualifies as a replacement property in a 1031 exchange.

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Revenue Ruling

Revenue Ruling A "Revenue Ruling” (Rev. Rul.) is a public declaration by the Internal Revenue Service that explains how the tax code applies to a particular situation. Revenue Rulings state the official position of the IRS, and can...

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Total Sales Price

Total Sales Price A property’s “total sales price” is the amount the buyer paid to acquire it, including sales costs and any remaining debt on the property, whether it will be paid off with the proceeds immediately. This is the...

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Total Sales Cost

Total Sales Cost The “total sales cost” of a property includes all of the expenses incurred as a result of selling or relinquishing it. This includes property inspections, sales commissions, loan fees and escrow fees. Sales costs may be...

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Total Revenue

Total Revenue A company's’ “total revenue” comprises all money actually received during a specified period. It accounts for discounts and returns, as well as any interest or dividends derived from investments or other activity...

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Total Return

Total Return The “total return” of an investment, or pool of investments, is the sum of all categories of return to an investor, including any income, principal reduction, and capital gains. Total return may be expressed as a total or...

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Original Purchase Price

Original Purchase Price A property’s “original purchase price” is the amount the owner paid to acquire it. This is the starting line for calculating the basis of a property.[Click here for more investing terms.]

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Code of Federal Regulations (C.F.R.)

Code of Federal Regulations (C.F.R.) The “Code of Federal Regulations” (C.F.R.) consists of the administrative laws that promulgate the United States Code (U.S.C.). The U.S.C. is created by Congress and is subordinate only to the...

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Constructive Receipt

Constructive Receipt Gross income is constructively received when it is made available without substantial limitations (26 C.F.R. 1.451-2). This means that you don’t have to physically hold cash in your hands to be taxed. For example, if a...

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26 Code of Federal Regulations (C.F.R.)

26 Code of Federal Regulations (C.F.R.) Title 26 of the Code of Federal Regulations (C.F.R.) contains the Treasury Department’s official and binding interpretations of Title 26 of the United States Code. These are also called “Treasury...

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Basis

Basis A property’s “basis” is the amount of capital that the IRS considers an owner to have in the property. In most cases, the basis of a property is its purchase price or its fair market value at the time it was acquired or...

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1031 Exchange

1031 Exchange A “1031 exchange” allows an investor to defer the capital gains taxes that would otherwise be due on the sale of an investment property if an investment property of like kind is acquired under Internal Revenue Code (IRC)...

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180 Day Property Acquisition Deadline

180 Day Property Acquisition Deadline A 1031 investor is legally required to complete a 1031 exchange by midnight on the 180th day after the close of escrow on the relinquished property. The day after escrow closes on the relinquished property is...

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26 United States Code (U.S.C.)

26 United States Code (U.S.C.) Title 26 of the United States Code (U.S.C.) contains the Internal Revenue Code (IRC). The IRC is the principal body of domestic statutory tax laws enacted by the United States Congress. It is organized topically, and...

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Sponsor

Sponsor A “Sponsor" is "any person who divides a single interest in the Property into multiple co-ownership interests for the purpose of offering those interests for sale" (Revenue Procedure 2002-22, section 4). Sponsors are...

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Capitalization Rate

An investment offering's "cap rate" represents the annual net operating income received from an investment (prior to and excluding debt cost), divided by its purchase price or fair market value. Cap rate does not reflect the potential impact that financi

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Cash-on-Cash

Cash-on-Cash An investment offering’s “cash-on-cash” (COC) is the cash income received by an investor in return for the cash invested. COC reflects an investment's net income after accounting for the cost of servicing the debt...

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45 Day Identification Deadline

45 Day Identification Deadline A 1031 investor is legally required to identify replacement property options by midnight on the 45th day after the close of escrow on the relinquished property. The day after escrow closes on the relinquished property...

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Total Yield

Total Yield “Total yield” may refer to slightly different aspects of an investment's return. For example, it may be used to describe the sum of the cash flow distributions and the payments on the principle of a loan (principal...

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Treasury Decision

''Treasury Decisions'' (TD) are temporary or final Treasury Regulations published in the Federal Register and in the Internal Revenue Bulletin.

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Tenant-in-Common (TIC)

"Tenant-in-Common" (TIC) is a way of holding title to real estate in which each owner is deeded an undivided, fractional interest. Revenue Procedure 2002-22 increased the popularity of TIC investments by more-officially recognizing them as valid replacem

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