Define: Phantom Income

UK Accounting Glossary

Definition: Phantom Income



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Full Definition of Phantom Income


Phantom income is any income that is reportable as taxable income but that does not generate cash flow for the investor. In other words, the investor does not actually receive phantom income but is taxed on it nevertheless. Earnings from limited partnerships often arrive in the form of phantom income. Phantom income can also come from zero-coupon bonds, which do not pay interest but are instead sold at a discount and accrue “income” over the course of their lives. Phantom income can also occur in the form of a loan that was forgiven, whether by a business (such as a credit card company) or by a private party. The borrower is thus liable for tax on this phantom income.


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Definition Sources


Definitions for Phantom Income are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 6th February 2020.