The terms you'll run into.

Alternative Minimum Tax (AMT)

A parallel federal tax system that can require additional tax beyond the regular calculation, especially for ISO exercises.

Bonus Depreciation

An additional first-year depreciation allowance for qualifying property, currently phasing down through 2027.

Employee Stock Purchase Plan (ESPP)

A program letting employees buy company stock at a discount, often with a lookback feature.

Incentive Stock Option (ISO)

An employee stock option with favorable tax treatment if specific holding requirements are met.

Limited Liability Company (LLC)

A flexible legal entity that combines personal liability protection with passthrough taxation by default.

Nexus

The connection between a business and a state that creates a tax filing or registration obligation.

Non-Qualified Stock Option (NSO)

A stock option whose spread at exercise is taxed as ordinary W-2 income.

Pass-Through Entity Tax (PTET)

A state-level tax election that lets passthrough entities pay state tax at the entity level, sidestepping the SALT cap.

Passthrough Entity

A business entity that doesn't pay federal income tax — income passes through to the owners.

QSBS (Qualified Small Business Stock, §1202)

A tax provision excluding up to $10M of capital gain on qualifying small business stock held 5+ years.

Qualified Business Income (QBI) Deduction

A 20% deduction on qualified business income from passthrough entities, available to most small business owners.

Restricted Stock Unit (RSU)

A grant of company shares that vests over time and is taxed as ordinary income at vest.

S-Corporation (S-Corp)

A passthrough entity that allows owner-employees to split income between salary (subject to FICA) and distribution (not).

SALT Cap

The $10,000 federal cap on the deduction for state and local taxes paid by individuals.

Schedule K-1

IRS form reporting a partner's, S-corp shareholder's, or trust beneficiary's share of income, deductions, and credits.

Section 179 Expensing

A tax election to immediately expense the full cost of qualifying equipment in the year placed in service.

Self-Employment Tax

Combined Social Security + Medicare tax (15.3%) owed by self-employed individuals on net earnings.

Wayfair (South Dakota v. Wayfair)

The 2018 Supreme Court decision that established economic nexus for sales tax, eliminating the physical-presence requirement.

Accrual Basis Accounting

An accounting method that records revenue when earned and expenses when incurred, regardless of cash timing.

Cash Basis Accounting

An accounting method that records revenue when cash arrives and expenses when cash leaves.

Depreciation

The systematic expensing of a long-lived asset's cost over its useful life.

GAAP (Generally Accepted Accounting Principles)

The U.S. standard set of accounting rules used in audited financial statements.

1099-NEC

IRS form used to report payments to non-employee contractors and freelancers.

FICA (Social Security & Medicare Tax)

Federal payroll taxes funding Social Security and Medicare — split between employer and employee.

FUTA (Federal Unemployment Tax)

Federal unemployment insurance tax paid by employers, separate from FICA.

W-2

IRS form reporting wages, tips, and tax withholding for employees.

13-Week Cash Forecast

A weekly projection of cash inflows, outflows, and ending balance over a rolling 13-week period.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization — a proxy for operating cash generation.

Discount for Lack of Control (DLOC)

A valuation discount applied to minority interests in private companies to reflect their inability to direct the company.

Discount for Lack of Marketability (DLOM)

A valuation discount applied to private company shares to reflect their illiquidity.