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

* Sole proprietorships
* Partnerships
* Estates & trusts
* Unincorporated associations
* Corporation defined
* Subchapter S corporations
* Ordinary “C” corporations
* Personal service corporations
* Corporate tax rates
* Alternative minimum tax

1. List the advantages and disadvantages of sole proprietorships warning as to self-employed taxes and payment requirements and determine the characterization sole proprietorship assets upon disposition.
2. Define partnerships identifying the advantages and disadvantages, outline partnerships taxation particularly the application of the passive loss (§469) and at-risk rules (§465), and explain partnership income or loss reporting including husband and wife partnerships and limited partnerships.
3. Summarize the reporting requirements of estates, trusts and unincorporated associations, define “corporation” differentiating between subchapter S and regular corporations, identify characteristics of a personal service corporation, compute alternative minimum tax for such corporations, and identify preferences and adjustments that apply to certain types of taxpayers.

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

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

* Incorporation
* Start-up & organizational expenses
* Tax recognition of the corporate entity
* Capital gains & losses
* Dividends received deduction
* Charitable contributions
* Accumulated earnings tax trap
* Accounting periods & methods
* Inventories
* Multiple corporations

1. Analyze the transfer of money, property or both by prospective shareholders and the basic requirements associated with §351.
2. List the requirements of §1244 and the small business stock exclusion, contrast start-up with organizational expenses, determine the elements of corporate tax recognition including the dangers of corporate ownership, and summarize the capital gains and losses treatment noting dividends received treatment.
3. Explain the requirements for corporate charitable contributions, describe former §341 collapsible corporations, and avoid §541 status particularly as to personal service contracts.
4. Avoid §531 status and summarize the accounting periods and methods available to corporations allowing them to comply with reporting standards.
5. List three methods for identifying inventory items including two common methods of valuing inventory, name six multiple corporation tax advantages, and explain the tax consequences of corporate liquidations and distributions.

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

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

* Payroll taxes
* FICA & FUTA
* Employee labor laws
* Employee v. contractor status
* Unreasonable compensation
* Income splitting
* Buy sell agreements
* Entity & cross purchase agreements
* Sole shareholder planning
* Recapitalization

1. Discuss payroll taxes identifying the uses of Form 941, Form W-4, Form W-2, and Form W-3, explain the application of FICA and FUTA taxes and how to report them, and name at least eight employee labor laws that affect employees.
2. List twenty common-law rules used to determine employee status for FICA and federal income tax withholding, summarize the dangers of unreasonable compensation noting how to avoid them, and explain how a corporation can be a valuable income-splitting device.
3. Define a buy-sell agreement distinguishing an entity purchase from a cross purchase agreement and explain a recapitalization and its potential uses.

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

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

* Statutory v. nonstatutory benefits
* No-additional-cost services & qualified employee discounts
* Working condition fringes
* Employee achievement awards
* Dependent care assistance
* Cafeteria plans
* Self-insured medical reimbursement plans
* Employer provided automobile
* Interest-free & below-market loans
* Fringe benefit plans for S corporations

1. Assess basic fringe benefit planning by defining “income” under §61 and distinguishing former nonstatutory and current statutory fringe benefits.
2. Define “no-additional-cost services” and identify what property or services are excludable from income as qualified employee discounts under §132(c), list examples of and exceptions to working condition fringes and de minimis fringes, describe a §74 “employee achievement award,” and explain the §79 group term life insurance rules.
3. Identify the requirements and limits of §129 dependent care assistance, define §125 “cafeteria plans” including how it operates, explain the §119 meals and lodging exclusion, outline the mechanics of §105 self-insured medical reimbursement plans, and describe the requirements and limits of §127 programs.
4. Summarize four employer-provided automobiles valuation methods, explain interest-free and below-market loans, outline the requirements and limitations on fringe benefits under §§217, 132, 67 212, 132(h)(5) and 280A, identify S corporation fringe benefits, and outline ERISA compliance requirements.

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

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

* Tests for entertainment expenses
* Statutory exceptions
* Quiet business meals & drinks
* Ticket purchases
* Percentage reduction for meals & entertainment
* Entertainment facilities
* Substantiation & record keeping
* Employee expense reimbursement & reporting
* Self-employed persons
* Employers

1. Define the key tax terms “entertainment”, “lavish” and “extravagant”, apply the required §162 & §274 tests to ensure that entertainment expenses can be deducted, and explain the importance of the nine statutory exceptions.
2. Summarize the treatment of ticket purchases identifying the percentage reduction restriction for meals and entertainment, explain the application of the 2% deduction limit particularly as to business entertainment deductions and define an “entertainment facility” listing deductible costs.
3. Satisfy substantiation, recordkeeping, reimbursement, and reporting requirements noting variations in methods and explain how to itemize non-reimbursed employee expenses and the special reporting rules for self-employed persons and employers.

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

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

* Company paid insurance
* Group term life insurance
* Regulations
* Retired lives reserve
* Split dollar life insurance
* Medical & dental insurance & disability income insurance
* Interest limitation on policy loans
* Key person life insurance
* COBRA
* VEBAs - §501(c)(9) Trusts

1. Analyze the importance and variety of business insurance:

a. Analyzing the popularity and application of business life insurance plans and identifying common coverage and premiums provided to employees;
b. Naming five corporate uses for life insurance including estate, travel and accident uses and outlining the tax treatment, reporting requirements, and discrimination rules for business insurance particularly the eight requirements for qualifying group term life insurance under §79.
c. Clarifying the benefit of not needing a medical examination as a prerequisite to purchasing a plan;
d. Defining a retired lives reserve and split-dollar life insurance explaining their mechanics, taxation regulation, and advantages and disadvantages;
e. Summarizing the mechanics of employer paid health, medical and disability income insurance including the impact of medical examination requirements.

2. Explain the impact of the disallowance of interest deduction on purchasers and the insurance industry clarifying the §264 interest limitation on policy loans, determine the benefit of corporate key person life insurance, warn clients on the requirements of COBRA, and describe a Voluntary Employee Benefit Association under §501(c)(9).

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

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

* Qualified deferred compensation
* Basic requirements of a qualified pension plan
* Basic types of corporate plans
* Types of defined contribution plans
* Self-employed plans - Keogh
* Distribution & settlement options of IRAs
* Tax-free rollovers for IRAs
* Roth IRAs
* Simplified employee pension plans (SEPs)
* SIMPLE Plans

1. Differentiate qualified deferred compensation plans from nonqualified plans, identify the major benefit of qualified plans, and explain the basis of the benefits and contributions by particularly addressing the corporate taxpayer listing the current and deferred advantages and the disadvantages of corporate plans while warning of fiduciary responsibilities and prohibited transactions.
2. Describe the requirements of the three basic forms of qualified pension plans permitting clients to compare and contrast such plans.
3. Distinguish defined contribution from defined benefit plans by differentiating among five types of defined contribution plans and describing their effect on retirement benefits.
4. Contrast self-employed plans from qualified plans for other business types identifying key choice of entity factors.
5. Outline the requirements of IRAs, SEPs and SIMPLEs, and explain tax-free Roth IRA distributions noting where changes may be necessary to maximize plan benefits.

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

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

* Postponement of income
* Purposes & benefits
* Constructive receipt
* Economic benefit
* Funded company account plan
* Segregated asset plan
* Tax consequences
* Accounting
* Estate planning considerations
* Withholding, Social Security & IRAs

1. Analyze the postponement of income with a nonqualified plan by:

a. Identifying nonqualified plan advantages including five ways to design the plans and discussing the IRS’s position on such arrangements explaining the impact of constructive receipt and economic benefit concepts;
b. Listing five deferred compensation patterns set forth in R.R. 60-31 analyzing the taxability of each; and
c. Contrasting unfunded with funded plans explaining the use of company assets or bookkeeping accounts to avoid employee taxation.

2. Outline the set up of a segregated asset plan where the account is not subject to the claims of the employer’s creditors and still avoids employee taxation and list the tax consequences of establishing a nonqualified plan.

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

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

* Advantages & disadvantages
* S corporation status
* Termination
* Income & expense
* Built-in gain
* Passive income
* Basis of stocks & debts
* Distributions
* Form 1120S
* Fringe benefits

1. Describe S corporations and advise clients about the advantages and disadvantages associated with them.
2. List at least five variables that impact whether a business can choose S corporation status.
3. Summarize three ways an S corporation may be terminated and the related procedures that must be followed.
4. Discuss the taxation and fringe benefits of S corporations to compare with other entity formats by:

a. Explaining the treatment of S corporation income and expenses, pass-through items, built-in gain, passive income, tax preference items, LIFO recapture tax and capital gains tax and their impact on the taxation of S corporations; and
b. Describing and contracting with other entity forms, S corporation owner compensation and distribution options by explaining reasonable compensation requirements, related party rules, S corporation distribution taxation, tax year choices, fringe benefits, and when the Form 1120S must be filed.

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

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

* Starting a new business
* Buying an existing business
* Type 1 thru 7 reorganizations
* Carryover of corporate tax attributes

1. Compare and contrast various business disposition and reorganization possibilities by:

a. Explaining how organizational costs, start-up costs and syndication costs are incurred and clarifying what expenditures they include and how they are treated;
b. Naming five advantages of purchasing an existing business over starting a new business, listing six ways to find a business that is for sale, and noting the tax and practical considerations of such an acquisition;
c. Defining a reorganization under §368(a)(1), and summarizing the seven types of transactions that qualify as non-taxable reorganizations; and
d. Identifying the factors that determine the corporate tax attributes of an acquired corporation that carry over to the acquiring or successor corporation.

CHAPTER 1 - Business Forms & Characteristics 

Sole Proprietorships

Advantages

Disadvantages

Self-Employment Taxes

Incorporation

“S” Solution

Estimated Tax Payments

Partnerships

Conduit Entity

Advantages

Disadvantages

Husband-Wife Partnerships

General Tax Aspects

Limited Partnerships

Passive Presumption

At Risk Rules - §465

Financing

Passive Loss Limitations - §469

Active/Passive Determination

Triggering Suspended Losses 

Limited Liability Companies 

Estates & Trusts 

Income Distribution 

Business Trusts 

Unincorporated Associations 

Corporate Treatment

Corporation Defined 

Effect of State Laws 

Corporate Characteristics 

Partnership Determinations 

Trust Determinations 

Professional Associations 

Check-The-Box Regulations 

Subchapter S Corporations 

Ordinary “C” Corporations 

Advantages 

Disadvantages 

Personal Service Corporations 

Testing Period 

Personal Services 

Principal Activity 

Employee-Owner

Independent Contractor

Passive Loss Limitations 

Qualified Personal Service Corporation 

Federal Corporate Income Taxation Overview  

Corporate Tax Rates 

Tax Tables 

Old Law  

Surtax 

Reform Act of 1986 

Phantom Bracket

Current Rates 

Tax Return & Filing 

Alternative Minimum Tax 

Computation 

Regular Tax Deduction - §55(c)

Tax Preferences & Adjustments 

Preferences & Adjustments for All Taxpayers

Preferences & Adjustments For Noncorporate Taxpayers & Some Corporations 

Preferences & Adjustments For Corporations Only 

Adjustments - §56 

Business Untaxed Reported Profits (Pre-1990)

ACE Adjustment (Post-1989)

Small Businesses AMT Exclusion 

Small Business Corporation 

Transition Rule 

CHAPTER 2 - Corporate Formation & Capitalization

Incorporation - §351

Basic Requirements

Corporate Nonrecognition

Property

Stock Solely For Services

Impact on Recipient

Impact on Other Shareholders

Stock For Debt

Stock

Notes

Control

Property Basis

Stock Basis

Liabilities

Miscellaneous Trade & Technical Corrections Act - §351

Recourse Liability

Nonrecourse Liability

Basis

Incorporation of a Partnership

Alternative #1

Alternative #2

Alternative #3

Tax Consequences - Alternative #1

Tax Consequences - Alternative #2 

Tax Consequences - Alternative #3 

Accounts Receivable 

Continuing Partnership 

Section 1244 Stock 

Maximum Ordinary Loss 

Original Issuance 

Distributed Stock 

General Requirements 

Start-Up Expenses 

Covered Expenses 

Amortization 

Organizational Expenses 

Definition 

Stock Issuance & Syndication Expenses 

Amortization 

Start of Business 

Tax Recognition of the Corporate Entity 

Tax Criteria 

Nominee & Agency Corporations 

Having Income Attributed to the Corporation 

Section 482 Reallocation 

Corporation & Shareholder

Goodwill

Interest Free Loans 

Section 269A  

Capital Gains & Losses 

Net Capital Loss Carryovers & Carrybacks - §1212 

S Corporation Status 

Asset Types 

Five-Step Characterization Process 

Netting Capital Gains 

Netting Section 1231 Gains (Losses)

Character of Section 1231 Gains (Losses)

5 Year Averaging 

NOL Carryback & Carryover

Temporary Extension of Carryback Period 

Loss Computation 

Deduction Computation 

Dividends Received Deduction 

Dividends from Domestic Corporations 

80% Exception 

Ownership 

Limitation 

Denial of Deduction 

Debt-Financed Portfolio Stock 

Property Dividends 

Change to Holding Period 

Charitable Contributions 

Timing of Deduction 

Limitation 

Carryover of Excess Contribution 

Charitable Contributions of Computer Equipment - Expired 

Collapsible Corporations - §341 (Repealed)

Definition 

Presumption 

Covered Transactions 

Personal Holding Companies - §541 

Penalty Tax 

Professional Corporations 

Named Professionals 

Avoidance of PHC Status 

Accumulated Earnings Tax Trap - §531 

Imposition of Penalty Tax 

Computation 

Accumulated Earnings Credit

Application of Credit to Controlled Groups 

Reasonable Accumulations 

Working Capital

Service Corporations 

Minority Stock Redemptions 

Majority Stock Redemptions 

Stockholder Harmony 

Tax Exempt Income 

Accounting Periods & Methods 

Accounting Periods 

Section 444 Election 

Business Purpose Tax Year

25% Test

Length of Accounting Period 

Short Tax Year

Not in Existence Entire Year

Change in Accounting Period 

Election of Accounting Period 

Changing Accounting Periods 

Changes Without IRS Consent

Accounting Methods 

Accounting Methods 

Methods Available 

Cash Method 

Limitation 

Notice 2001-76 

Accrual Method 

Economic Performance Rule 

Special Methods 

Combination (Hybrid) Method 

Changing the Accounting Method 

Inventories 

Identification Methods 

Specific Identification Method 

FIFO Method 

LIFO Method 

Valuation Methods 

Cost Method 

Uniform Capitalization Rules - §263A  

Lower of Cost or Market Method 

Multiple Corporations 

Controlled Group Restrictions 

Definition 

Parent-Subsidiary Groups 

Brother-Sister Groups 

Consolidated Returns 

Definition 

Corporate Liquidations & Distributions 

The Old General Utilities Doctrine 

Loss Limitations 

CHAPTER 3 - Corporate Principals & Employees

Employee Status of Active Shareholders

Payroll Taxes

Form 941

Deposit Rules

Lookback Period

Monthly Depositor

Semi-Weekly Depositor

One-Day Rule

De Minimis Rule

Form W-4

Whistle-Blowing

Form W-2

Form W-3

FICA

FUTA

Form 940

Employee Labor Laws

Minimum Wage Requirement

Overtime

Fair Employment Laws

Child Labor Laws

Immigration Law

Workers’ Compensation Insurance

State Disability Insurance (SDI)

OSHA

Employee vs. Contractor Status

Factors 

Unreasonable Compensation 

Overall Limitation 

Allowance of Deduction 

Limitation on Accrual Deduction 

Employment Contracts 

Scope of Examination 

Factors 

Employee’s Qualifications 

Size of the Business 

Employee’s Compensation History 

Unreasonably Low Salaries 

Services Performed by the Employee 

Past Service 

Reasonable Dividends 

Bonuses as Constituting Dividends 

Payback Agreements 

Miscellaneous Factors 

Income Splitting 

Gift & Redemption 

Hire the Kids 

Buy Sell Agreements 

Definition 

Professional Corporations 

Marketability Problems 

Controlled Disposition 

Entity & Cross Purchase Agreements 

Stepped-Up Basis 

Resulting Equity Ownership 

Attribution & Constructive Ownership Rules 

Estate Tax Valuation 

Using the Buy Sell Agreement to Set Value 

Section 2703 Restrictions 

Exceptions to §2703 

Arm’s Length Bargain 

Enforcement of Contract Price 

Joint Ownership 

Funding the Buy-Sell Agreement

Term vs. Whole Life 

Policy Ownership 

Premium Payment

Purchase Price 

S Corporations 

Sole Shareholder Planning 

Complete Liquidations 

Alternative Dispositions 

Use of Life Insurance 

Estate Valuation 

One-Way Buy-Outs 

Recapitalization 

In General

Valuation of Stock 

Estate Freeze Provisions 

Stock Dividends 

Section 306 Tainted Stocks 

§306 Exceptions 

CHAPTER 4 - Basic Fringe Benefits

Concept

Definition of Income - §61

Deductions without Taxable Income

Types of Benefits

Old Dichotomy - Statutory v. Nonstatutory

Fringe Benefit Provisions

TRA ‘84 - §132

Discrimination

Only Statutory Benefits

No-Additional-Cost Services - §132(b)

Covered Employees

Line of Business Requirement

Definition

Qualified Employee Discounts - §132(c)

Manner of Discount

Real Estate & Investment Property Exclusion

Amount of Discount

Working Condition Fringes - §132(d)

Covered Employees

Exceptions

Substantiation

De Minimis Fringes - §132(e)

Subsidized Eating Facilities

Employee Achievement Awards - §74(c) & §274(j)

Exclusion

Definition of Employee Achievement Awards

Qualified Plan Award

Employer Deduction Limits

Aggregation Limit

Special Partnership Rule

Employee Impact

Group Term Life Insurance - §79

Dependent Care Assistance - §129

Amount of Assistance

Requirements

Conflict with Dependent Care

Cafeteria Plans - §125 

Definition 

Qualified Benefits 

Non-Qualified Benefits 

Controlled Group Rules 

Salary Reduction Plans 

Nondiscrimination 

Meals & Lodging - §119 

Income Exclusion 

Convenience of Employer

Self-Insured Medical Reimbursement Plans - §105 

Allowable Expenses 

Requirements 

Benefits 

Exposure 

Employee Educational Assistance Programs - §127 

Employer Provided Automobile - §61 & §132 

General Valuation Method 

Annual Lease Value Method 

Computation 

Cents Per Mile Method 

Commuting Value Method 

Interest Free & Below-Market Loans - §7872 

Permissible Discrimination 

Employee Needs 

Imputed Interest

Types of Loans 

Demand Loans 

Term Loans 

Application of §7872 and Rate Determinations 

Summary 

Moving Expenses - §217 

Employer-Provided Retirement Advice & Planning - §132 

Financial Planning - §67 & §212 

Popularity 

Taxation 

Tax Planning - §67 & §212 

Taxation 

Estate Planning - §67 & §212 

Death Benefit Payment - §101(b) Repealed 

Physical Fitness Programs - §132(h)(5)

Home Office - §280A  

Carryforward 

Renting Space to Employer

Fringe Benefit Plans for S Corporations 

Insurance 

Basis 

Permanent Policies 

Effect of Premium Payment

Key Employee Insurance 

Medical Insurance 

Retirement Plans 

Summary 

ERISA Compliance 

Welfare Plans 

Additional Requirements 

CHAPTER 5 - Business Entertainment

Definition

Lavish or Extravagant Restriction

Ordinary & Necessary Requirement

Directly Related Test

Clear Business Setting Presumption

Associated Test

Substantial Business Discussion

Timing

Conventions

Statutory Exceptions

Food and Beverages for Employees

Expenses Treated as Compensation

Reimbursed Expenses

Recreational Expenses for Employees

Employee, Stockholder and Business Meetings

Trade Association Meetings

Items Available to Public

Entertainment Sold to Customers

Expenses Includible in Income of Non-employees

Quiet Business Meals & Drinks

Taxpayer's (or Employee) Presence

Section 212 Meals Not Deductible

Home Entertainment

Ticket Purchases

Exception for Charitable Sports Events

Special Limitation for Skyboxes

Percentage Reduction for Meals & Entertainment

Related Expenses

Application of Reduction Rule

Exceptions

2% Floor on Employee Business Expenses 

Miscellaneous Itemized Deductions 

Entertainment Facilities 

Exceptions 

Covered Expenses 

Club Dues 

OBRA '93 

Sales Incentive Awards 

Substantiation & Record Keeping 

Documentation 

Contemporaneous Records 

Payback Agreements 

Employee Expense Reimbursement & Reporting 

Family Support Act of 1988 

Remaining Above-The-Line Deductions 

Accountable Plans 

Reasonable Period of Time 

Fixed Date Safe Harbor

Period Statement Safe Harbor

Adequate Accounting 

Per Diem Allowance Arrangements 

Federal Per Diem Rate 

Related Employer

Meal Break Out

Partial Days of Travel

Usage & Consistency 

Unproven or Unspent Per Diem Allowances 

Travel Advance 

Reporting Per Diem Allowances 

Reimbursement Not More Than Federal Rate 

Reimbursement More Than Federal Rate 

Nonaccountable Plans 

Non-Reimbursed Employee Expenses 

When an Employee Needs to File Form 2106 

Self-Employed Persons 

Expenses Related to Taxpayer's Business 

Expenses Incurred on Behalf of a Client & Reimbursed 

Meal & Entertainment Expenses 

With Adequate Accounting 

Without Adequate Accounting 

Non-Entertainment Expense Deduction 

Employers 

When Can an Expense Be Deducted? 

Economic Performance Rule 

Corporation 

Nondeductible Meals 

Employer Provided Auto 

CHAPTER 6 - Insurance

Company Paid Insurance

Popularity

Types of Life Insurance

Group Term Life

Requirements

“Key Employee” Defined

Popularity and Application

Coverage & Premiums

Medical Examination

Regulations

Spouse & Dependent Insurance

Computation

Tax Liability

Reporting

Discrimination

Eligibility & Benefits

Excluded Employees

Policy Requirements

Ten Employee Rule

Less Than Ten Employees

Permanent Benefits

Nondiscrimination Requirements

Retired Lives Reserve

Revenue Ruling 68-577

Taxation

Advantages

Comparison With Other Programs 

Executive Bonus 

Split Dollar

Disadvantages 

Reserve Account

Revenue Rulings 

Qualified Trusts 

Nonqualified Trusts 

Deductibility of Contributions 

Separate Account for Key Employees 

Disqualified Benefit

Effective Date 

Revenue Procedure 93-3 

Estate Planning Considerations 

Policy Assignments 

Split Dollar Life 

Low Cost Term Insurance 

Regulatory Requirements 

Taxation 

Revenue Ruling 64-328 

Johnson Case 

Business Travel Accident Insurance 

Medical & Dental Insurance 

Premiums 

Disability Income Insurance 

Interest Limitation on Policy Loans - §264A  

Disallowance of Interest Deduction 

Impact

Limit on Deductibility of Premiums & Interest

Key Person Life Insurance 

Closely Held Corporations 

Sole Shareholder Applications 

Application of AMT 

COBRA  

Affected Employers 

VEBAs - §501(c)(9) Trusts 

Section 419 

Self Insurance 

Severance Pay 

Post-Retirement Medical Benefits 

VEBA Taxation on Earnings 

Nondiscrimination Rules Applied 

Uniform Application 

Controlled Groups 

Termination 

Disqualified Benefits 

Conclusion 

CHAPTER 7 - Retirement Plans

Deferred Compensation

Qualified Deferred Compensation

Qualified v. Nonqualified Plans

Major Benefit

Current Deduction

Timing of Deductions

Part of Total Compensation

Compensation Base

Salary Reduction Amounts

Benefit Planning

Corporate Plans

Advantages

Current

Deferred

Disadvantages

Employee Costs

Comparison with IRAs & Keoghs

Basic ERISA Provisions

ERISA Reporting Requirements

Fiduciary Responsibilities

Bonding Requirement

Prohibited Transactions

Additional Restrictions

Fiduciary Exceptions

Loans

Employer Securities

Excise Penalty Tax 

PBGC Insurance 

Sixty-Month Requirement

Recovery Against Employer

Termination Proceedings 

Plans Exempt from PBGC Coverage 

Basic Requirements of a Qualified Pension Plan 

Written Plan 

Communication 

Trust

Requirements 

Permanency 

Exclusive Benefit of Employees 

Highly Compensated Employees 

Reversion of Trust Assets to Employer

Participation & Coverage 

Age & Service 

Coverage 

Percentage Test

Ratio Test

Average Benefits Test

Numerical Coverage 

Related Employers 

Vesting 

Full & Immediate Vesting 

Minimum Vesting 

Nondiscrimination Compliance 

Contribution & Benefit Limits 

Defined Benefit Plans (Annual Benefits Limitation) - §415 

Defined Contribution Plans (Annual Addition Limitation) - §415 

Limits on Deductible Contributions - §404 

Assignment & Alienation 

Miscellaneous Requirements 

Basic Types of Corporate Plans 

Defined Benefit

Mechanics 

Defined Benefit Pension 

Defined Contribution 

Mechanics 

Discretion 

Favorable Circumstances 

Types of Defined Contribution Plans 

Profit Sharing 

Requirements for a Qualified Profit Sharing Plan 

Written Plan 

Eligibility 

Deductible Contribution Limit

Substantial & Recurrent Rule 

Money Purchase Pension 

Cafeteria Compensation Plan 

Thrift Plan 

Section 401(k) Plans 

Death Benefits 

Defined Benefit Plans 

Money Purchase Pension & Target Benefit Plans 

Employee Contributions 

Non-Deductible 

Life Insurance in the Qualified Plan 

Return 

Universal Life 

Compare 

Plan Terminations & Corporate Liquidations 

10-Year Rule 

Lump-Sum Distributions 

Asset Dispositions 

IRA Limitations 

Self-Employed Plans - Keogh 

Contribution Timing 

Controlled Business 

General Limitations 

Effect of Incorporation 

Mechanics 

Parity with Corporate Plans 

Figuring Retirement Plan Deductions For Self-Employed 

Self-Employed Rate 

Determining the Deduction 

Individual Plans - IRA’s 

Deemed IRA  

Mechanics 

Phase-out

Special Spousal Participation Rule - §219(g)(1)

Spousal IRA  

Eligibility 

Contributions & Deductions 

Employer Contributions 

Retirement Vehicles 

Distribution & Settlement Options 

Life Annuity Exemption 

Minimum Distributions 

Required Minimum Distribution – Subject to 2009 Waiver

2009 Waiver of Required Minimum Distribution Rules 

Definitions 

Distributions during Owner’s Lifetime & Year of Death after RBD  

Sole Beneficiary Spouse Who Is More Than 10 Years Younger

Distributions after Owner’s Death 

Inherited IRAs 

Estate Tax Deduction 

Charitable Distributions from an IRA  

Post-Retirement Tax Treatment of IRA Distributions 

Income In Respect of a Decedent

Estate Tax Consequences 

Losses on IRA Investments 

Prohibited Transactions 

Effect of Disqualification 

Penalties 

Borrowing on an Annuity Contract

Tax-Free Rollovers 

Rollover from One IRA to Another

Waiting Period between Rollovers 

Partial Rollovers 

Rollovers from Traditional IRAs into Qualified Plans 

Rollovers of Distributions from Employer Plans 

Withholding Requirement

Waiting Period between Rollovers 

Conduit IRAs 

Keogh Rollovers 

Direct Rollovers From Retirement Plans to Roth IRAs 

Rollovers of §457 Plans into Traditional IRAs 

Rollovers of Traditional IRAs into §457 Plans 

Rollovers of Traditional IRAs into §403(B) Plans 

Rollovers from SIMPLE IRAs 

Roth IRA - §408A  

Eligibility 

Contribution Limitation 

Roth IRAs Only 

Roth IRAs & Traditional IRAs 

Conversions 

Recharacterizations 

Reconversions 

Taxation of Distributions 

No Required Minimum Distributions 

Simplified Employee Pension Plans (SEPs)

Contribution Limits & Taxation 

SIMPLE Plans 

SIMPLE IRA Plan 

Employee Limit

Other Qualified Plan 

Set up 

Contribution Limits 

Salary Reduction Contributions 

Employer Matching Contributions 

Deduction of Contributions 

Distributions 

SIMPLE §401(k) Plan 

CHAPTER 8 - Nonqualified Deferred Compensation

Postponement of Income

Advantages

IRS Scrutiny & Approval

Nondiscrimination

ERISA

Funding

No Immediate Cash Outlay

Annual Report

Notice Requirement

Purposes & Benefits

Benefit Formula

Incentive

Deferred Bonuses

Contractual Arrangement

Necessary Provisions

Tax Status

Service’s Position

Rationale

Congressional Moratorium

No Ruling or Regulation Policy

Constructive Receipt

Beyond Actual Receipt

Simple Set-Asides Are Not Possible

Revenue Ruling 60-31

Regulations

Time & Control Concept

Control

Timing

After-the-Fact Contract

Amendment to Existing Contract

Economic Benefit

Has Something of Value Been Transferred?

Insurance Coverage Has a Calculable Value

Segregated Funds Have Immediate Economic Value

Value v. Control

Revenue Ruling 60-31

Situation 1

Situation 2 

Situation 3 

Situation 4 

Situation 5 

General Principles 

Unfunded Bare Contractual Promise Plan - Type I

Risk 

Funded Company Account Plan - Type II

Ownership & Segregation 

Bookkeeping Reserve or Separate Account

Employee Still Bears Economic Risk 

Limited Protection 

Investment of Deferred Amounts 

Life Insurance 

Premiums 

Third Party Guarantees 

Segregated Asset Plan - Type III

Section 83 Approach 

Tight Rope Format

Transferable or Not Subject To A Risk of Substantial Forfeiture 

Substantial Restrictions 

Redemption or Forfeiture 

Condition Related to a Purpose of the Transfer

Noncompetition 

Consultation 

Time Alone is Not Enough 

Realization & Taxation 

30-Day Election Period 

Deduction Allowed 

Timing 

Withholding 

Tax Consequences 

Reciprocal Taxation/Deduction Rule 

No Difference for Cash or Accrual

Separate Accounts for Two or More Participants 

Employer Deduction Traps 

Income Tax on Employer Held Assets 

Inclusion in Income Under §409A  

State Tax Issues 

Accounting 

Two Sets of Rules 

Financial Accounting Rules 

IRS Rules 

Estate Planning Considerations 

Death During Deferral

Income Tax Consequences 

Estate Tax Consequences 

Gift Tax Consequences 

Withholding, Social Security & IRA’s 

Other Payroll Taxes 

Social Security Benefits 

IRA’s 

CHAPTER 9 - S Corporations

Introduction

Advantages

Planning

Disadvantages

Becoming an S Corporation

S Corporation Status

Number of Shareholders

Individuals Only

Estates

Grantor Trusts

Voting Trusts

Testamentary Trust

Qualifying Simple Trusts

Electing Small Business Trusts

Aliens

C Corporations

Tax-Exempt Entities

Exception for S Corporation ESOP - §512

One Class of Stock 

Affiliated Groups & Subsidiaries 

Prior Law  

Current Law  

Domestic Corporation 

Election Requirement

Making the Election 

Form 2553 

Invalid S Elections 

Extension 

S Corporation Termination 

Revoking the Election 

Procedure 

Effective Date 

Ceasing to Qualify 

Effective Date