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Course Details

Choosing the Right Entity & Getting Cash Out of It from a Tax Perspective (Course Id 122)

Updated / QAS / Registry / EA   Add to Cart 
Author : Danny C Santucci, JD
Status : Production
CPE Credits : 24.0
IRS Credits : 24
Price : $167.95
Passing Score : 70%
Primary Subject-Field Of Study:

Taxes - Taxation for Course Id 122

Description :

This comprehensive book describes and compares sole proprietorships, partnerships, limited liability companies, “C” corporations and “S” corporations. It examines their advantages and disadvantages, permitting the reader to properly select the right business entity for their tax and liability needs. Major emphasis is given the maximization of tax benefits in each business format. Fringe benefits, retirement plan alternatives, and nonqualified deferred compensation are discussed in detail.

Usage Rank : 0
Release : 2016
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 : Self-Study.
Intended Participants : Anyone needing Continuing Professional Education (CPE).
Revision Date : 05-May-2016
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 - NASBA Registry - IRS Enrolled Agents - 122

Keywords : Taxes, Choosing, Right, Entity, Getting, Cash, Out, It, from, Tax, Perspective, 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.

ASSIGNMENT       SUBJECT
Chapter 1                Sole Proprietorship

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

    * Advantages & disadvantages
    * Formation
    * Schedule C
    * Self-employment tax
    * Estimated tax
    * Sale of a business
    * Classification of assets
    * Other business dispositions
    * Income splitting
    * Estate planning
Learning Objectives:

       After reading Chapter 1, participants will be able to:
    1. Determine the advantages and disadvantages associated with sole proprietorships, and specify the formation requirements.
    2. Identify not-for-profit activities particularly as they relate to Schedule C businesses and recall the various requirements permitting such businesses to complete the C-EZ form or request an automatic filing extension.
    3. Recognize the taxes imposed on self-employed persons noting compliance with payment requirements, determine how sole proprietorship assets are characterized on disposition and, identify income splitting and estate planning devices available for such business owners and their impact on entity choice.
ASSIGNMENT       SUBJECT
Chapter 2                Partnerships

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

    * Definition of partnership
    * Partners taxed as individuals
    * Partnership tax return
    * Year taxable
    * Transactions between partner & partnership
    * Contributions of property
    * Inside basis of contributed assets
    * Basis of partner’s interest – outside basis
    * Sales & exchanges of partnership interests
    * Partnership distributions
Learning Objectives:

       After reading Chapter 2, participants will be able to:
    1. Determine what constitutes a partnership under §761(a) including the status of joint ventures, cotenancy, publicly traded partnerships, and the special benefits of family partnerships noting several advantages and disadvantages of each and recognize how partners share tax items.
    2. Identify the taxation of partners and partnerships and its affect on the preparation of individual returns and K 1s and, specify the exclusion requirements noting tax rate and §1031 exchange impact.
    3. Recognize separately stated items noting the relationship of deductions to outside basis, partnership versus partner deductions, allocation of deductions, and related filing requirements to improve accurate tax reporting.
    4. Determine the closing of a partnership year, the events that terminate a partnership and the events that do not close the year to insure proper tax allocation.
    5. Identify types of transactions between a partner and the partnership that can influence the treatment of the transaction, and specify the character of property contributions under §721.
    6. Determine inside and outside basis, including complications caused by the contribution of services, specify their interplay with the at risk & passive rules, their impact on the disposition of partnership interests, and their effect on partnership distributions, and identify how such distributions and liquidations effect gain or loss for partnership and partners.
ASSIGNMENT       SUBJECT
Chapter 3                Limited Liability Companies

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

    * Advantages of LLCs over C corporations
    * Advantages of LLCs over S corporations
    * Advantages of LLCs over limited partnerships
    * Advantages of LLCs over general partnerships
    * Disadvantages
    * Uses
    * Federal tax consequences
    * Conversion to LLCs from other entities
    * Local taxes on conversion
    * California Limited Liability Company Act
Learning Objectives:

       After reading Chapter 3, participants will be able to:
    1. Identify the characteristics of limited liability companies (LLCs) that distinguish them from other entities, particularly C corporations, and specify benefits of an LLC and their effect on choosing a form of entity.
    2. Cite reasons for choosing an LLC over S corporations, limited partnerships, and general partnerships and, in contrast, determine the drawbacks of LLCs to assist clients in entity selection.
    3. Identify several ways to use the LLC form effectively and thereby fit client objectives and expand business-planning opportunities.
    4. Recognize the varying tax consequences of forming or converting to an LLC including possible tax differences using the California Limited Liability Company Act.
ASSIGNMENT       SUBJECT
Chapter 4                Corporations

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

    * Corporation defined
    * PSC corporations
    * Incorporation
    * Small business stock exclusion
    * Start-up & organizational expenses
    * Alternative minimum tax
    * Capital gains & losses
    * Accumulated earnings
    * Accounting periods & methods
    * Inventories
Learning Objectives:

       After reading Chapter 4, participants will be able to:
    1. Determine a “corporation,” for tax purposes, and identify regular corporations from other entities.
    2. Identify “personal service corporations” and small business investment companies, their requirements & tax treatment and determine when and how clients can engage or avoid such classification for their benefit.
    3. Recognize the transfer of money, property or both by prospective shareholders to a corporation and the requirements of §351.
    4. Specify the requirements of §1244 stock and the small business stock exclusion, and determine the differences between start-up expenses and organizational expenses.
    5. Identify corporate pitfalls and dangers noting tax recognition of the entity, tax rates, AMT computation, capital gains & losses under §1212 and the dividends received deduction under §243.
    6. Specify necessary corporate action for making allowable corporate charitable contributions, benefiting from the repeal of §341, and avoiding tax penalties under §541 and §531.
    7. Identify available corporate accounting periods and methods noting the treatment and impact of tax-exempt income, inventory identification & evaluation, multiple corporations, and corporate liquidations and distributions.
ASSIGNMENT       SUBJECT
Chapter 5                S Corporations

       At the start of Chapter 5, 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
Learning Objectives:

       After reading Chapter 5, participants will be able to:
    1. Determine what constitutes an S corporation and specify the advantages and disadvantages associated with them.
    2. Identify variables that impact whether a business can choose S corporation status, ways that an S corporation may be terminated and the related procedures that must be followed.
    3. Recognize S corporation tax treatment including special areas involving income and expenses, pass-through items, built-in gain, passive income, tax preference items, LIFO recapture tax, capital gains tax, investment credit recapture, estimated tax payments, and basis of S corporation stock.
    4. Identify S corporation owner compensation and distribution options noting reasonable compensation requirements, related party rules, S corporation distribution taxation, tax year choices, fringe benefits, and specifying when the Form 1120S must be filed.
ASSIGNMENT       SUBJECT
Chapter 6                Basic Fringe Benefits

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

    * Benefit mechanics
    * Employee achievement awards
    * Group term life insurance
    * Self-insured medical reimbursement plans
    * Medical insurance
    * Meals & lodging
    * Cafeteria plans
    * Employer-provided automobile
    * Adoption assistance program
    * Interest-free & below-market loans
Learning Objectives:

       After reading Chapter 6, participants will be able to:
    1. Recognize basic fringe benefit planning by specifying “income” under §61, and determining the differences between former nonstatutory and current statutory fringe benefits created by recent cases, rulings, and tax law changes.
    2. Identify the basic mechanics of typical fringe benefits, determine the fair market value of a fringe benefit under the general valuation rule or the special valuation rules, and cite the general accounting rule and the special two-month pour-over accounting rule.
    3. Determine what constitutes a §274 “employee achievement award” and specify the rules for §79 group term life insurance noting how to implement proper coverage.
    4. Recognize the mechanics of §105 self-insured medical reimbursement plans, and determine the requirements of §106 medical insurance noting the differences between the two Code sections.
    5. Specify the rules for excluding the value of meals and lodging under §119 and determine what constitutes a “cafeteria plan” noting how it operates.
    6. Identify the requirements and limits of employee educational assistance programs and dependent care assistance noting how to obtain each type of assistance.
    7. Determine “no-additional-cost services” and identify what property or services are excludable from income as qualified employee discounts under §132(c), and specify exceptions to working condition fringes and de minimis fringes.
    8. Recognize the requirements for qualified transportation fringe benefits under §132(f), specify valuation methods for employer-provided automobiles, and identify qualifications for the popular physical fitness exclusion and the requirements and benefits of adoption assistance programs.
    9. Identify planning services available under §§132, 212 and 67, determine interest-free and below-market loans, recognize the elements of child care benefits and corporate funded educational savings accounts, specify S corporation fringe benefits, and identify ERISA compliance requirements.
ASSIGNMENT       SUBJECT
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. Determine the differences between qualified deferred compensation plans and nonqualified plans and, recognize the major benefit of qualified plans, the basis of the benefits and contributions, the current and deferred advantages and the disadvantages of corporate plans and fiduciary responsibilities and prohibited transactions.
    2. Specify the requirements of the basic forms of qualified pension plans.
    3. Identify defined contribution and defined benefit plans noting the types of defined contribution plans and specifying their effect on retirement benefits.
    4. Determine the differences between self-employed and qualified plans for other business types noting key choice of entity factors.
    5. Specify the requirements of IRAs, SEPs and SIMPLEs, and identify tax-free Roth IRA distributions noting where to maximize plan benefits.
ASSIGNMENT       SUBJECT
Chapter 8                Nonqualified Plans

       At the start of Chapter 8, 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
Learning Objectives:

       After reading Chapter 8, participants will be able to:
    1. Identify the advantages of nonqualified deferred compensation, specify the purposes of nonqualified plans and factors that a nonqualified retirement benefit can be based on, determine the contractual provisions of such arrangements and necessary provisions, recognize the IRS’s position on nonqualified compensation, and determine “constructive receipt” and “economic benefit.”
    2. Specify the differences among unfunded bare contractual promise plans, funded company account plans and segregated asset plans and the tax consequences of each, and identify the basic tax consequences associated with nonqualified plans.
Course Contents :

Chapter 1 - Sole Proprietorship

Introduction

Advantages

Disadvantages

Formation

Start-Up Expenses

Withdrawals

Schedule C

Not-For-Profit Activities

Deduction & Loss Limit

Profit Presumption - 3/5

Schedule C-EZ

Individual Rates

Due Date - Form 1040

Extension to File - Form 4868

Business Entity Impact

Self-Employment Tax

Incorporation

“S” Solution

Estimated Tax

Underpayment of Tax - Form 2210

Sale of a Business

Classification of Assets

Other Business Dispositions

Income Splitting

Estate Planning

Chapter 2 - Partnerships

Definition of Partnership

Section 761(a)

Co-tenancies

Partnership Agreement

Modifications

Partner’s Share of Tax Items

Limited Partners

Family Partnerships - §704(e)

Publicly Traded Partnerships - §7704

Advantages

Disadvantages

Exclusion from Partnership Treatment - §761

Complete Exclusion Election

Partial Exclusion Election

Partners Taxed as Individuals

Exception - Separate Entity for Some Purposes

Individual Returns & K-1s

Partnership Expenses Paid By a Partner

Separately Treated Items

Character of Items & Limitations

Deduction of Losses

Outside Basis Limitation - §704(d)

Loss Ultimately Deductible

Effect of Losses on Outside Basis - §705

Partnership Tax Return

Organization & Syndication Fees - §709

Capitalized Syndication Fees

Business Start-up Costs - §195

Definition

Filing Requirements

Due Date of Return

Failure to File

Failure to Furnish Copies to Partners

Special Allocations - §704(b)

Economic Effect

“Substantial Effect”

Year Taxable - §706(a)

Limitation on Choice of Taxable Year

Closing of Partnership Year

Events That Terminate Partnership - §708(b)

Discontinuance of Business

Winding Up

Sale of 50% or More Interest

Gift or Bequest Exception

Events That Do Not Close the Year - §706(c)

Sale of Individual Partner’s Interest

Death of Partner

Admission of New Partners - §706(d)

Allocation Techniques

Daily Allocation Required for Cash Items

Transactions between Partner and Partnership

Treating Partner as Stranger - §707(a)

Payments by Accrual Basis Partnership to Cash Basis Partner

Guaranteed Payments - §707(c)

Section 709

Guaranteed Minimum

Year Taxed - §706(a)

Payments Resulting in Loss

Accident & Health Insurance Premiums

Certain Losses Disallowed - §707(b)

Two Partnerships

Constructive Ownership

Sales at Gain

Contributions of Property - §721

Contribution vs. Sale or Exchange

Disguised Sale - §707(a)

Disguised Taxable Exchanges - §704 & §737

Property Distribution to Contributing Partner - §737

Anti-Abuse Rules

Contributed Property Distribution to Another Partner - §704(c)

Inside Basis of Contributed Assets - §723

Allocation of Precontribution Gain or Loss - §704(c)

Liabilities

Earlier Optional Application of §704(c)

Character of Subsequent Gain

Taint On Contribution- §724

Character of Subsequent Loss - §724(c)

Contribution of Services

Basis of Partner’s Interest - Outside Basis

Original Basis - §722

Adjustments to Basis

Effect of Liabilities - §752

Deemed Distribution & Contribution

Special Rule for Liabilities of Cash Basis Partnership

Partner’s Share of Partnership Liabilities

Limited partnerships

Exception

Guarantees

Limits on Deduction of Partnership Losses

At-Risk Rules - §465

Definition of Amounts at Risk

Passive Losses - §469

Sales & Exchanges of Partnership Interests

Exchanges & Transfers

Like-Kind Exchanges - §1031

Transfers to Controlled Corporations - §351

Partner’s Interest Basis

Incorporation Methods

Hot Assets - §751

Unrealized Receivables

Depreciation Recapture

Inventory

“Inventory Items”

Basis of §751 Property

Tax Reporting

Effect

Capital Gains - Regulations

Liabilities of Partnership

Basis of Partnership Assets after Transfer of Interest

General Rule - §743(a)

Special Basis Adjustment - §754 & §743(b)

Partnership Distributions - §731

Exceptions to General Rule

Basis Adjustments

Partner’s Interest - §733

Property Received - §732

Basis Limitation - §732(a)

Allocation of Basis When Limited - §732(c)

Partnership’s Basis Greater Than Partner’s Basis

Partner’s Basis Greater Than Partnership’s Basis

Special Adjustment to Basis

Holding Period - §735

Partnership Property - §754 & §734

Distributions of Receivables or Inventory

Proportionate Distributions

Disproportionate Distribution - §751(b)

Partnership Liquidations

Types of Liquidating Distributions

Liquidating Distributions of Money

Section 736(a) Payments

Section 736(b) Payments

Distributions of Property in Liquidation

Chapter 3 - Limited Liability Companies

Introduction

LLC Benefits

Advantages of LLCs over C Corporation

Double Tax

Basis Adjustment

Special Allocations

Contributions

Liquidation

Unreasonable Compensation

Non-Tax Benefits

Advantages of LLCs over S Corporations

Advantages of LLCs over Limited Partnerships

Outside Basis & Debt Share Advantage

Substantial Economic Effect Rules - §704(b)

Discharge of Indebtedness Income

Advantages of LLCs over General Partnerships

Disadvantages

Uses

Professional Firms

Venture Capitalists

Leveraged Buyouts - LBO

Joint Venture

Corporations Filing Consolidated Returns

Foreign Investment

Real Estate Ventures

Charitable Investment

Estate Planning

Problem Uses

Federal Tax Consequences

Check-the-Box Regulations

Self-Employment Tax

Proposed Amendments to Limited Partner Regs

Moratorium

The Old Quandary – What to Do?

Chief Counsel Advice 201436049

At-Risk Rules

Debt Discharge Income

Passive Loss Rules

Method of Accounting

Audit Procedures

Conversion of Partnership to LLC

Conversion of S Corporation to LLC

Conversion of C Corporation to LLC

Local Taxes on Conversion

Sales & Use Tax

Real Property Taxes

Real Property Transfer Taxes

California Limited Liability Company Act

Formation

Members

Permissible Businesses

Professional Practice

Limited Liability Partnerships

Formation Fees

Operating Agreement

Office in California

Foreign Limited Liability Companies

California LLCs in Other States

Reporting Requirements

Secretary of State’s Office

Member Requirements

Franchise Tax Board Requirements

California Taxes & Fees

Franchise Tax

Entity Level Fee

Computation of Gross Receipts

Ownership Requirement

Dissolution

Chapter 4 - Corporations

Corporation Defined

Effect of State Laws

Corporate Characteristics

Partnership Determinations - 3 Through 6

Trust Determinations - 1 & 2

Professional Associations

Unincorporated Associations

Check-the-Box Regulations

C Corporations

Advantages

Disadvantages

PSC Corporations - §441, §448, §469

Testing Period

Personal Services

Principal Activity & Substantial Performance

Employee-Owner

Independent Contractor

Passive Loss Limitations - §469(a)(2)

Qualified Personal Service Corporation - §448

Small Business Investment Company - §1243

Rollover of Gain from Sale of Securities - §1044

Replacement Property

Postponed Amount

Annual Limit on Postponed Gain

Incorporation - §351

Basic Requirements

Corporate Nonrecognition

Property

Stock Solely For Services

Impact on Recipient

Impact on Other Shareholders

Stock for Debt

Control

Property Basis

Stock Basis

Liabilities

Section 1244 Stock

Maximum Ordinary Loss

Original Issuance

Distributed Stock

General Requirements

Small Business Stock Exclusion - §1202

Eligible Gain Limit

Qualified Small Business Stock

Active Business Test

Eligible Corporation

Qualified Trade or Business

Pass-Through Entities

Capital Gains & Investment Interest

Start-Up Expenses - §195

Covered Expenses

Amortization

Organizational Expenses - §248

Definition

Stock Issuance & Syndication Expenses

Amortization

Start of Business

Tax Recognition of the Corporate Entity

Tax Criteria

Nominee & Agency Corporations

Section 482 Reallocation

Section 269A

Corporate Income Tax Rates

Tax Tables

Current Rates

Tax Return & Filing

Corporate Estimated Tax

Alternative Minimum Tax

Computation

Exemption for Small Corporations

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)

Capital Gains & Losses - §1212

Net Capital Loss Carryovers

S Corporation Status

Asset Types

Five-Step Characterization Process

Netting Capital Gains (Losses)

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 - §243

Dividends from Domestic Corporations

80% Exception

Charitable Contributions - §170

Timing of Deduction

Limitation

Carryover of Excess Contribution

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

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

Methods Available

Cash Method

Limitation

R.P. 2011-14

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 Rules

Definition

Parent-Subsidiary Groups

Brother-Sister Groups

Consolidated Returns

Definition

Corporate Liquidations & Distributions

The Old General Utilities Doctrine

Loss Limitations

Chapter 5 - 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

Passive Income - §1362

Effective Date

S Termination Year

Pro Rata Allocation

Allocation Based On Normal Accounting Rules

Annualization of 1120 Short Year

Taxation of S Corporations

S Corporation Income & Expense

Separately Stated Items

Nonseparately Stated Items

Interest Expense on Debt-Financed Distributions

Tax Exempt Income

Net Operation Losses

Carryover of C Corporation NOLs

Reduction of Pass-Thru Items

Built-In Gain - §1374

Net Recognized Built-In Gain

Recognized Built-In Gains

Recognized Built-In Loss

Deduction Items

Amount of Tax

Credits

Net Operating Loss Carryovers

Treatment of Certain Property

Transfer of Assets

Passive Income - §1375

Gross Receipts

Sales or Exchanges of Stock or Securities

Passive Investment Income

Royalties

Rents

Interest

Figuring the Tax on Excess Net Passive Income

Net Passive Income

Excess Net Passive Income

Special Provisions

Waiver of Tax

Tax Preference Items

LIFO Recapture Tax

Capital Gains Tax

Reducing Corporate Capital Gains

Figuring Corporate Taxable Income

Recapture of Investment Credit

Estimated Corporate Tax Payments

Basis of Stock & Debts

Adjustments to Basis

Limitation on Loss Deductions

Basis Limit

Adjustments to Stock Basis

Increases

Decreases

Adjustments to Debt Basis

Restoring Basis of Loans

Loan Repayments

Guarantees

At-Risk Rules - §465

Reasonable Compensation

Related Party Rules

Definition of Related Party

Stock Attribution Rules

Business Expenses & Interest

Distributions

Earnings & Profits

Accumulated Adjustments Account (AAA)

Dividend Election

Post-Termination Distributions

Transition Period

Order of Distribution

No Earnings & Profits

Appreciated Property Distributions

Taxable Year

Business Purpose

Change of Tax Year

Form 1120S

Extension

Late Filing

Reasonable Cause

Schedule K-1

Shareholder’s Treatment Of S Corporation Items

Pro Rata Share

Optional 10-year Write-Off of Tax Preferences

Fringe Benefits

Health Insurance Premiums

Reporting Requirements

Medical Deduction

Entity Tax Comparison

Chapter 6 - Basic Fringe Benefits

Concept

Definition of Income - §61

Deductions without Taxable Income

Benefit Mechanics

Old Dichotomy - Statutory v. Nonstatutory

Fringe Benefit Provisions

TRA ‘84 - §132

Discrimination

Only Statutory Benefits Remain

General Valuation Rule

Fair Market Value

Special Valuation Rules

Restrictions on Special Valuation Rules

Withholding & Accounting

General Accounting Rule

Special 2-Month Pour-Over Accounting Rule

Types of Benefits

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

Monthly Cost Table

Family Member Cost

Employment Taxes

Group Requirements

Employee

Permanent Benefits

Discriminatory Plan

Eligibility

Type & Amount of Benefits

Key Employee

Self-Insured Medical Reimbursement Plans - §105

Allowable Expenses

Requirements

Benefits

Reporting

Exposure

Medical Insurance - §106

Group Health Plan Restrictions - COBRA

Coverage Requirement

Continuation Requirement

American Recovery & Reinvestment Act

Exemptions

Continuation Period

Notice

Meals & Lodging - §119

Convenience of Employer

Substantial Nonpay Reasons

Meals with a Charge

Lodging Required by Employer

Highly Compensated Employees

50% Limit on Meals

Cafeteria Plans - §125

Definition

Qualified Benefits

Non-Qualified Benefits

Controlled Group Rules

Salary Reduction Plans

Nondiscrimination

Highly Compensated Participants

Key Employees

Timing

Reporting Requirements

Employee Educational Assistance Programs - §127

Requirements

Educational Assistance

Dependent Care Assistance - §129

Amount of Assistance

Requirements

55% Test

Reporting

Conflict with Dependent Care

No-Additional-Cost Services - §132(b)

Covered Employees

Line of Business Requirement

Definition

Reciprocal Agreements

Nondiscrimination

Highly Compensated Employee

Qualified Employee Discounts - §132(c)

Manner of Discount

Real Estate & Investment Property Exclusion

Amount of Discount

Nondiscrimination

Working Condition Fringes - §132(d)

Covered Employees

Additions to Exclusion

Substantiation

Exceptions

De Minimis (Minimal) Fringes - §132(e)

Subsidized Eating Facilities

Qualified Transportation - §132(f)

Commuter Highway Vehicle

Transit Pass

Qualified Parking

Exclusion Limits

Employer Provided Automobile - §132 & §61

General Valuation Method

Special Method #1 - Lease Value

Annual Lease Value

Fair Market Value

Safe Harbor Value

Items Included in Annual Lease Value Table

Prorated Annual Lease Value

Daily Lease Value

Special Method #2 - Cents Per Mile

Regular Use

Mileage Rule

Items Included In Cents-Per-Mile Rate

Special Method #3 - Commuting Value

Control Employee

Employer-Provided Transportation in Unsafe Areas

Qualified Employee

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

Adoption Assistance Program - §137

Employment Taxes

Conflict with Adoption Credit

Eligible Child

Child with Special Needs

Limits on the Exclusion

Dollar Limit

Income Limit

Timing

Employer-Provided Retirement Advice & Planning - §132

Financial Planning - §212 & §67

Popularity

Taxation

Tax Planning - §212 & §67

Taxation

Estate Planning - §212 & §67

Moving Expenses - §217

Statement to Employees

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

25% Credit Allowed For Employer Child Care Facilities

Corporate Funded Educational Savings Accounts

Fringe Benefit Plans for S Corporations

ERISA Compliance

Welfare Plans

Additional Requirements

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

2009 Waiver of Required Minimum Distribution Rules (Expired)

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

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 Plans

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

 

Glossary

Taxes Course 122 Home: https://www.cpethink.com/tax-cpa-courses
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