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Course Details

Business Taxation (Course Id 326)

Updated / QAS / Registry / EA
  Add to Cart 
Author : Danny C Santucci, JD
Course Length : Pages: 0 ||| Review Questions: 0 ||| Final Exam Questions: 120
CPE Credits : 24.0
IRS Credits : 24
Price : $145.95
Passing Score : 70%
Course Type: NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents
Technical Designation: Technical
Primary Subject-Field Of Study:

Taxes - Taxes for Course Id 326

Description :

Americans who want to be their own boss are not entirely on their own. They have a rich uncle - Uncle Sam - who is there to help, as well as to make demands. The nation's tax laws are intended to encourage people to start new businesses and are chock full of incentives and tax breaks, as well as sometimes onerous reporting requirements.

This course is a fast-paced and entertaining guide through tax issues affecting business entities and their owners. The focus of this class is on tax devices and techniques available to the small business owner. Emphasis will be given to operational deductions, fringe benefits, compensation, family income splitting, retirement plans, and estate planning.

Usage Rank : 16818
Release : 2023
Version : 1.0
Prerequisites : General understanding of federal income taxation.
Experience Level : Overview
Additional Contents : Complete, no additional material needed.
Additional Links :
Advance Preparation : None.
Delivery Method : QAS Self Study
Intended Participants : Anyone needing Continuing Professional Education (CPE).
Revision Date : 19-Oct-2023
NASBA Course Declaration : Participants must complete the final examination within one year of purchase and with a minimum passing grade of 70% or better to receive CPE credit unless otherwise noted on the Course History page (i.e. California Ethics must score 90% or better). After logging in click on the Course History links on your My Courses page for the Begin date and Expire date for the Final Exam.
Approved Audience :

NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents - 326

Keywords : Taxes, Business, Taxation, cpe, cpa, online course
Learning Objectives :

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

Chapter 1                Structure, Reporting & Accounting

       At the start of Chapter 1, participants should identify the following topics for study:

    * Sole proprietorships
    * Partnerships
    * Regular corporations
    * Recordkeeping
    * Kinds of records to keep
    * Business transactions
    * Bookkeeping systems
    * How long to keep records
    * Accounting periods & methods
    * Inventories
Learning Objectives:

       After reading Chapter 1, participants will be able to:
    1. Recognize sole proprietorships, partnerships, and corporations as organizational formats for new and existing businesses.
    2. Identify how choice of entity relates to the type of records to keep, listing issues related to substantiation and documentation.
    3. Specify available accounting periods and methods and the methods for identifying and valuing inventory items.
Chapter 2                Structure, Business Income, Credits & Assets

       At the start of Chapter 2, participants should identify the following topics for study:

    * Rental income
    * Interest
    * Discharge of debt income
    * Dividends
    * Recoveries
    * Depreciation recapture
    * Partnership income
    * Business & investment credits
    * Asset types
    * Non-recognition transfers
Learning Objectives:

       After reading Chapter 2, participants will be able to:
    1. Identify the various types of income and their implications, including the hidden income tax dangers of cancellation of indebtedness income, tax recoveries, and depreciation recapture.
    2. Specify the existing basic business and investment tax credits, naming their tax requirements, and business asset types that affect the character of gain or loss, and recognize the tax treatment on the disposition of business assets, including non-recognition transfers and §1231 assets.
Chapter 3                Selected Business Expenses

       At the start of Chapter 3, participants should identify the following topics for study:

    * Section 162
    * Expenses of not-for-profit activities
    * Rent expenses
    * Interest expense
    * Deductible taxes
    * Other selected deductible costs
    * Amortization
    * Depletion -§613
    * Business bad debts
    * Depreciation
Learning Objectives:

       After reading Chapter 3, participants will be able to:
    1. Recognize the importance of §162 in deducting and substantiating business expenses and costs and specify the implications of the deduction timing and limits specifying the treatment of not-for-profit activities.
    2. Identify conditional sales contracts, leveraged leases, and true leases, and determine how to qualify for rent expense deductions including through leasehold improvements.
    3. Specify the various forms of interest expense under §163(a) recognizing related reporting and filing issues, and identify the distinctions between deductible and nondeductible interest.
    4. Recognize deductions for real estate, state, and local taxes and list deductions for home office use, research and experimentation costs, barrier removal, and mine development.
    5. Identify the various forms of tax treatment under the concepts of depreciation and amortization, including the effect on amortization of §197.
    6. Determine the differences between cost depletion and percentage depletion as a means of accounting for the reduction of a product’s reserves.
    7. Specify the types of bad debt and their effect on accounting and the various methods for dealing with bad debt.
    8. Recall MACRS classifications, cite the recapture provisions and exceptions, and identify the alternative depreciation system.
Chapter 4                Employee Compensation & Benefits

       At the start of Chapter 4, participants should identify the following topics for study:

    * Wages, salary & pay
    * Tests for deducting pay to employees
    * Selected types of compensation
    * Payroll taxes
    * Selected fringe benefits
    * Interest-free & below-market loans
    * Equity participation
    * Advantages of nonqualified deferred compensation
    * Funded company account plans
    * Segregated asset plans
Learning Objectives:

       After reading Chapter 4, participants will be able to:
    1. Specify the common-law rules used by the IRS to determine whether a person is an employee for purposes of FICA, FUTA, and federal income tax withholding.
    2. Identify the tests for wages to be deductible and how excluded fringe benefits can result in more employer deductions and incentive-based compensation to employees.
    3. Recognize the use of deferred compensation agreements including the basic types of nonqualified deferred compensation, and the tax consequences related to these plans.
Chapter 5                Automobiles

       At the start of Chapter 5, participants should identify the following topics for study:

    * Apportionment of personal & business use
    * Deduction limitations using the actual cost method
    * Expensing - §179
    * Predominate business use rule
    * Auto leasing
    * Standard mileage method
    * Auto trade-in vs. sale
    * Employer-provided automobile
    * Nonpersonal use vehicle
    * Reporting of an employer-provided automobile
Learning Objectives:

       After reading Chapter 5, participants will be able to:
    1. Identify the apportionment of business and personal use of an automobile, including deduction limitations, and specify the various depreciation methods such as MACRS and §179 expensing.
    2. Recognize personal auto leasing, its advantages and disadvantages, and the various kinds of leasing arrangements that can be used, such as closed-end or open-end leases.
    3. Recall the standard mileage method listing its limitations and identify the various working condition fringe benefits including their impact on the gross income of employees.
    4. Identify the various valuation methods used in determining the actual value of an employee’s personal use of an automobile specifying the reporting options available to the employer.
Chapter 6                Business Travel & Entertainment

       At the start of Chapter 6, participants should identify the following topics for study:

    * Transportation & travel distinguished
    * Definition of “tax home”
    * Temporary & indefinite assignments
    * Business purpose requirement for business travel
    * Conventions & meetings
    * Statutory exceptions of the ordinary & necessary requirement
    * Post-2018 restrictions on entertainment & facilities
    * Employee expense reimbursement & reporting
    * Self-employed persons
    * Employers
Learning Objectives:

       After reading Chapter 6, participants will be able to:
    1. Identify deductible business travel expenses by:
      a. Specifying the differences between transportation and travel in order to benefit from the appropriate business tax deduction;
      b. Recalling IRS definitions of a taxpayer's tax home for travel and transportation purposes;
      c. Recognizing how time acts as a critical factor in distinguishing a temporary from an indefinite job assignment; and
      d. Specify the distinctions between business and nonbusiness days.
    2. Determine the factors associated with the business purpose requirement stating how they determine deductible expenses for meals and currently restricted entertainment.
    3. Identify the applicable federal per diem rate from any one of several methods and the different reporting and income inclusion treatments given to self-employed persons or reimbursed employees.
Chapter 7                Retirement Plans

       At the start of Chapter 7, 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
Learning Objectives:

       After reading Chapter 7, participants will be able to:
    1. Recognize the requirements and characteristics of qualified retirement plans by:
      a. Citing the limitations imposed by ERISA and TEFRA;
      b. Specifying trust requirements and tests associated with these requirements, such as the ratio test; and
      c. Identifying three classes of vesting listing how the vesting standards affect retirement plans.
    2. Determine the differences between defined contribution and defined benefit plans recognizing the different types of plans and their effect on retirement benefits.
    3. Identify Keogh Plans, traditional and Roth IRAs, and SIMPLE 401(k) plans by specifying their characteristics and determining how and when they may and may not be appropriate.
Chapter 8                Insurance

       At the start of Chapter 8, participants should identify the following topics for study:

    * Company paid insurance
    * Group term life insurance
    * Retired lives reserve
    * Split-dollar life insurance
    * Medical & dental insurance
    * Disability income insurance
    * Interest limitation on policy loans
    * Self-employed health insurance deduction
    * Capitalized insurance
    * Health savings account
Learning Objectives:

       After reading Chapter 8, participants will be able to:
    1. Recognize the benefits of company-provided insurance policies by identifying how to qualify for group term life insurance and citing the requirements of retired lives reserve funds and split-life insurance policies.
    2. Specify the requirements that determine insurance premium deduction and, identify the interest disallowance rule, and the uniform capitalization rules citing their relation to production or resale activity costs.
Chapter 9                Estate Planning

       At the start of Chapter 9, participants should identify the following topics for study:

    * Unlimited marital deduction
    * Simple will
    * Types of trusts
    * Charitable trusts
    * Family documents
    * Private annuities
    * Business valuation
    * Redemptions
    * Lifetime dispositions
    * Installment payment of federal estate taxes
Learning Objectives:

       After reading Chapter 9, participants will be able to:
    1. Recognize the elements of general estate planning such as the unlimited marital deduction, including the qualified terminable interest property trust, stepped-up basis, and former modified carryover basis rules.
    2. Identify the primary dispositive plans, such as simple wills, the various types of trusts, annuities, related family documents, and conservatorships.
    3. Specify the various special business issues related to estate planning, such as methods of business valuation, the implications of important revenue rulings, the use of estate planning tools recognizing buy-sell agreements, and deferred compensation agreements.
Course Contents :

Chapter 1 - Structure, Reporting & Accounting


Entity Tax Divide

Passthrough Entities - 20% Deduction


Deduction Amount

Qualified Trade Or Business

Corporations - 21% Rate

Types of Business Organizations

Sole Proprietorships

Schedules C & Former C-EZ

Self-Employment Taxes

Estimated Tax Payments





General Tax Aspects

Form 1065

Limited Partnerships

Passive Presumption

At-Risk Rules - §465


Passive Loss Limitations - §469

Active/Passive Determination

Triggering Suspended Losses

Regular Corporations

Electronic Federal Tax Payment System (EFTPS)

Form 1120 - Corporate Income Tax Return

Which Form To File

Penalty for Late Filing of Return

Penalty for Late Payment of Tax

Limit on Deduction for Dividends

Effect on Net Operating Loss

At-Risk Rules for Closely Held Corporations

Alternative Minimum Tax for Corporations

Tax Rate - 21%



Qualified Personal Service Corporation

S Corporations



Limited Liability Company



Record keeping

Why Keep Records?

Monitor the Progress of a Business

Prepare Financial Statements

Identify Source of Receipts

Keep Track Of Deductible Expenses

Prepare Tax Returns

Support Items Reported On Tax Returns

Kinds of Records to Keep

Supporting Documents

Gross Receipts




Business Transactions

Basic Recordkeeping

Business Checkbook

Reconciling the Checking Account

Bookkeeping Systems



Computerized System


Electronic Storage System

How Long To Keep Records

Employment Taxes


Records for Nontax Purposes

Accounting Periods & Methods

Tax Year

Section 444 Election

Business Purpose

Changes in Accounting Periods

Accounting Method

Changing a Business’s Method of Accounting


Identification Methods

Specific Identification Method

FIFO Method

LIFO Method

Valuation Methods

Cost Method

Uniform Capitalization Rules - §263A

Lower of Cost or Market Method

Chapter 2 - Business Income, Credits & Assets

Business Income


Types of Income


Information Returns

Rental Income

Individual Lessors

Advance Rent

Lease Bonus

Security Deposits

Payment for Canceling a Lease

Payments to Third Parties

Settlement Payments


Uncollectible Loans

Below-Market Loans

Installment Sales

Interest on Insurance Dividends

Discharge of Debt Income

Exceptions from Income Inclusion

Reduction of Tax Attributes

Order of Reductions

Sale of Products or Services


Ordinary Dividends

Money Market Funds

Dividends on Capital Stock

Dividends Used to Buy More Stock

Qualified Dividends

Tax on Net Investment Income - §1411


Itemized Deduction Recoveries

Recovery Limited to Deduction

Recoveries Included in Income

Non-Itemized Deduction Recoveries

Amounts Recovered for Credits

Tax Benefit Rule

Recapture of Depreciation

Sale Or Exchange Of Depreciable Property

Listed Property

Section 179 Property

Sole Proprietorship Income

Partnership Income

Partnership Agreement

Partnership Return

Partner’s Return

Corporate Income

S Corporation Income

S Corporation Return

Shareholder’s Return


Alternative Minimum Tax Income

Business & Investment Credits

Business Credit Carryback & Carryforward Rules - §39(a)

NOL Comparison

Disposition of Business Assets

Amount Realized

Basis of Assets

Unstated Interest

Allocation of Purchase Price

Asset Types

Section 1231 Assets

Character of Gain or Loss

5 Year Averaging

Like-Kind Exchanges

Qualified Property Requirement

Like-kind Requirement

Like-kind Exchanges Limited to Real Property

Goodwill Prohibition

Chapter 3 - Selected Business Expenses

Section 162

Cost of Goods Sold

Capital Expenses

Cost Recovery Depreciation

Personal vs. Business Expenses

At-Risk Amounts - §465

Passive Losses - §469

Net Operating Loss - §172

Loss Limitation For Noncorporate Taxpayers

Pandemic Provision

Inflation Reduction Act

Creation of an NOL

Individual NOLs


Pandemic Provision


Corporate NOLs

Timing of Expense Deduction - §447

Economic Performance - §461

Prepayment of Expenses

Contested Liability

Related Person

Expenses of Not-for-Profit Activities - §183

Presumption of Profit

Using The Presumption Later

Limit on Deductions

Partnerships & S Corporations

More Than One Activity

Rent Expenses

Rent Paid In Advance

Lease vs. Sale

Leveraged Leases

Leveraged Leases Of Limited-Use Property

Leases over $250,000 - §467

Taxes on Leased Property

Cost of Getting a Lease

Options To Renew

Cost Of A Modification Agreement

Commissions, Bonuses, & Fees

Loss On Merchandise & Fixtures

Pre-2018 Leasehold Improvement, Retail Improvement & Restaurant Property - §168

Qualified 15-Year Leasehold Improvement Property - §168(e)(3)(E)(iv)

Qualified Leasehold Improvement Property

Subsequent Owner

Qualified 15-Year Retail Improvement Property - §168(e)(E)(ix)

Qualified Retail Improvement Property

15-Year Restaurant Improvement Property - §168(e)(3)(E)(v)

Qualified Restaurant Property

Expensing & Bonus Depreciation Permitted

Expensing - §179

Bonus Depreciation - 168

Recapture Considerations - §1245 & §1250

Post-2018 Qualified Improvement Property Consolidation - §168(e)(6)(A)

Assignment of a Lease

Capitalizing Rent Expenses - §263A

Interest Expense - §163

Business Interest - §162

Pandemic Provision

Interest Paid In Advance

Mortgage Interest

Prepayment Penalty

Points - §461

Expenses to Obtain a Mortgage

Interest on Installment Purchases - §483 & §1271

Investment Interest - §212

Investment Property

Limit on Deduction

Net Investment Income

Investment Income

Capital Gain Inclusion Election

Investment Expenses

Losses from Passive Activities


When to Deduct Investment Interest

Form 4952

Interest on Margin Accounts

Interest on a Market Discount Bond

Nondeductible Interest

Interest on Income Tax Owed


Commitment Fees & Service Charges

Capitalized Interest

Production Period

Traced Debt

Avoided Cost Debt

When Interest Is Paid or Incurred

Partnerships & S Corporations

Interest Related To Tax-Exempt Income - §265

Interest on Insurance Policy Loans - §264

Single Premium Life Insurance

Systematic Plan of Borrowing

Key Person Insurance

Deductibility of Premiums & Interest on Life Insurance

Existing Interest on Purchase

Corporate Acquisition Interest

Interest Allocation Rules for Multi-Purpose Loans

Allocation period

Proceeds Not Disbursed To Borrower

Proceeds Deposited In Borrower's Account

Order Of Funds Spent

Payments From Checking Accounts

Amounts Paid Within 30 Days

Optional Method For Determining Date Of Reallocation

Interest On A Separate Account

Accrued Interest

Accrued Interest Before Debt Proceeds Are Received

Loan Repayment

Continuous Borrowings

Loan Refinancing

Special Rules for Partnerships & S Corporations

Debt-Financed Acquisitions


How to Report

Debt-Financed Distributions

Optional Method

How to Report

Deductible Taxes - §164

Tax Refunds

Change in Date of Tax Accrual

Real Estate Taxes

Local Benefits

Real Estate Taxes on Purchase Or Sale

Choosing To Ratably Accrue

Separate Choices

Making the Choice

Form 3115

State & Local Income Taxes

Foreign Income Taxes

States & Local Sales Tax for Individuals

Temporary Sales Tax Deduction for Qualified Vehicles (Expired)

Employment Taxes

Unemployment Fund Taxes

Self-employment Tax

Other Taxes

Casualty & Theft Losses - §165

Proof of Loss

Amount of Loss


Dividends Received Deduction - §243

Dividends from Domestic Corporations

65% Exception



Other Selected Deductible Costs

Home-Office Deduction - §280A

Requirements - §280A

Non-Exclusive Use Exceptions

Income Limitation

Home Office Deduction After 1998

Research & Experimental Cost Deduction (Repealed)



Costs Not Included

When & How To Choose

Business Start-Up & Organizational Costs - §195

How To Make The Choice

Carrying Charges

Intangible Drilling Costs

Exploration Costs


Reduced Corporate Deductions For Exploration Costs

Recapture Of Exploration Expenses

Mine Development Costs

Circulation Costs

Reforestation Costs

Retired Asset Removal Costs

Barrier Removal Costs

Deduction Limit

Partners & Partnerships

Qualification Standards

Other Barrier Removals

How To Make The Choice


Deducting Amortization

Start-Up Costs - §195

Amortization Period

Qualifying Costs

Purchasing An Active Trade Or Business

Corporate Organizational Costs - §248

Qualifying Costs

Nonqualifying Costs

Partnership Organizational Costs - §709  

Qualifying Costs

Nonqualifying Costs

Partnership Liquidation

Costs of Obtaining a Lease

Intangibles - §197

Cost Attributable To Other Property

Section 197 Intangibles Defined


Going Concern Value

Workforce In Place, Etc.

Business Books And Records, Etc.

Patents, Copyrights, Etc.

Customer-Based Intangible

Supplier-Based Intangible

Government-Granted License, Permit, Etc.

Covenant Not To Compete

Franchise, Trademark, Or Trade Name

Professional Sports Franchise

Contract For The Use Of, Or A Term Interest In, A §197 Intangible

Assets That Are Not §197 Intangibles

Computer Software

Computer Software Defined

Rights Of Fixed Duration Or Amount

Safe Harbor for Creative Property Costs

Anti-Churning Rules

Disposition of §197 Intangibles

Nondeductible Loss

Covenant Not To Compete

Nonrecognition Transfers

Research & Experimental Cost Amortization - §174(a)

Optional write-off method

Amortizable Costs


Pollution Control Facilities

Certified Pollution Control Facility

Reforestation Costs

Depletion - §613

Cost Depletion

Basis For Depletion

Total Recoverable Units

Number Of Units Sold

Determining The Cost Depletion Deduction

Percentage Depletion

Gross Income

Taxable Income Limit

Partnerships & S Corporations

Partner’s or Shareholder’s Adjusted Basis


Reporting the Deduction

Mines & Geothermal Deposits

Gross Income From The Property

Excise Tax


Treatment Processes

Transportation Of More Than 50 Miles

Lessor’s Gross Income

Bonuses & Advanced Royalties


Business Bad Debts - §166

Credit Transactions

Income Inclusion

Accrual Method Taxpayers

Cash Method Taxpayers

Former Business

Debt Acquired from a Decedent

Political Debts

Insolvency of Partner

Business Loan Guarantees


Methods of Treating Bad Debts

Specific Charge-Off Method

Partly Worthless Debts

Deduction Disallowed

Totally Worthless Debts

Recovery of Bad Debt

Property Received for a Debt

Bankruptcy Claim

Sale of Mortgaged Property

Net Operating Loss

Nonaccrual-Experience Accounting Method

Performing Services

Interest & Late Charges

Refueling Property & Electric Vehicles

Alternative Fuel Refueling Property - §30C

Electric Vehicle (EV) Credit Modified - §30D

Plug-in Motorcycles & 3-Wheeled Electric Vehicles (Expired) - §30D(g)

Advanced Energy Investment Credit - §48C

Depreciation - §168

Personal Property

ACRS - §168

Applicable Percentage

Straight-line Election



Bonus (or Additional First-year) Depreciation - §168(k)

Qualifying Property

Coordination with §179

MACRS Conventions

Mid-quarter Convention Exception

Recapture - §1245

Real Property



Recapture - §1250 & §1245

Section 1245

Full Recapture

Section 1250

Partial Recapture

MACRS Recapture Exception for Real Property

Alternative Depreciation System - §168(g)

Mandatory Application


Chapter 4 - Employee Compensation & Benefits

Wages, Salary & Pay

Employee vs. Contractor Status


Tests for Deducting Pay to Employees

Test #1 - Reasonableness

Overall Limitation

Allowance of Deduction

Publicly Traded Corporation Limitation

Limitation on Accrual Deduction

Employment Contracts

Scope of Examination

Officer’s Compensation


Employee’s Qualifications

Size of the Business

Employee’s Compensation History

Unreasonably Low Salaries

Past Service

Reasonable Dividends

Bonuses as Constituting Dividends

Payback Agreements

Miscellaneous Factors

Test #2 - For Services Performed

Employee-Shareholder Salaries

Selected Types of Compensation



Employee Gifts of Nominal Value

Education Expenses

Fringe Benefits

Life Insurance Coverage

Welfare Benefit Funds

Loans or Advances


Restricted Property

Sick & Vacation Pay

Payroll Tax Withholding & Reporting

Form 941

Deposit Rules

Lookback Period

Monthly Depositor

Semi-Weekly Depositor

One-Day Rule

Pandemic Provisions

Applicable Date

Form W-4

Whistle-Blowing (Repealed)

Form W-2

Form W-3

Social Security’s Payroll Tax or FICA - §3111 & §3121


FUTA - §3301 & 3306

Form 940

Selected Fringe Benefits

Old Dichotomy - Statutory v. Nonstatutory

Fringe Benefit Provisions

TRA ‘84 - §132


Only Statutory Benefits

No-Additional-Cost Services - §132(b)

Covered Employees

Line of Business Requirement


Qualified Employee Discounts - §132(c)

Manner of Discount

Real Estate & Investment Property Exclusion

Amount of Discount

Working Condition Fringes - §132(d)

Covered Employees



De Minimis Fringes - §132(e)

Subsidized Eating Facilities

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


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


Conflict with Dependent Care

Cafeteria Plans - §125


Qualified Benefits

Non-Qualified Benefits

Controlled Group Rules

Salary Reduction Plans


Meals & Lodging - §119

Income Exclusion

Convenience of Employer

Self-Insured Medical Reimbursement Plans - §105

Allowable Expenses




Employee Educational Assistance Programs - §127

Employer-Provided Automobile - §61 & §132

General Valuation Method

Annual Lease Value Method


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


Moving Expense Reimbursement Suspended - §217

Family & Medical Leave - §45S

Pandemic Provisions

Parking Exclusion & Passes Suspended - §132

Employer-Provided Retirement Advice & Planning - §132

Financial Planning - §67 & §212



Tax Planning - §67 & §212


Estate Planning - §67 & §212

On-premises Athletic Facility - §132(j)(4)(B)

ERISA Compliance

Welfare Plans

Additional Requirements

Equity Participation

Stock Transfers or Equity Grants

Stock Sales or Unrestricted Stock Plan

Stock Plans

Stock Bonus


Phantom Stock


Comparison with Profit Sharing Plans

Repurchase or Restricted Stock Agreement

Stock Options

Section 83

Risk of Forfeiture


Stock Appreciation Rights Plans

Tandem Plans

Qualified Incentive Stock Option


Nonqualified Deferred Compensation

Postponement of Income


IRS Scrutiny & Approval




No Immediate Cash Outlay

Annual Report

Notice Requirement


Benefit Formula


Deferred Bonuses

Tax Status

Service’s Position


Constructive Receipt

Beyond Actual Receipt

Simple Set-Asides Are Not Possible

Revenue Ruling 60-31


Time & Control Concept



Economic Benefit

Has Something of Value Been Transferred?

Insurance Coverage Has a Calculable Value

Segregated Funds Have Immediate Economic Value

General Principles

Unfunded Bare Contractual Promise Plan - Type I


Funded Company Account Plan - Type II

Ownership & Segregation

Bookkeeping Reserve or Separate Account

Employee Bears Economic Risk

Limited Protection

Investment of Deferred Amounts

Life Insurance


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



Time Alone is Not Enough

Realization & Taxation

30-Day Election Period

Deduction Allowed



Tax Consequences

Reciprocal Taxation/Deduction Rule

No Difference between Cash or Accrual

Separate Accounts for Two or More Participants

Income Tax on Employer Held Assets

Inclusion in Income Under §409A

Chapter 5 - Automobiles

Apportionment of Personal & Business Use

Car Pool


Parking Fees

Interest Deduction Limit for Individuals

Self-Employed Exception

Property Taxes

Sales Taxes

Sales Tax Deduction for Qualified Vehicles (Expired) - §164

Actual Cost Method

Deduction Limitations

Definition of Car

Depreciation and Expensing


Trade-In of Old Car for New

Placed in Service

Conversion to Business Use - “Lesser of” Rule

MACRS - 5 (Actually 6) Years

200%Double Declining Balance Method

150% Declining Balance Method Election

Straight-Line Method Election

Half-Year Convention

Mid-Quarter Convention

Depreciation “Caps” - §280F(a)

Passenger Auto Depreciation Safe Harbor Method - R.P. 2019-13

No Separate Depreciation Caps for Trucks & Vans

Post-Recovery Period Depreciation - Max Reduction Rule

Partial Business Use


Bonus (or Additional First-year) Depreciation - §168(k)

Expensing - §179

Cost of Car

Basis Reduction

Making the §179 Election

Business Use Reduction

SUV Limitation

Predominate Business (More Than 50%) Use Rule

Qualified Business Use


Change From Personal to Business Use

Employee Use of Their Own Car

Failure to Meet Predominate Business Use Rule

Later Reduction in Qualified Use

ITC Recapture - Highly Unlikely

Straight-line Depreciation

Excess Depreciation Recapture

Short Tax Year Depreciation Reduction

Auto Leasing

Pros & Cons

Leasing Terminology

Closed-End vs. Open-End Lease

Formula for Monthly Payments

Leasing Deduction Restrictions

Income Inclusion Amount

Separate Lease Inclusion Table for Trucks & Vans

Cars Leased For 30 Days or More After 1986

Computation of Inclusion

Nine-Month Following Year Rule

Buying v. Leasing

Standard Mileage Method

Limitations on Standard Mileage Method

Use, Ownership & Prior Depreciation

Switching Methods

Charitable Transportation

Medical Transportation

Auto Trade-In vs. Sale

Working Condition Fringe Benefits

Qualified Transportation - §132(f)

Exclusion Limits

Employer-Provided Automobile

General Hypothetical Valuation Method

Special Method #1 - Lease Value

Annual Lease Value - For Entire Calendar Year

Fair Market Value

Safe Harbor Value

Items Included in Annual Lease Value Table

Prorated Annual Lease Value - For 30 Days or More

Daily Lease Value - For Less Than 30 Days

Optional Fleet-Average Valuation Rule (FAVR)

Special Method #2 - Cents per Mile

Regular Use - 50% Business

Mileage Rule - 10,000 Miles

Items Included In Cents-Per-Mile Rate

Special Method #3 - Commuting Value

Control Employee

Employer-Provided Transportation in Unsafe Areas

Qualified Employee

Nonpersonal Use Vehicles - 100% Excludable

Clearly Marked Police or Fire Vehicles

Unmarked Law Enforcement Vehicles

Law Enforcement Officer

Trucks & Vans

Pickup Truck Guidelines

Van Guidelines

Qualified Automobile Demonstration Use

Full-time Automobile Salesperson

Restrictions on Personal Use

Reporting by Employer

Election Not to Withhold for Income Taxes

Value Reported

Accounting Period

Special Accounting Period - Pour Over Method

Chapter 6 - Business Travel & Entertainment

Business Travel

Transportation & Travel Distinguished

Travel Expenses

Transportation Expenses

Definition of “Tax Home”

Circuit Court Test

IRS Test

Employment Area

No Tax Home

Itinerant Worker

Two Work Locations

Temporary & Indefinite Assignments

Temporary Assignment

Indefinite Assignment


Prior Law Presumptions

One-Year IRS Presumption

Less than Two-Year Exception

Regular Home

Temporary Job That Became Permanent

Current Law - One-Year Rigid Time Rule

Away From Home Requirement

Sleep & Rest Rule

Correll Case

Business Purpose Requirement

All or Nothing

Primarily for Business Test


Other Factors

Existing Trade or Business

51/49 Percent Test

Domestic Business Travel

Foreign Business Travel

Personal Pleasure

Primarily Business

Full Deduction

Definition of Business Day

Meals & Lodging

50% Deduction Limitation

Conventions & Meetings

Agenda Test

Foreign Conventions


North American Area

Allowable Expenses


Deduction Limitation

Reporting Statements

Luxury Water Travel


Family Member Travel Expenses

Business Entertainment

Statutory Exceptions - §274(e)

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

Percentage Reduction for Meals - §274(n)(1)

Application of Reduction Rule

Exceptions - §274(n)(2)

Employee Business Expenses Subject to 2% Floor Suspended

Entertainment Facilities


Covered Expenses

Club Dues


Sales Incentive Awards

Substantiation & Record Keeping - §274(d)


Payback Agreements

Employee Expense Reimbursement & Reporting

TRA '86 - Unreimbursed Expenses Become Itemized Deductions

Family Support Act - Reimbursement Without Accounting Is Income

Accountable Plans

Reasonable Period of Time

Fixed Date Safe Harbor - #1

Period Statement Safe Harbor - #2

Adequate Accounting

Per Diem Allowance Arrangements

Federal Per Diem Rate

Reporting Per Diem Allowances

Reimbursement Not More Than Federal Rate

Reimbursement More Than Federal Rate

Nonaccountable Plans

Self-Employed Persons Reimbursement & Reporting

Expenses Related to Taxpayer's Business

Reimbursed Expenses Incurred on Behalf of a Client

With Adequate Accounting

Without Adequate Accounting


When Can an Expense Be Deducted?

Economic Performance Rule


Nondeductible Meals

Employer-Provided Auto

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





Employee Costs

Comparison with IRAs & Keoghs

Basic ERISA Provisions

ERISA Reporting Requirements

Fiduciary Responsibilities

Bonding Requirement

Prohibited Transactions

Additional Restrictions

Fiduciary Exceptions


    Pandemic Provisions

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





Exclusive Benefit of Employees

Highly Compensated Employees

Reversion of Trust Assets to Employer

Participation & Coverage

Age & Service


Percentage Test

Ratio Test

Average Benefits Test

Numerical Coverage

Related Employers


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


Defined Benefit Pension

Defined Contribution



Favorable Circumstances

Types of Defined Contribution Plans


Requirements for a Qualified Profit-Sharing Plan

Written Plan


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


Life Insurance in the Qualified Plan


Universal Life


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


Parity with Corporate Plans

Figuring Retirement Plan Deductions For Self-Employed

Self-Employed Rate

Determining the Deduction

Individual Plans - IRAs

Deemed IRA



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

Spousal IRA


Contributions & Deductions

Employer Contributions

Retirement Vehicles

Distribution & Settlement Options

Pandemic Provisions

Life Annuity Exemption

Minimum Distributions

Pandemic Provisions

Required Minimum Distribution


Required Minimum Distributions During Owner’s Lifetime

Required Minimum Distributions in Year of the Owner's Death

Beneficiaries - Distributions after Owner’s Death

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


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


Contribution Limitation

Roth IRAs Only

Roth IRAs & Traditional IRAs




Taxation of Distributions

No Required Minimum Distributions

Simplified Employee Pension Plans (SEPs)

Contribution Limits & Taxation



Employee Limit

Other Qualified Plan

Set up

Contribution Limits

Salary Reduction Contributions

Employer Matching Contributions

Deduction of Contributions


SIMPLE §401(k) Plan

Chapter 8 - Insurance

Company Paid Insurance


Types of Life Insurance

Group Term Life - §79


Cost Of Group-term Life Insurance

“Key Employee” Defined

Retired Lives Reserve

Revenue Ruling 68-577


Split-Dollar Life

Low-Cost Term Insurance

Regulatory Requirements


Death Benefit Only Plan - Repealed

Business Travel Accident Insurance

Medical & Dental Insurance


Disability Income Insurance

Interest Limitation on Policy Loans - §264

Deductibility of Premiums & Interest on Life Insurance

Exclusion Of Inside Buildup & Amounts Received

Premium Deduction Limitation

Interest Deduction Disallowance With Respect To Life Insurance

Prorata Disallowance of Interest on Debt to Fund Life Insurance

Interest Limitation for Tax-Exempt Interest Income

Other Selected Insurances

Self-Employed Health Insurance Deduction

Long-Term Care Premiums

Capitalized Insurance

Health Savings Accounts

Small Business Health Insurance Expense Tax Credit - §45R

Chapter 9 - Estate Planning

Unlimited Marital Deduction

Outright To Spouse

Marital Deduction Trust

Qualified Terminable Interest Property Trust

Applicable Exemption (or Exclusion) Amount

Spousal Portability of Unused Exemption Amount - §2010(c)(2)

Stepped-up Basis & Modified Carryover Basis

Modified Carryover Basis - §1022

Limited Basis Increase for Certain Property

2010 Special Election

Basic Estate Planning Goals

Primary Dispositive Plans

Simple Will

Danger for Larger Estates


Assets Not Subject to a Will

Assets Subject to a Will


Types of Trusts

Living Trusts

Testamentary Trusts

Revocable & Irrevocable

Living “A-B” Revocable Trust

Living “A-B-C” (QTIP) Trust

Impact of Spousal Portability on Trust B under TUIRJCA

Charitable Trusts

Charitable Remainder Trusts

Charitable Income Trusts

Insurance Trusts

Family Documents

Living Will

Property Agreement & Inventory

Durable Power Of Attorney

Power of Attorney for Health Care


Funeral Arrangements

Anatomical Gifts

Private Annuity

Advantages to the Transferor

Disadvantages to the Transferor

Advantages to the Transferee

Disadvantages to the Transferee

Business Valuation

Relevant Facts

Revenue Ruling 59-60

Tangible Assets

Special Real Estate Election - §2032A


Related Party Cash Lease

Intangible Assets & Goodwill

R.R. 68-609

Land Subject To Conservation Easement - §2032A(c)(8)

Family Member

Indirect Ownership of Land

Qualified Conservation Easement

Qualified Real Property Interest

Qualified Organization

Conservation Purpose

No Additional Income Tax Deduction

Valuation Discounts

Minority Interests

Special Valuation plus Minority Discount

Fractional Interests

Lack of Marketability

Swing Vote Premium

Buy-Sell Agreements

Redemptions Under §303


Corporate Accumulation For §303 Redemption

Accumulation in Anticipation of Shareholder’s Death

Death of a Spouse

Bypass Trust

Lifetime Dispositions


Stock Redemptions Under §302

Substantially Disproportionate Redemption - 80/50 Rule

Redemptions Not Essentially Equivalent to a Dividend

Complete Redemptions

Constructive Ownership - §318

Double Attribution

Stock Attribution in Complete Redemptions

Stock Recapitalization

Section 306 Taint

Deferred Compensation Agreements

Installment Payment of Federal Estate Taxes - §6166


Eligibility & Court Supervision

Closely Held Business

Acceleration of Payment



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