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Course Details

Controllers’ & Practitioners’ Business Tax Update for 2008 (Course Id 101)

Registry / EA
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 101

Description :

This course summarizes the major provisions of new tax legislation, cases, and regulations examining their impact on, businesses, investments, and retirement plans. The emphasis is on strategic tax planning for business entities and planning opportunities. This presentation is designed to meet those needs by identifying features of recent developments having special meaning to the tax practitioner and return preparer. Practical solutions to problems of the general practitioner and tax planning will be emphasized.

Usage Rank : 0
Release : 2008
Version : 999
Prerequisites : General understanding of federal income taxation.
Experience Level : Overview
Additional Contents : Complete, no additional material needed.
Advance Preparation : None.
Delivery Method : Self-Study.
Intended Participants : Anyone needing Continuing Professional Education (CPE).
Revision Date : 05-Jul-2008
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 Registry - IRS Enrolled Agents - 101

Keywords :
Learning Objectives :

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

Chapter 1 Tax Rates, Tables, Statutory Amounts & Highlights

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

    * Federal income tax rates and inflation adjusted provisions
    * Phased in legislative highlights from tax Acts prior to 2008
    * Earned income credit, Social Security & self-employment base
    * Standard deduction, personal exemption & educational credits
    * Alternative Minimum Tax
    * Health Savings Accounts & long-term care
    * Charitable contributions
    * Tax Increase Prevention and Reconciliation Act
    * Pension Protection & Tax Relief and Health Care Acts
    * Small Business and Work Opportunity & Mortgage Relief Acts
    * Technical Corrections & Economic Stimulus Package Acts

After reading the chapter or section, participants will be able to:
    1. Compare individual and corporate income tax rates as they relate to retained income, identify tax-related legislation that has expired, explain the increasing impact of the alternative minimum tax and its limited exemptions, decipher the estate and GST exemption and the credit amount for state death taxes, name the Social Security, Medicare and self-employment earnings bases, and identify the FUTA tax deposit requirements.
    2. Identify the standard deduction for all taxpayers for the current year, explain the reasoning for the standard deduction increase for married couples, clarify the dependent limit, explain the election to report on a parents return, and identify the refundable child credit and the adoption credit.
    3. Describe the changes to the earned income credit and to exemptions and their importance to lower income taxpayers, and figure the minimum amount of net itemized deductions.
    4. Figure standard mileage rates for automobiles that are used for different purposes, describe the qualified transportation fringes and passenger automobile depreciation limits, figure business-related deductible expenses for meals away from home, and explain the credits that are and were previously available for taxpayers placing specified vehicles in service.
    5. Explain how self-employed individuals can deduct health insurance, describe the benefits and qualifications of medical savings accounts and health savings accounts and their importance for client healthcare planning, describe the long-term care and accelerated death benefits exclusion, and describe the changes made by the Health Care Act.
    6. Delineate the legislative changes that affect qualified plans, designated Roth contributions, traditional IRAs, simplified employee pensions (SEPs), SEP-IRAs, SIMPLE plans, and nonqualified deferred compensation plans.
    7. Explain the recent legislation that relates to small businesses, including bonus depreciation, the 179 small business expensing deduction, 199 start-up costs and organizational costs, leasehold improvements and restaurant property, the 1202 exclusion, and timber reforestation costs.
    8. Summarize the ways that recent legislation affects the various education-related credits, deductions and exclusions, charitable contributions, domestic production activities, income averaging for farmers and fishermen, the expiration of the research credit, the work opportunity tax credit, the welfare-to-work tax credit, employment taxes on employee stock options, the nanny tax threshold, and the reinvestment of foreign earnings deduction.
    9. Interpret the changes that were made by recent legislation, including the Small Business and Work Opportunity Act, that impacts S corporations.
    10. List several major retirement plan changes provided by the Pension Protection Act of 2006.
    11. Outline the changes that were made by the Tax Relief and Health Care Act of 2006, the Small Business and Work Opportunity Tax Act, the Mortgage Debt Relief Act of 2007, the Technical Corrections Act of 2007 and the Economic Stimulus Package Act of 2008, and describe the impact these Acts have on tax planning.
Chapter 2 Cases, Rulings & Developmensts

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

    * Definition of business income (61)
    * Restricted property rules (83)
    * Fringe Benefit Audit Technique Guide (162)
    * Medical coverage for employed spouse (162)
    * Cost Segregation Audit Techniques Guide (162)
    * Correcting depreciation on sold assets (168)
    * Audit issues for production activities deduction (199)
    * Guidance on nonqualified deferred compensation rules (409A)
    * UBTI developments for tax exempt organizations (512)
    * Inadvertent S corporation terminations (1361)
    * Regulations on 10 year built-in gains period (1374)
    * Self-employment tax issues (1402)
    * Employee vs. independent contractor (3121)
    * Responsible person liability (6672)

After reading the chapter or section, participants will be able to:
    1. Identify the qualifications for and requirements of the credit for contractors on energy efficient homes under 45L, and outline the inclusive definition of income under 61 and how it relates to business taxation.
    2. Differentiate between an accountable plan and a nonaccountable plan for M&IE purposes, and identify the special rules for M&IE.
    3. Clarify the key elements of 83 and what requirements the code imposes on stock options and associated elections, explain how to treat disability benefits and payments made for coverage under a self-funded health plan, identify the correct way to obtain medical coverage for an employed spouse, and describe how to report construction allowance received from a lessor.
    4. Explain how a plan can qualify as a cafeteria plan, and define terminology used in 125, including cash, employee, and experience gains.
    5. Summarize how Smartcards, debit cards, and cell phones can be used for fringe benefits.
    6. Outline qualifications for deducting certain trade or business expenses including vehicle leases, travel expenses, health insurance, reimbursed expenses, daycare, education and separate activities, and explain the proposed regulations for the capitalization of tangible assets.
    7. Explain why simultaneous deductions cannot be taken for a single casualty, list key variables in determining whether to correct depreciation on sold assets and its effect on audit potential, and keep the appropriate records for depreciation.
    8. Enumerate the requirements to take a 179 deduction, compute the necessary calculations for figuring the 179 deduction, and clarify the requirements for taking a deduction for expenses that an individual assumes in owning and operating a farm.
    9. Detail the technical corrections that Congress made to the Gulf Opportunity Zone Act of 2005, particularly where it concerns domestic production activities deductions, list the methods that may be used to calculate W-2 wages, and describe the audit issues for production activities deductions under 199.
    10. Summarize the substantiation rules for payment card reimbursements under flexible spending accounts and health reimbursement arrangements, and identify when certain sales are subject or exempt from the UNICAP rules.
    11. Determine and account for business-related per diem rates and the substantiation requirements for M&IE, define specified individuals, and identify when estimating expenses is allowable.
    12. Allocate business expenses from personal expenses per 280A, account for an acquisition of a target stock by a parent that merges with the target, create a separate entity to divide assets, and define ownership change and family member under 382.
    13. Enumerate the Roth Steel factors and describe how they are used to determine whether shareholder advances are equity or debt.
    14. Outline the requirements of qualified automatic contribution arrangements and for taking pre-retirement plan distributions, identify when pension penalties apply, and describe the highlights of the regulations on medical or accident insurance payments and the Roth 401(k) regulations.
    15. Define the nonqualified deferred compensation rules under 409A and prevent the imposition of new penalties, and restore retirement benefits appropriately.
    16. Define personal service corporation, and avoid the classification of a PSC.
    17. Account for settlement proceeds for unpaid royalties, determine when to account for certain items under the accrual accounting method, clarify the abuses of tax-exempt organizations, and identify when a certain action will adversely affect the tax-exempt status of an organization.
    18. Explain conditions that are disregarded when determining whether a partner should pay tax on his appropriate share of partnership income, account for a property transfer used to satisfy a guaranteed payment, identify a condition when the IRS can impose a change for a year that was closed by the statute of limitations, and describe the effect of liabilities and SMLLC basis rules.
    19. Account for qualified small business stock sales, determine the transferee and transferor in a transfer, list items that qualify as a governing provision, file Form 2552 or Form 5223 with an S corporation return, and distinguish between circular loans and an effective generation of basis.
    20. Identify the limit on open account debts and explain the purpose of the new regulations, and describe the treatment of C corporations that elect the S corporation status, and outline the tax circumstances of Conservation Reserve Program rentals.
    21. Differentiate employees from independent contractors and make that determination for tax purposes.
    22. Explain the tax treatment of disregarded entities under 3401, identify when to send W-4s to the IRS, and list prohibited transactions of 4975 for businesses.
    23. Summarize the tax consequences of hiring a payroll service, describe the changes that were made to corporate estimated tax rules under the final regulations, define responsible person under 6672, ascertain whether an agreement constitutes a partnership agreement, and describe the tax consequences of check-the-box regulations.
    24. Name four specific modifications that the GO Zone Act made to the rules regarding the treatment of family members as one shareholder, explain what H.R. 4019 prohibits states from taxing, identify the changes that were made to Form 941 instructions and to Form 941(c), enumerate the highlights of the latest S corporation NRP study, apply the advice offered by the IRS for filing K-1s, identify the amounts of income being underreported by sole proprietors, list the increases in key retirement plan limits, and explain the updated version of the IRS fringe benefit publication.
Course Contents :

CHAPTER 1 - Rates, Tables, Statutory Amounts & Highlights


Standard Deduction

Dependent Limit

Election to Report on Parents Return

Phaseout of Exemptions - 2% Haircut

Overall Limitation on Itemized Deductions - 3% Haircut

Earned Income Credit - 32

Social Security & Self-Employment Earnings Base

Cents-Per-Mile Rates - Standard Mileage Rate

Qualified Transportation Fringes

Passenger Automobile Depreciation Limits

Expensing Deduction - 179

Self-Employed Health Insurance Deduction

Corporate Income Tax Rates

Recent Legislative Highlights

Standard Deduction Increase for Married Persons

15% Tax Bracket Will Expand for Married Persons Filing Jointly

Personal Exemption Amount Increases

Elimination of Limit on Itemized Deductions - 3% Haircut

Elimination of Phaseout of Personal Exemptions - 2% Haircut

Hope & Lifetime Learning Credits - 25A

Tuition & Fees Deduction - Expired

Education Savings Bond Exclusion - 135

State and Local General Sales Taxes - Expired

Alternative Minimum Tax

Hours of Service Meal Limits

Archer Medical Savings Accounts - Suspended?

Health Savings Accounts (HSAs)

Old Medical Savings Accounts



High Deductible Health Plan (HDHP)

Limits for HDHP

Amount of Contribution

Special Rules for Married Couples

Establishing an HSA



Qualified Medical Expenses

Insurance Premiums

Record keeping

Health Care Act of 2006 Changes

Long-Term Care & Accelerated Death Benefits Exclusion

Long-term Care Premiums

Refundable Child Credit


Student Loan Interest Deduction

Interest Exclusion for Higher Education

Insubstantial Benefit Charitable Contribution Limitation

Qualified Plans

Defined Benefit Plan Limits

Defined Contribution Plan Limits

Elective Deferrals Treated as Roth Contributions

Modified AGI Limit for Traditional IRAs

Charitable Transfers for IRA Owners - Expired

Increase in Limits on Elective Deferrals under a SEP-IRA

Simplified Employee Pensions (SEPs)

Additional Elective Deferrals under a SEP-IRA for Persons 50 & Older

Increase In Limit on Salary Reduction Contributions under a SIMPLE

Additional Salary Reduction Contributions to SIMPLE IRAs for Persons 50 & Older

Increased Estate & GST Exemption

Scheduled Repeal of Estate & GST Taxes

Reduction of Credit for State Death Taxes

Social Security and Medicare Taxes

Self-employment Tax

Bonus Depreciation for 2008

Qualifying Property

Coordination with 179

Expensing Under 179

179 Extended Through 2009

179 on SUVs Under 14,000 GVW limited to $25,000

Expensing of Environmental Remediation Costs Expired

Standard Mileage Rate

Alternative Motor Vehicles - 30B

Electric Vehicles Credit - Expired

Start-Up Costs & Organizational Costs - 195

Qualifying Costs

Purchasing An Active Trade Or Business

Leasehold Improvements & Restaurant Property - Expired

Qualified Restaurant Property

Leasehold Improvement Recovery

Qualified Improvement Property

Deduction for Domestic Production Activities

Qualified Production Activities Income

Passthrough Entities

Limits On The Deduction

Alternative Minimum Tax

Income Averaging for Farmers & Fishermen

Research Credit - Expired

Health Care Act of 2006 Changes

Work Opportunity Tax Credit

Welfare-to-Work Tax Credit

Health Care Act of 2006 Changes

Small Business and Work Opportunity Tax Act of 2007

Charitable Contributions of Computer Equipment - Expired

Treatment of Nonqualified Deferred Compensation Plans - 409A

Section 1202 Exclusion Increased


Expensing Reforestation Costs

Capital Gain on Outright Sales of Timber

S Corporations

Number of Shareholders

Family Members Treated As One Shareholder

Transfer of Suspended Losses

Electing Small Business Trusts

Grandfathered IRAs Allowed to Hold Bank S Stock

Monetary Donations

Charitable Contributions of Clothing and Household Items

Charitable Contribution of Patents

Employment Taxes on Employee Stock Options

Increase to FUTA Tax Deposit Requirement

Nanny Tax Threshold

Reinvest Foreign Earnings Deduction

Tax Increase Prevention and Reconciliation Act (H.R. 4297)

Tax Relief or Extensions

Pension Protection Act of 2006 (H.R. 4)

Permanent EGTRRA Pension & IRA Provisions

Saver's Credit Made Permanent - 25B

Direct Deposit Of Tax Refunds In An IRA

Rollovers By Nonspouse Beneficiaries - 402

Direct Rollovers From Retirement Plans to Roth IRAs

Automatic Enrollment

Investment Advice

Investment in Employer Stock

Combined Defined Benefit and 401(k) Plans

Hardship Withdrawals

Section 529 College Savings Plans

Charitable Giving Provisions

Charitable Distributions from an IRA

Conservation Easements

Clothing & Household Goods

Cash Contributions

Contributions of Fractional Interests of Tangible Personal Property

The Tax Relief and Health Care Act of 2006 - "Extender" Bill

Extended Provisions

Health Savings Accounts (HSA) Provisions

Other Provisions

Small Business and Work Opportunity Tax Act of 2007

Tax Increase Prevention Act of 2007 (H.R. 3996)

Mortgage Debt Relief Act of 2007 (H.R. 3648)

Technical Corrections Act Of 2007 (H.R. 4839)

Economic Stimulus Package Act of 2008 (H.R. 5140)

Rebate Formula

Rebate Phaseouts

Child Payments

Increased 179 Expensing

Temporary Bonus Depreciation

Qualifying Property

Coordination with 179 

CHAPTER 2 - Cases, Rulings & Developmensts


Credit for Contractors on Energy Efficient Homes - 45L

Cash Kickback Not Income - 61

Incentive Payments Excludable Loan - 61

Volume Discounts - 61

M&IE Per Diem Held Wages - 62

Tool Reimbursement Held Disguised Wages - 62

Consent to Revoke Election - 83

Taxpayer Stuck With Election - 83

Exercise of Options Create Income - 83

Partnership's Self-funded Health Plan Approved by IRS - 104

Reimbursement Makes Disability Income Tax-free - 104

Medical Premiums for Spouse/Employee Deductible - 106

Contributions Made to Health Plan Not Excludable - 106

Excess Lessee's Construction Allowance Held Income - 110

Comprehensive Regs on Cafeteria Plans - 125

Smartcards & Debit Cards Allowed For Fringes - 132

Employer-Provided Cell Phones Tax-Free Fringe Benefit - 132

Truck Lease Expenses Not Deductible on Schedule C - 162

Reimbursement of Travel Expenses Treated a Wages - 162

Deducting Health Insurance Paid by the Self-Employed - 162

Insurance Deduction Limited for S Corporation Owners - 162

Unreimbursed Expenses Denied Deduction - 162

Traveling Preacher Had No Tax Home - 162

Capitalization of Tangible Asset Proposed Regulations - 162

Compensation to Owner Unreasonable - 162

S Corporation Denied Daycare Deduction - 162

Fringe Benefits Guide & Publication Revised - 162

Employee-Spouse Loses Medical Deduction - 162

Mileage Deduction Denied for Travel to Worksite - 162

Travel Expenses Nondeductible Due to Turtle Rule - 162

Book Writing Not Separate Activity - 162

Engineer Denied Deduction for Flight School - 162

M&I Per Diem Rate for Self-Employeds OK - 162

Liberalized Lodging Deduction Rules - 162

Home Office Deductible for Musician - 162

Insurance Deduction for 2% S Shareholders Relaxed - 162

Simultaneous Deductions Denied for Single Casualty - 165

Correcting Depreciation on Sold Assets - 168

Vineyard's Trellising Held 10 Year Depreciable Property - 168

Adequate Records Needed for Depreciation - 168

Section 179 Election on SUV Denied - 179

Energy-Efficient Commercial Property Expenditures - 179D

Horse Breeding Not for Profit - 183

Family Farm Held Hobby - 183

Bass Fishing Held Not For Profit - 183

Aggregation Avoids Hobby Loss Rules - 183

Technical Corrections to Production Deduction - 199

More Domestic Production Activity Guidance - 199

W-2 Guidance for Production Activities Deduction - 199

Audit Issues for Production Activities Deduction - 199

Payment Card Reimbursements under FSAs and HRAs - 223

Policy Rider Causes HSA Disallowance - 223

FSA & HRA Rollovers to HSAs - 223

2007 & 2008 Inflation Adjustments for HSAs - 223

IRS HSA Publication Updated - 223

Publisher Subject to UNICAP Rules - 263A

Cohan Rule Allowed to Estimate Business Expenses - 274

Casinos Comps 100% Deductible - 274

2007 Per Diem Rates - 274

Indefinite Job Assignment Taxable - 274

Entertainment Use of Planes 274

Property Used Partly for Personal Purposes - 280A

Regs Ignore Step Transaction Doctrine - 338(h)(10)

S Corporation Separates into Two Legal Entities - 368

NOLs Limited After Stock Sale - 382

Shareholder Advances Treated as Debt - 385

Guidance on Automatic Contribution Arrangements - 401

Controlled Partnership Liable for Pension Penalty - 401

Guidelines for Pre-Retirement Plan Distributions - 401

Regs on Medical or Accident Insurance Payments - 402

Roth 401(k) Final Regulations - 402A

Sample Roth 401(k) Elections - 402A

Regs on Distributions from Designated Roth Accounts - 402A

Deferred Compensation Payroll Taxes Deductible? - 404

Final Regs on Nonqualified Deferred Compensation - 409A

2008 Relief for 409A Document Compliance - 409A

2008 Transition Relief for 409A Compliance - 409A

Teachers Pay Not Subject to Deferred Comp Rules - s409A

Retroactive Effect When Benefits Are Restored - 411

Guidance on Benefits & Contribution Limits - 415

Business Valuation Firm Not PSC - 448

Accounting Firm Escapes PSC Status - 448

Return Preparation & Bookkeeping Held Accounting - 448

Treasury Shares Ignored For PSC Test - 448

Radiation Therapy Corporation Held QPSC - 448

Settlement Income Includible Under All-Events Test - 451

Prepaid Postage Deduction Allowed - 461

Prepaid Services Deductible - 461

Many Tax-Exempt Organizations Abusing Tax System - 501

Tax-Exempt Social Club Not Required to Recognize Gain - 512

Association's Land Sale Not Subject to UBIT - 512

Partner Taxed on Distributive Share Held in Escrow - 702

Partnership Distribution of House Recognition Event - 731

Partnership Taxed on Property Transfer - 731

Tax Year Closed by SOL Still Open for Certain Purposes - 751

Installment Sale Treatment Not Available - 751

Regs on Effect of Liabilities and SMLLC Basis Rules - 752

Qualified Small Business Stock Election - 1045

Allocation Rules Inapplicable to Non-Compete - 1060

Conversion Did Not Create Second Class of Stock - 1361

Proposed Regs on S Corporation Changes - 1361

Form 2553 May Be Filed With S Corporation Return - 1362

Circular Loans Failed to Create Debt Basis - 1366

S Corp Shareholder Get Basis After Restructuring - 1366

Distributive Share of S Corp Taxable to Shareholder - 1366

$10,000 Limit Imposed on Open Account Debt - 1367

Regs. on 10-Year Built-In Gains Period - 1374

Adjustment for C Corporation Electing S Corp Status - 1374

CRP "Rental" Payments Subject to S/E Tax - 1402

Dance Teachers Not Employees - 3121

Satellite TV Installer Independent Contractor - 3121

Employee vs. Independent Contractor - 3121

Section 530 Publication Updated - 3121

Worker Held Independent Contractor - 3121

New Form Should Alert IRS on Misclassified Workers - 3121

Unemployment Benefits Not Subject to FICA or FUTA - 3401

Disregarded Entities Pay Their Own Employment Taxes - 3401

Regs on Sending IRS Questionable W-4s - 3402

Contracts Stating Workers Not Employees Void - 3509

Leased Back Held Prohibited Transaction - 4975

Family Business Interest Held Prohibited Investment - 4975

Employment Tax Liability Despite Embezzlement - 6651

Final Regs Cover Corporate Estimated Tax Rules - 6655

Corporate Secretary Not Responsible - 6672

Responsible Person Sentenced to Jail - 6672

Chief Operating Officer Not Responsible Person - 6672

Arrangement Found to Constitute a Partnership - 7701

Check the Box Regs Held Valid - 7701

Choice for Husband & Wife Sole Proprietorships - 7701

Technical Corrections for S Corporations - Misc.

Retirement Payments to Nonresident Partners Misc.

Form 941 Instructions and Form 941c Revised - Misc.

Highlights of S Corporation NRP Study - Misc.

IRS Offers Advice for Accurately Filing K-1s - Misc.

Most Sole Proprietors Underreporting Income - Misc.

Key Retirement Plan Limits Increase for 2008 - Misc.

Updated Version of IRS Fringe Benefit Publication - Misc.

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