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Net short-term capital loss the net loss resulting when taxpayers combine short-term capital gains and losses for the year.Net unearned income unearned income in excess of a specified threshold amount of a child under the age of 19 or under the age of 24 if a full-time student.Net unrealized built-in gain the net gain (if any) an S corporation that was formerly a C corporation would recognize if it sold each asset at its fair market value. It is measured on the first day of the corporation’s first year as an S corporation.Nexus the connection between a business and a tax jurisdiction suffi-cient to subject the business to the tax jurisdiction’s tax system. Also, the connection that is required to exist between a jurisdiction and a potential taxpayer such that the jurisdiction asserts the right to impose a tax.No-additional-cost services a nontaxable fringe benefit that provides employer services to employees with little cost to the employer (e.g., airline tickets or phone service).Nonacquiescence issued after the IRS loses a trial-level or circuit court case when the IRS has decided to continue to litigate this issue.Nonbusiness income all income except for business income—generally investment income and rental income.Nondeductible terminable interests transfers of property interests to a spouse that do not qualify for a marital deduction, because the interest of the spouse terminates when some event occurs or after a specified amount of time and the property is then transferred to another person.Nondomiciliary business a business operating in a state other than its commercial domicile.Nonperformance based compensation compensation paid to an em-ployee that does not depend on the employee’s performance or the corporation’s performance or success. It usually is straight salary.Nonqualified deferred compensation compensation provided for under a nonqualified plan allowing employees to defer compensation to a future period.Nonqualified stock option a type of stock option requiring employ-ees to treat the bargain element from options exercised as ordinary income in the tax year options are exercised. Correspondingly, employers may deduct the bargain element as compensation expense in the tax year options are exercised.Nonrecaptured net §1231 losses a net §1231 loss that is deducted as an ordinary loss in one year and has not caused subsequent §1231 gain to be taxed as ordinary income.Medicare tax the Medical Health Insurance (MHI) tax. This tax helps pay medical costs for qualifying individuals. The Medicare tax rate for employees is 1.45 percent on salary or wages up to $200,000 ($125,000 for married filing separate; $250,000 of combined salary or wages for married filing joint) and is 2.35 percent on salary or wages in excess of $200,000 ($125,000 for married filing separate; $250,000 of combined salary or wages for married filing joint). For employers, the Medicare tax rate is 1.45 percent of employee salary or wages, regardless of the amount of salary or wages. Self-employed taxpayers pay both the employee and employer Medicare tax.