What does related person mean on the CPA exam?
Related person. A person close enough to the taxpayer that the Code distrusts the transaction: family, controlled entities, and certain fiduciaries. Losses between them are disallowed and gains can be recharacterized.
Defined against Sec. 267(b).
Which CPA exam sections use related person?
Related person appears in the TCP section of the CPA exam.
Other names for related person
related party
Related terms
- disallowed loss: A loss the Code refuses to let you deduct, typically on a sale to a related person or a wash sale.
- lease term: The non-cancellable period, plus any option period the lessee is reasonably certain to take, plus any period controlled by the lessor.
- lineal descendant: A person in the direct downward line from an individual: child, grandchild, great-grandchild.
- excess business loss: The amount by which a noncorporate taxpayer's aggregate business deductions exceed business income plus a threshold.
- capital gain net income: Capital gains minus capital losses for the year, long-term and short-term combined.
- other comprehensive income: Gains and losses that bypass net income and sit in equity until realized, such as unrealized gains on available-for-sale debt securities and foreign currency translation.