Negligence
A failure to make a reasonable attempt to comply with the tax law or to exercise ordinary and reasonable care in preparing a return. Negligence also includes failure to keep adequate books and records. You will not have to pay a negligence penalty if you have a reasonable basis for a position you took.
Net Operating Loss
If your deductions for the year are more than your income for the year, you may have a net operating loss (NOL). You can use an NOL by deducting it from your income in another year or years.
Nonbusiness Bad Debt
If someone owes you money that you cannot collect, you have a bad debt. A debt must be genuine for you to deduct a loss. A debt is genuine if it arises from a debtor- creditor relationship based on a valid and enforceable obligation to repay a fixed or determinable sum of money. Bad debts that you did not get in the course of operating your trade or business are nonbusiness bad debts. To be deductible, nonbusiness bad debts must be totally worthless and you must have a basis in it (that is, you must have already included the amount in your income or loaned out your cash). You cannot deduct a partly worthless nonbusiness debt.
Noncapital Asset
Any asset that is not specifically identified as a capital asset. Usually, noncapital assets are those used in a trade or business, or for the production of rental or royalty income. Examples of noncapital assets are: property held mainly for sale to customers, depreciable property used in your trade or business, real property used in your trade or business, accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of property, and supplies of a type you regularly use or consume in the ordinary course of your trade or business.
Noncustodial Parent
The noncustodial parent is the parent who has custody of the child for the shorter part of the year or who does not have custody at all.
Nonrefundable Credit
A credit that cannot be more than your tax liability. For example, a nonrefundable credit is the Child Tax Credit or the Child and Dependent Care Credit.
Nonresident Alien
If you are an alien (not a U.S. citizen), you are generally considered a nonresident alien unless you meet the Green Card Test or Substantial Presence Test.
Nontaxable Exchanges
A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred.