Phantom Income means income that is reportable as taxable income but that does not generate cash flow for the taxpayer.
Additional meaning of Phantom Income:
Phantom income is for example income from limited partnerships and zero-coupon bonds (the latter do not pay interest but are issued at a discount and the holder receives the payment at maturity, when the bond is redeemed at the higher par value). Phantom income also occurs in the form of a loan that is forgiven, in that case the borrower receives the amount of debt from the creditor.