Phantom Income

A tax situation where you owe the government money for income you recorded on paper, but didn't actually receive. So...you've booked something that the government considers income. You are legally obligated to pay the taxes on it. But you never actually received any cash from the deal...the taxes have to come out of your pocket.

You join a crime-fighting superteam. For tax purposes, your accountant has organized the group as a limited partnership, with each of the four members (you, Buzzard Man, Incredigirl, and the Human Sail) each owning 25% of the firm.

However, you and Buzzard Man have a falling out. You decide to leave the team to start a solo superhero career. Meanwhile, the city pays your former superteam an annual stipend for crime fighting of $500,000. After expenses, the partnership earns $100,000 in profits for the year.

You still have a 25% stake in the superteam (you are still bickering with Buzzard Man about the details of dissolving the partnership)...meaning you are entitled to $25,000 of that income. But Buzzard Man won't send your check. He says the group has decided to reinvest the profits in the team, so no one is getting those funds.

But the IRS says you still owe taxes on that income. You have to pay the government for the theoretical income you booked on paper, even though you haven't received any money from the situation. You're stuck paying taxes on income you haven't received. Phantom Income...your arch-nemesis.