2011/2008 Statutory Tax Update-Blowout (Course Id 1074)

Taxes - Taxes for Course Id 1074

During 2008, 2009, 2010 and early 2011, Congress produced massive legislation to “jumpstart” the economy. This course presents the main tax provisions of seven Congressional Acts passed and enacted during this critical time. Included in these Acts are provisions for agriculture, conservation, energy, housing, and individual and business tax credits and deductions. These Acts impact taxation of individual taxpayers, farmers, servicemen and women, small business owners, and large corporations. No one is left out of this package!

NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents - 1074

As a result of studying each assignment, you should be able to meet the objectives listed below each assignment.

       At the start of Chapter I, participants should identify the following topics for study:

* Overview of Tax Provisions
* Rebate for Individual Taxpayers
* Increased §179 Expensing
* Temporary Bonus Depreciation

1. Point out eight ways the Economic Stimulus Act of 2008 impacts individual taxpayers and businesses and describe specifically how the Act modifies tax law by:
a. Identifying the two components of the rebate credit and changes to §179; and
b. Explaining bonus depreciation and listing the requirements of the new additional first-year depreciation deduction.

       At the start of Chapter II, participants should identify the following topics for study:

* Conservation Provisions
* Energy Provisions
* Agricultural Provisions
* Revenue Provisions

1. List the main provisions of the Food, Conservation, and Energy Act of 2008 describing their varying effects on ranchers, farmers, timber producers, ethanol producers, and large corporations.

       At the start of Chapter III, participants should identify the following topics for study:

* Economic Stimulus Payments
* Combat Pay Earned Income for EIC
* Plan Survivor Benefits & Qualified Mortgage Bonds for Veterans
* Penalty Free Plan Withdrawals
* Differential Military Pay as Wages and Employer Wage Tax Credit
* Flexible Spending Accounts, Roth IRAs, & ESA Accounts
* Volunteer Fire Fighters
* Expatriation of Individuals
* Failure to File Penalty
* Contractors with Foreign Subsidiaries

1. Describe the tax provisions affecting service personnel, expatriates, and contractors under the Heroes Earning Assistance and Relief Tax Act of 2008 by:
a. Explaining the Act’s treatment of the military personnel exemption, combat pay, the restoration of retirement plan benefits for returning veterans and the application of the homebuyer credit to veterans;
b. Listing the Act’s modifications to qualified reservist distributions (§125), differential wage payments, the employer wage tax credit and IRA & ESA contribution limits for military death gratuity or SGLI recipients;
c. Describing the Act’s tax treatment of benefits and reimbursements by volunteer emergency response organizations, the taxes imposed on those who relinquish their citizenship or terminate their residency and the application of FICA taxes to foreign persons; and
d. Contrasting the old and new penalty on taxpayers who fail to file a return in a timely manner.

       At the start of Chapter IV, participants should identify the following topics for study:

* Non-Itemizer Real Estate Tax Deduction
* Low-Income Housing Credit & Rehabilitation Tax Credit
* First-Time Homebuyer Credit and Reduced Home Sale Exclusion
* Mortgage Revenue Bonds & Tax-Exempt Housing Bonds
* REITs
* FIRPTA Compliance
* Credit Card Information Reporting
* Delayed Interest Allocation
* Large-Corporation Estimated Tax
* AMT & Research and Development Credits

1. Overview the tax law changes in the Housing & Economic Recovery Act of 2008 by:
a. Determining which taxpayers benefit from the temporary, extra standard deduction for real estate taxes;
b. Explaining credit limit modifications, the effect of the basic housing allowances on income eligibility rules, and the alternative minimum tax impact on businesses; and
c. Identifying the tax-exempt entities leasing restriction on the rehabilitation tax credit.

2. Focus on and explain the real estate and corporate tax provisions of the Act by:
a. Outlining the first-time homebuyer credit, changes to mortgage revenue & tax-exempt housing bond provisions and determining taxable gain from a sale or exchange;
b. Listing six rules that the Act reformed for REITs and three compliance rules established for the Foreign Investment and Real Property Tax Act (FIRPTA);
c. Discussing the new merchant reporting rules indicating two exceptions for small merchants and identifying the phase-in of the interest allocation rule; and
d. Naming the payment due dates for the accelerated estimated tax payments for large corporations and describing the alternative tax break allowed for corporations otherwise eligible for bonus depreciation.

       At the start of Chapter V, participants should identify the following topics for study:

* Refundable Child Credit
* Residential Energy Efficient Property
* Alternative Minimum Tax
* Miscellaneous Individual Provisions
* Business Tax Credits
* Depreciation of Business Property
* Charitable Donations of Businesses
* Disaster Relief
* Expensing Business Purchases
* IRS Practice & Procedure Provisions

1. Outline the key individual provisions of the Emergency Economic Stabilization Act of 2008 by:
a. Identifying the expansion and application of the refundable child tax, energy efficient improvements, and electric vehicles credits;
b. Calculate the alternative minimum tax, the minimum tax credit, and any long-term unused AMT credit, determine how to allocate the credit over a three year period, and ascertain the tax treatment of underpayments of tax outstanding related to minimum tax adjustments; and
c. Name eight other provisions providing deductions, income exclusions, and new definitions and describe their impact on taxpayers.

2. Summarize new business provisions providing for additional and extended tax credits, additional fringe benefits, compensation and golden parachute restrictions, depreciation alternatives, enhanced charitable deductions, alternative expensing for certain property, deduction limitations and modifications, and tax treatment of certain compensation and stocks.
3. Explain the provisions that affect IRS practice and procedure to improve reporting skills by naming the broker reporting requirements for the adjusted basis of securities and discussing the standard that replaces the “more likely than not” standard for disclosures and the related penalties and filing requirements.

       At the start of Chapter VI, participants should identify the following topics for study:

* Required Minimum Distribution Rules
* Nonspouse Rollovers
* Single Employer Defined Benefit Pension Plan Funding Rules
* Single-Employer Plan Benefit Limits
* Multiemployer Defined Benefit Pension Plan Funding Rules
* Interest Rate Provisions
* Missing Participants
* Disclosure
* Deduction Limits

1. Explain the changes that the Worker, Retiree, and Employer Recovery Act of 2008 made to employer-provided qualified retirement plans and to the rules for rolling over distributions from a decedent’s retirement plan. Identify numerous technical corrections this Act made to the Pension Protection Act to better advise clients on their rights and obligations.

       At the start of Chapter VII, participants should identify the following topics for study:

* “Making Work Pay” Tax Credit
* “American Opportunity” Education Tax Credit
* Modified Homebuyer Credit
* AMT Patch for Individuals
* Extension of Bonus Depreciation
* Extension of Enhanced Small Business Expensing
* 5-Year Carryback of Net Operating Losses
* Delayed Recognition of Certain Cancellation of Debt Income
* Tax Credits for Energy-Efficient Improvements to Existing Homes
* Advanced Energy Investment Credit

1. Analyze and apply the individual tax provisions of the American Recovery and Reinvestment Act of 2009 (“Act”) by:
a. Determining and claiming the “Making Work Pay’ tax credit, the economic recovery payment to Social Security and SSI recipients and the EITC;
b. Listing and describing Act modifications to the 2008 Stabilization Act child tax credit provisions, the Hope credit (renamed the American Opportunity tax credit), tuition saving accounts, the homebuyer tax credit and the low-income housing tax credit; and
c. Accounting for and computing 2009 unemployment compensation taxation, allowable qualified motor vehicle deductions, and 2009 individual AMT exemption amounts.

2. Analyze and apply the business tax provisions of the American Recovery and Reinvestment Act of 2009 (“Act”) by:
a. Discussing three changes bonus depreciation provision (§168(k)), listing dollar caps for vehicles, and identifying a special election for corporations;
b. Explaining extended §179 expensing, revised net operating loss provisions; estimated tax payments for small businesses, category additions to the work opportunity credit, and employer-provided transit and vanpool benefits under the Act;
c. Evaluating the impact of Congress's legislative response to Notice 2008-83, the new cancellation of indebtedness income election, the §1202 small business stock percentage exclusion, the reduced holding period for §1374 assets and the new markets tax credit; and
d. Listing and advising clients as to the new COBRA requirements, delayed implementation 3% government contractor withholding and expand the definition of industrial development bonds.

3. Analyze and apply the energy provisions of the American Recovery and Reinvestment Act of 2009 (“Act”) by:
a. Discussing the tax benefits, limitations, and requirements of credits for energy property (specifically including solar electric and water heating property), alternative fuel refueling property, electric drive motor vehicles, renewable energy production, and advanced energy manufacturing projects.
b. Determining when an investment tax credit can be taken in lieu of the production tax credit; and
c. Compare and contrast prior law with the Act's expanded program for clean renewable energy bonds and qualified energy conservation bonds.

       At the start of Chapter VIII, participants should identify the following topics for study:

* Extension and Modification of First-Time Homebuyer Credit
* Five-Year Carryback of Operating Losses
* Failure to File Partnership or S Corporation Returns
* Electronic Filing by Return Preparers
* Worldwide Interest Allocation
* Corporate Estimated Taxes
* Extension of COBRA Subsidy

1. Analyze and apply the tax provisions of the Worker, Homeownership, and Business Assistance Act of 2009 and Department of Defense Appropriations Act of 2010 by:
a. Determining the amount of tax credit first time homebuyers can claim and applying the waiver of recapture for individuals called for extended official duty;
b. Determining and applying the NOL carryback period as modified under the Act; and
c. Assess the effects of the changes for the penalty for failure to file S corporation returns and the worldwide allocation of interest under the Act.
d. Explaining how the DDA Act extends the COBRA subsidy and describing the tax consequences of the subsidy for high-income individuals.

       At the start of Chapter IX, participants should identify the following topics for study:

* Payroll tax forgiveness
* Credit for retention of newly hired
* Increase in expensing of assets
* Failure to report foreign trusts

1. Specify the tax consequences resulting from the provisions of the HIRE Act for employers and employees, especially as related to OASDI tax relief, business credits, and the expensing of business investments.

       At the start of Chapter X, participants should identify the following topics for study:

* Increased & expanded §179 expensing
* Additional first-year bonus depreciation
* Increase §195 start-up deduction
* Health insurance deduction in computing SE
* Cellular phones no longer listed property
* Reporting rental expense payments
* Exclusion for small business stock
* Five-year carryback & AMT exemption for business credit
* Reduction in built-in gains period
* Rollovers into Roth accounts

1. Analyze the changes in prior or existing law produced by of the Jobs Act and specify its affects on the additional first-year bonus depreciation, the §195 start-up deduction, original use, the SE health insurance deduction, the listing of property for depreciation deductions, the reporting of rental expense payments, small business stock exclusion carryback period and AMT exemption for business credit, the built-in gains period, and rollover provisions as related to Roth IRAs.

       At the start of Chapter XI, participants should identify the following topics for study:

* Extension of Individual Income Tax & Dividend Rates
* Continuation of Educational & Energy Benefits
* Implementation of Family & Child Incentives
* Extension of AMT Patch for Individuals
* Extension of Bonus Depreciation & Other Business Provisions
* New Estate & Charitable Planning Provisions

1. Explain the TRUIRJCA changes to individual tax rates, marriage penalty relief, alternative minimum tax relief, tax rates for dividend income and capital gain, the adoption credit, employer-provided child care credit, and tuition credit.
2. List extended and enhanced credits & deductions for teachers, state and local sales taxes, educational expenses, research, and wages, pointing out their timing and usage.
3. Summarize the TRUIRJCA business provisions, in particular those on depreciation of leasehold improvements, bonus depreciation, payroll taxes, expensing, and environmental remediation costs.
4. Differentiate selected contributions, including conservation, inventory, charitable IRA contributions and contributions for transit and parking.
5. Analyze the major impact of TRUIRJCA on estate, gift, and generation-skipping transfer taxes, and spousal portability, listing several planning consequences.

Preamble

CHAPTER 1 - Economic Stimulus Act of 2008 (HR 5140)

Overview of Tax Provisions

Rebate for Individual Taxpayers

Increased §179 Expensing

Temporary Bonus Depreciation

CHAPTER 2 - Food, Conservation, and Energy Act of 2008 (HR 2419)

Conservation Provisions

Energy Provisions

Agricultural Provisions

Revenue Provisions

CHAPTER 3 - Heroes Earnings Assistance and Relief Tax Act of 2008 (HR 6081)

Economic Stimulus Payments - §6428

Combat Pay Earned Income for EIC - §32 & §112

Plan Survivor Benefits - §§401, 403, 404 & 457

Qualified Mortgage Bonds for Veterans - §143

Penalty Free Plan Withdrawals - §72(t)

Differential Military Pay as Wages - §3401

Employer Wage Tax Credit - §45P

Flexible Spending Accounts - §125

Roth IRAs & ESA Accounts - §408A & §530

Volunteer Fire Fighters - §3121

Expatriation of Individuals - §§877A & 2801

Failure to File Penalty - §6651

Contractors with Foreign Subsidiaries - §3121

CHAPTER 4 - Housing & Economic Recovery Act of 2008 (HR 3221)

Non-Itemizer Real Estate Tax Deduction - §164

Low-Income Housing Credit - §42

AMT Impact

Rehabilitation Tax Credit - §47

First-Time Homebuyer Credit - §36

Reduced Home Sale Exclusion - §121

Mortgage Revenue Bonds - §146

Tax-Exempt Housing Bonds

REITs

FIRPTA Compliance

Credit Card Information Reporting

Delayed Interest Allocation

Large-Corporation Estimated Tax

AMT & Research and Development Credits

CHAPTER 5 - Emergency Economic Stabilization Act of 2008 (HR 1424)

Individual Provisions

Refundable Child Credit - §24(a) & (d)

Residential Energy Efficient Property

Energy Efficient Improvements to Personal Residence - §25C

Residential Energy Efficient Property - §25D

New Plug-In Electric Drive Vehicle Credit - §30D

Alternative Minimum Tax - §55

The Minimum Tax Credit

Refundable Minimum Tax Credit - §53

Allowance of Long Term Unused Credit - §53

Tax Abatement & Refund of Penalties and Interest Paid

Miscellaneous

$250 “Above the Line” Deduction for Classroom Materials - §62

Standard Deduction for State and Local Real Property Taxes §63

Income Exclusion for Discharges of Acquisition Indebtedness - §108

Uniform Definition of “Qualifying Child” Modified - §151

Deduction of State & Local Sales Taxes - §164

Casualty Losses in Federally Declared Disasters - §165

Tuition Deduction - §222

Charitable Distributions from IRAs Extended - §408

Business Provisions

Refueling Property Credit - §30C

Research Tax Credit Extended - §41

Renewable Energy Production Tax Credit - §45

Indian Employment Tax Credit - §45A

New Markets Tax Credit Extended - §45D

Modification of Energy Investment Credit - §48

Credits for Biodiesel & Renewable Diesel - §40A, §6426; §6427

Credit for Energy New Efficient Home Extended- §45L(g)

Hurricane Katrina Work Opportunity Tax Credit - §51

Bicycle Commuters Fringe Benefit - §132(f)

$500K Compensation Limit under Relief Act - §162(m) & §280G

5-Year MACRS for Farm Equipment in 2009 - §168

15-Year Restaurant Improvements - §168

15-Year Leasehold Improvements - §168

Cellulosic Biofuel & Bonus Depreciation for Biomass - §168(i)

Depreciation for Indian Reservation Property - §168(j)

Special Depreciation for Disaster Assistance Property - §168(n)

Enhanced Charitable Deduction for Food - §170

Enhanced Charitable Deduction for Books - §170

Corporate Donation of Scientific & Computer Equipment - §170

5-Year NOL Carryback for Federally Declared Disasters - §172

Increased Expensing for Disaster Assistance Property  - §179

Energy-efficient Commercial Property Expenditures - §179D

“Brownfield” Environmental Remediation Expensing - §198

Qualified Disaster Expensing - §198A

Deduction Limitation for Oil & Gas Income - §199

Modification of Deduction for Film Production - §199

Nonqualified Deferred Compensation - §457A

Bank’s Fannie Mae & Freddie Mac Stock - §582(c)(1)

S Corp. Stock Basis Adjustment on Contribution - §1367

IRS Practice & Procedure Provisions

Broker Reporting of Securities Basis - §6045, §6045A, §6045B

“More Likely Than Not” Standard Repealed - §6694

CHAPTER 6 - Worker, Retiree, and Employer Recovery Act of 2008 (HR 7327)

Required Minimum Distribution Rules - §401 

Nonspouse Rollovers - §§402(c)(11), (f)(2)(A))

Selected Technical Corrections 

Single Employer Defined Benefit Pension Plan Funding Rules 

Prohibition on Benefit Increases with Waiver - §412(c)(7)(A))

Minimum Funding Standards - §412(d)(1))

Determination of Target Normal Cost - §430(b)

Determination of At-risk Status - §430(i)(4)(B))

Quarterly Contributions - §430(j)(3))

Single-Employer Plan Benefit Limits 

Definition of Prohibited Payment - §436(d)(5))

Small Plans - §436(k))

Notice Requirement - ERISA §101(j))

Definition of Single Employer Plan - §436(l)

Multiemployer Defined Benefit Pension Plan Funding Rules 

Shortfall Funding Method - Act §201(b))

Notice Requirements - §432(b)(3)(D), §432(e)(8)(C))

Enforcement of Default Schedule - §432(c)(7), §432(e)(3)(C))

Lump Sum Payments - §432(F)(2)(A))

Definition of Plan Sponsor - §432(i)(9))

Excise Tax on Trustees - §4971(g)(4))

Interest Rate Provisions 

Replacement of 30-Year Treasury Rates - Act § 301 

Interest Rate for Lump Sum Distributions - §415(b)(2)(E))

Missing Participants 

Participant Program Coverage - ERISA §4050(d))

Disclosure 

Funding Notice & Withdrawal Liability - ERISA § 101(f))

Multiemployer Pension Plan Information - ERISA §101 & §4221(e))

Disclosure of Termination Information - ERISA §4041 & §4042 

Periodic Pension Benefit Statements - ERISA §209(a)

Deduction Limits 

Single-Employer Plans - §404 

Combination Plans - §404(a)(7))

CHAPTER 7 - American Recovery & Reinvestment Act of 2009 (HR 1)

Individual Provisions 

“Making Work Pay” Tax Credit – New §36A  

Economic Recovery Payments – Act §2201 

Increase in Earned Income Tax Credit - §32 

Increase Eligibility for the Refundable Child Credit - §24 

“American Opportunity” Education Tax Credit - §25A  

Computer Technology & Equip. as Education Expense - §529 

Modified Homebuyer Credit - §36 

Suspension of Tax on Unemployment Benefits - §85 

Sales Tax Deduction for Qualified Vehicles - §63 & §164 

AMT Patch for Individuals - §26 & §56 

Election to Substitute Grants for Credit Allocations - §42 

Business Provisions 

Extension of Bonus Depreciation - §168(k)

Extension of Enhanced Small Business Expensing - §179 

5-Year Carryback of Net Operating Losses - §172 

Estimated Tax Payments - §6654 

Modification of Work Opportunity Tax Credit - §51 

Transportation Fringe Benefit Parity- §132 

Repeal of Treasury Notice 2008-83 & Code Modification - §382 

Delay of Certain Cancellation of Debt Income - §108 

Qualified Small Business Capital Gains - §1202 

Reduction of S Corporation Built-In Gain Period - §1374 

New Markets Tax Credit - §45D  

Delay of 3% Withholding on Government Contractors- §3402(t)

COBRA Coverage - §4980B  

Industrial Development Bonds - §144(a)

Energy Provisions 

Existing Homes Energy-Efficient Improvements Credits - §25C  

Residential Energy Efficient Property - §25D  

Extension of Renewable Energy Production Tax Credit - §45 

Investment Tax Credit for Production Tax Credit - §45 & §48 

Tax Credits for Alternative Fuel Refueling Property- §30C  

Plug-In Electric Drive Motor Vehicle Credit - §30D  

Advanced Energy Investment Credit - §48C  

Clean Renewable Energy Bonds (“CREBs”) - §54C  

Qualified Energy Conservation Bonds §54D  

CHAPTER 8 - Worker, Homeownership, and Business Assistance Act of 2009 and Department of Defense Appropriations Act of 2010 

Extension & Modification of First-Time Homebuyer Credit (§36)

Five-Year Carryback of Operating Losses (§172)

Failure to File Partnership or S Corporation Returns (§§6698 & 6699)

Electronic Filing by Return Preparers (§6011)

Corporate Estimated Taxes (§6655)

Military Base Realignment & Closure Fringe (§132)

Worldwide Allocation of Interest (§864)

Department of Defense Appropriations Act of 2010 (HR 3326)

CHAPTER 9 - Hiring Incentives to Restore Employment Act of 2010 (HR 2847)

Payroll Tax Forgiveness - §3111 

Credit for Retention of Newly Hired - §38(b)

Increase in Expensing of Assets - §179 

Failure to Report Foreign Trusts - §6677 

CHAPTER 10 - Creating Small Business Jobs Act of 2010 (HR 5297)

Increased & Expanded §179 Expensing 

Additional First-Year Bonus Depreciation 

Increased §195 Start-up Deduction 

Health Insurance Deduction in Computing SE 

Cellular Phones No Longer Listed Property 

Reporting Rental Property Expense Payments 

Exclusion for §1202 Small Business Stock 

Five-Year Carryback of §38 Business Credit

AMT Exemption for §38 Business Credit

Reduction in §1374 Built-in Gains Period 

Designated Roth Accounts for §457 Plans 

§401(k) & §403 Plan Rollovers to Roth Accounts 

CHAPTER 11 - Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (HR 4853)

Individual Tax Rates - §1 

Marriage Penalty Relief & EITC - §1, §32, & §63 

Family & Child Incentives - §21, §36C, §45F & §137 

Child Tax Credit - §24 

American Opportunity Tax Credit - §25A  

Earned Income Tax Credit - §32 

Alternative Minimum Tax Relief - §26 & §55 

Dividends & Capital Gains - §1(h)

Deduction for School Teachers - §62 

State & Local Sales Tax Deduction - §164 

Deduction for Qualified Tuition - §222 

Deduction & Exemption Phase-Out - §68 & §151 

Educational Incentives - §117, §127, §221, & §530 

Energy Efficient Home Credit - §45L 

Nonbusiness Energy Property Credit - §25C  

Research Credit - §41 

Uniformed Services Wage Credit - §45P 

15-Year Qualified Improvements - §168 

Bonus Depreciation - §168(k)

Expensing - §179 

Special Film & TV Production Expensing - §181 

Environmental Remediation Cost Expensing - §198 

Payroll Taxes - §3111 & §3121 

Conservation Contributions - §170 

Charitable Food Inventory Contributions - §170 

Charitable Computer Inventory Contributions - §170 

Charitable Book Inventory Contributions - §170 

Charitable IRA Distributions - §408 

Employer-Provided Mass Transit & Parking - §132 

Estate, Gift, & GST Taxes - §2001, §2010, §2502, §2505, §2511 & §2631