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Course Details

Corporate Tax Planning - v13 (Course Id 1401)

Updated / QAS / Registry / EA
  Add to Cart 
Author : Danny C Santucci, JD
Course Length : Pages: 174 ||| Review Questions: 125 ||| Final Exam Questions: 105
CPE Credits : 21.0
IRS Credits : 21
Price : $133.95
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 1401

Description :

This course examines and explains the practical aspects of using a closely held corporation to maximize after-tax return on business operations. Recent developments giving corporations a competitive edge over other entities are explored and detailed. Practitioners are alerted to often missed fringe benefits, retirement planning opportunities, corporate business deductions, income splitting possibilities, and little-known estate planning techniques. The program covers step-by-step tax procedures to form, operate, and ultimately dispose of a closely held corporation. Distinctions between S and C corporations will be unraveled and guidelines for client direction given.

Usage Rank : 15455
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 : 30-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 - 1401

Keywords : Taxes, Corporate, Tax, Planning, v13, 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                Business Forms & Characteristics

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

    * Sole proprietorships
    * Partnerships
    * Estates & trusts
    * Unincorporated associations
    * Corporation defined
    * Subchapter S corporations
    * Ordinary “C” corporations
    * Personal service corporations
    * Corporate tax rate
Learning Objectives:

       After reading Chapter 1, participants will be able to:
    1. Specify the advantages and disadvantages of sole proprietorships including self-employed taxes and payment requirements and identify the characterization of sole proprietorship assets upon disposition.
    2. Recognize partnerships and their advantages and disadvantages, identify partnership taxation particularly the application of the passive loss (§469) and at-risk rules (§465), and determine correct partnership income or loss reporting stating the role of husband and wife partnerships and limited partnerships.
    3. Identify the reporting requirements of estates, trusts, and unincorporated associations, determine what constitutes a “corporation” for a subchapter S or regular corporation, specify the characteristics of a personal service corporation, and recognize the repeal of the alternative minimum tax for regular corporations.

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

Chapter 2                Corporate Formation & Capitalization

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

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

       After reading Chapter 2, participants will be able to:
    1. Identify the transfer of money, property, or both by prospective shareholders and the basic requirements associated with §351.
    2. Recognize the requirements of §1244 and the small business stock exclusion, determine the differences between start-up and organizational expenses, and identify the elements of corporate tax recognition including the dangers of corporate ownership and capital gains and losses stating dividends received treatment.
    3. Specify the requirements for corporate charitable contributions, identify former §341 collapsible corporations, and determine how to avoid §541 status particularly as to personal service contracts.
    4. Identify §531 status and determine accounting periods and methods available to corporations.
    5. Specify methods for identifying inventory items including common methods of valuing inventory and, identify multiple corporation tax advantages and the tax consequences of corporate liquidations and distributions.

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

Chapter 3                Corporate Principals & Employees

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

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

       After reading Chapter 3, participants will be able to:
    1. Determine payroll taxes and the uses of Form 941, Form W-4, Form W-2, and Form W-3, specify the application of FICA and FUTA taxes and how to report them, and identify major employee labor laws.
    2. Recognize common-law rules used to determine employee status for FICA and federal income tax withholding, specify the dangers of unreasonable compensation stating how to avoid them, and determine how a corporation can be a valuable income-splitting device.
    3. Identify a buy-sell agreement distinguishing an entity purchase from a cross-purchase agreement and recognize business recapitalizations and their potential uses.

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

Chapter 4                Basic Fringe Benefits

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

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

       After reading Chapter 4, participants will be able to:
    1. Identify basic fringe benefit planning by determining “income” under §61 and specifying the differences between former nonstatutory and current statutory fringe benefits.
    2. Determine “no-additional-cost services” and identify what property or services are excludable from income as qualified employee discounts under §132(c), specify exceptions to working condition fringes and de minimis fringes, recognize a §74 “employee achievement award,” and cite the §79 group term life insurance rules.
    3. Recognize the requirements and limits of §129 dependent care assistance, identify §125 “cafeteria plans” specifying how they function, specify the §119 meals and lodging exclusion, cite the mechanics of §105 self-insured medical reimbursement plans, and determine the requirements and limits of §127 programs.
    4. Identify employer-provided automobiles valuation methods, determine what constitutes interest-free and below-market loans, specify the requirements and limitations of fringe benefits under §§217, 132, 67 212, 132(h)(5) and 280A, cite S corporation fringe benefits, and specify ERISA compliance requirements.

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

Chapter 5                Business Entertainment

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

    * Pre- & post-2018 tests for entertainment expenses
    * Statutory exceptions
    * Pre-2018 ticket purchases
    * Percentage reduction for meals
    * Entertainment facilities
    * Substantiation & record keeping
    * Employee expense reimbursement & reporting
    * Self-employed persons
    * Employers
Learning Objectives:

       After reading Chapter 5, participants will be able to:
    1. Define the key tax term “entertainment" and identify the pre- and post-2018 required §162 & §274 deductibility tests recognizing the importance of the remaining statutory exceptions for entertainment.
    2. Determine the former treatment of ticket purchases, recognize the percentage reduction restriction for meals, specify the application of the former 2% deduction limit, and determine an “entertainment facility” stating related deductible costs.
    3. Identify substantiation, recordkeeping, reimbursement, and reporting requirements recognizing variations in methods, and determine how to itemize non-reimbursed employee expenses and specify the special reporting rules for self-employed persons and employers.

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

Chapter 6                Insurance

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

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

       After reading Chapter 6, participants will be able to:
    1. Recognize the importance and variety of business insurance by:
      a. Identifying the popularity and application of business life insurance plans specifying common coverage and premiums;
      b. Determining corporate uses for life insurance including estate, travel, and accident uses and specifying the tax treatment, reporting requirements, and discrimination rules for business insurance particularly the §79 requirements for group insurance;
      c. Identifying the benefit of not needing a medical examination as a prerequisite to purchasing a plan;
      d. Recognizing retired lives reserve and split-dollar life insurance stating their mechanics, taxation regulation, and advantages and disadvantages;
      e. Specifying the mechanics of employer-paid health, medical, and disability income insurance including the impact of medical examination requirements.
    2. Identify the impact of the disallowance of the interest deduction on purchasers and the insurance industry recognizing the §264 interest limitation on policy loans, specify the benefit of corporate key person life insurance, cite the requirements of COBRA, and determine what constitutes a Voluntary Employee Benefit Association under §501(c)(9).

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

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. Identify nonqualified and qualified deferred compensation plans recognizing their benefits and contribution limits and recall the current and deferred advantages and disadvantages of corporate plans including fiduciary responsibilities and prohibited transactions.
    2. Specify the requirements of three basic forms of qualified pension plans.
    3. Determine the differences between defined contribution and defined benefit retirement plans and specify five types of defined contribution plans stating their impact on retirement benefits.
    4. Recognize self-employed plans from qualified plans for other business types and owners.
    5. Identify the requirements of IRAs, SEPs, and SIMPLEs, and define tax-free Roth IRA distributions specifying strategies to maximize plan benefits.

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

Chapter 8                Nonqualified Deferred Compensation

       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
Learning Objectives:

       After reading Chapter 8, participants will be able to:
    1. Recognize the postponement of income with a nonqualified plan by:
      a. Identifying nonqualified plan advantages including ways to design the plans and specifying the IRS’s position on such arrangements recognizing the impact of constructive receipt and economic benefit concepts;
      b. Specifying deferred compensation patterns set forth in R.R. 60-31 stating the taxability of each; and
      c. Determining unfunded and funded plans and the use of company assets or bookkeeping accounts to avoid employee taxation.
    2. Identify the setup of a segregated asset plan where the account is not subject to the claims of the employer’s creditors and still avoids employee taxation and specify the tax consequences of establishing a nonqualified plan.

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

Chapter 9                S Corporations

       At the start of Chapter 9, 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 9, participants will be able to:
    1. Determine what constitutes an S corporation and specify the advantages and list the disadvantages associated with them.
    2. Identify variables that impact whether a business can choose S corporation status.
    3. Cite ways an S corporation may be terminated specifying related procedures to be followed.
    4. Recognize the taxation and fringe benefits of S corporations as compared to other entity formats by:
      a. Determining the tax treatment of S corporation income and expenses, pass-through items, built-in gain, passive income, tax preference items, LIFO recapture tax, and capital gains tax and their impact on the taxation of S corporations; and
      b. Identifying the benefits available to other entity formats, determining S corporation owner compensation and distribution options recognizing reasonable compensation requirements, related party rules, S corporation distribution taxation, tax year choices, fringe benefits, and specifying when the Form 1120S must be filed.

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

Chapter 10                Business Dispositions & Reorganizations

       At the start of Chapter 10, participants should identify the following topics for study:

    * Starting a new business
    * Buying an existing business
    * Reorganization types
    * Carryover of corporate tax attributes
Learning Objectives:

       After reading Chapter 10, participants will be able to:
    1. Recognize various business disposition and reorganization possibilities by:
      a. Determining how organizational costs, start-up costs, and syndication costs are incurred and specifying what expenditures they include and how they are treated;
      b. Identifying advantages of purchasing an existing business over starting a new business, citing ways to find a business that is for sale, and specifying the tax considerations of such an acquisition;
      c. Specifying a reorganization under §368(a)(1) recognizing the types of transactions that qualify as non-taxable reorganizations; and
      d. Identifying the factors that determine the corporate tax attributes of an acquired corporation that carry over to the acquiring or successor corporation.
Course Contents :

Chapter 1 - Business Forms & Characteristics

Sole Proprietorships



Self-Employment Taxes


“S” Solution

Estimated Tax Payments

20% Deduction


Conduit Entity



Husband-Wife Partnerships

General Tax Aspects

Limited Partnerships

Passive Presumption

At-Risk Rules - §465


Passive Loss Limitations - §469

Active/Passive Determination

Triggering Suspended Losses

Limited Liability Companies

Estates & Trusts

Income Distribution

Business Trusts

Unincorporated Associations

Corporate Treatment

Corporation Defined

Effect of State Laws

Corporate Characteristics

Partnership Determinations

Trust Determinations

Professional Associations

Check-The-Box Regulations

Subchapter S Corporations

Ordinary “C” Corporations



Personal Service Corporations - §441, §448, §469

Testing Period

Personal Services

Principal Activity & Substantial Performance


Independent Contractor

Passive Loss Limitations - §469(a)(2)

Qualified Personal Service Corporation - §448

Federal Corporate Income Taxation Overview

Taxable Income

Allowable Deductions

Tax Credits

Corporate Tax Rates

Tax Tables

Current Rate - 21%

Capital Gains

Tax Return & Filing

Affiliated Group

Corporate Estimated Tax

Alternative Minimum Tax Repealed

Chapter 2 - Corporate Formation & Capitalization

Incorporation - §351

Basic Requirements

Corporate Nonrecognition


Stock Solely For Services

Impact on Recipient

Impact on Other Shareholders

Stock for Debt




Property Basis

Stock Basis


Miscellaneous Trade & Technical Corrections Act - §351

Recourse Liability

Nonrecourse Liability


Incorporation of a Partnership

Alternative #1

Alternative #2

Alternative #3

Tax Consequences - Alternative #1

Tax Consequences - Alternative #2

Tax Consequences - Alternative #3

Accounts Receivable

Continuing Partnership

Section 1244 Stock

Maximum Ordinary Loss

Original Issuance

Distributed Stock

General Requirements

Start-Up Expenses

Covered Expenses


Organizational Expenses


Stock Issuance & Syndication Expenses


Start of Business

Tax Recognition of the Corporate Entity

Tax Criteria

Nominee & Agency Corporations

Having Income Attributed to the Corporation

Section 482 Reallocation

Corporation & Shareholder


Interest-Free Loans

Section 269A

Capital Gains & Losses

Net Capital Loss Carryovers & Carrybacks - §1212

S Corporation Status

Asset Types

Five-Step Characterization Process

Netting Capital Gains

Netting Section 1231 Gains (Losses)

Character of Section 1231 Gains (Losses)

5 Year Averaging

NOL Carryback & Carryover - §172

Loss Computation

Deduction Computation

Dividends Received Deduction - §243

Dividends from Domestic Corporations

65% Exception



Denial of Deduction

Debt-Financed Portfolio Stock

Property Dividends

Change to Holding Period

Charitable Contributions - §170

Timing of Deduction


Carryover of Excess Contribution

Charitable Contributions of Computer Equipment - Expired

Collapsible Corporations - §341 (Repealed)



Covered Transactions

Personal Holding Companies - §541

Penalty Tax

Professional Corporations

Named Professionals

Avoidance of PHC Status

Accumulated Earnings Tax Trap - §531

Imposition of Penalty Tax


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


Accrual Method

Economic Performance Rule

Special Methods

Combination (Hybrid) Method

Accounting for Long-term Contracts

Changing the Accounting Method


Identification Methods

Specific Identification Method

FIFO Method

LIFO Method

Valuation Methods

Cost Method

Uniform Capitalization Rules - §263A

Lower of Cost or Market Method

Multiple Corporations

Controlled Group Restrictions


Parent-Subsidiary Groups

Brother-Sister Groups

Consolidated Returns


Corporate Liquidations & Distributions

The Old General Utilities Doctrine

Loss Limitations

Chapter 3 - Corporate Principals & Employees

Employee Status of Active Shareholders

Payroll Tax Withholding & Reporting

Form 941

Deposit Rules

Lookback Period

Monthly Depositor

Semi-Weekly Depositor

One-Day Rule

Form W-4

Whistle-Blowing (Repealed)

Form W-2

Form W-3

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



Federal Unemployment (FUTA) Tax - §3301 & 3306

Form 940

Employee Labor Laws

Minimum Wage Requirement


Fair Employment Laws

Child Labor Laws

Immigration Law

Workers’ Compensation Insurance

State Disability Insurance (SDI)


Employee vs. Contractor Status


Unreasonable Compensation

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

Services Performed by the Employee

Past Service

Reasonable Dividends

Bonuses as Constituting Dividends

Payback Agreements

Miscellaneous Factors

Income Splitting

Gift & Redemption

Hire the Kids & Spouse

Buy Sell Agreements


Professional Corporations

Marketability Problems

Controlled Disposition

Entity & Cross-Purchase Agreements

Stepped-Up Basis

Resulting Equity Ownership

Attribution & Constructive Ownership Rules

Estate Tax Valuation

Using the Buy-Sell Agreement to Set Value

Section 2703 Restrictions

Exceptions to §2703

Arms-Length Bargain

Enforcement of Contract Price

Joint Ownership

Funding the Buy-Sell Agreement

Term vs. Whole Life

Policy Ownership

Premium Payment

Purchase Price

S Corporations

Sole Shareholder Planning

Complete Liquidations

Alternative Dispositions

Use of Life Insurance

Estate Valuation

One-Way Buy-Outs


In General

Valuation of Stock

Estate Freeze Provisions

Stock Dividends

Section 306 Tainted Stocks

§306 Exceptions

Chapter 4 - Basic Fringe Benefits


Definition of Income - §61

Deductions without Taxable Income

Benefit Mechanics

Old Dichotomy - Statutory v. Nonstatutory

Fringe Benefit Provisions

TRA ‘84 - §132


Only Statutory Benefits Remain

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 Expenses - §217

Employer-Provided Retirement Advice & Planning - §132

Financial Planning - §67 & §212



Tax Planning - §67 & §212


Estate Planning - §67 & §212

Death Benefit Payment - §101(b) (Repealed)

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

Home Office - §280A


Renting Space to Employer

Fringe Benefit Plans for S Corporations



Permanent Policies

Effect of Premium Payment

Key Employee Insurance

Medical Insurance

Retirement Plans


ERISA Compliance

Welfare Plans

Additional Requirements

Chapter 5 - Business Entertainment

Pre-2018 Entertainment

Former Directly Related Test

Clear Business Setting Presumption

Former Associated Test

Substantial Business Discussion



Statutory Exceptions

Miscellaneous Former Entertainment Provisions

Home Entertainment Expenses

Expenses for Spouses Of Out Of Town Business Guests

Ticket Purchase Face Value Restriction

Charitable Sports Events Exception


One Event Rule

Related Parties

Food & Beverages

Employee Business Expenses

Post-2018 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 the Public

Entertainment Sold to Customers

Expenses Includible in Income of Non-employees

Lavish or Extravagant Restriction

Ordinary & Necessary Requirement

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

Application of Reduction Rule

Exceptions - §274(n)(2)

Employee Business Expenses Subject to 2% Floor Suspended

Form 2106 Restricted

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

Related Employer Restriction

Usage & Consistency

Unproven or Unspent Per Diem Allowances

Reporting Per Diem Allowances

Reimbursement Not More Than Federal Rate

Reimbursement More Than Federal Rate

Nonaccountable Plans

Self-Employed Persons

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 6 - Insurance

Company Paid Insurance


Types of Life Insurance

Group Term Life


“Key Employee” Defined

Popularity and Application

Coverage & Premiums

Medical Examination


Spouse & Dependent Insurance


Tax Liability



Eligibility & Benefits

Excluded Employees

Policy Requirements

Ten Employee Rule

Less Than Ten Employees

Permanent Benefits

Nondiscrimination Requirements

Retired Lives Reserve

Revenue Ruling 68-577



Comparison With Other Programs

Executive Bonus



Reserve Account

Revenue Rulings

Qualified Trusts

Nonqualified Trusts

Deductibility of Contributions

Separate Account for Key Employees

Disqualified Benefit

Effective Date

Revenue Procedure 93-3

Estate Planning Considerations

Policy Assignments

Split Dollar Life

Low-Cost Term Insurance

Regulatory Requirements


Revenue Ruling 64-328

Johnson Case

Business Travel Accident Insurance

Medical & Dental Insurance


Disability Income Insurance

Interest Limitation on Policy Loans - §264A

Disallowance of Interest Deduction


Limit on Deductibility of Premiums & Interest

Key Person Life Insurance

Closely Held Corporations

Sole Shareholder Applications


Affected Employers

VEBAs - §501(c)(9) Trusts

Section 419

Self Insurance

Severance Pay

Post-Retirement Medical Benefits

VEBA Taxation on Earnings

Nondiscrimination Rules Applied

Uniform Application

Controlled Groups


Disqualified Benefits


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 - Nonqualified Deferred Compensation

Postponement of Income


IRS Scrutiny & Approval




No Immediate Cash Outlay

Annual Report

Notice Requirement

Purposes & Benefits

Benefit Formula


Deferred Bonuses

Contractual Arrangement

Necessary Provisions

Tax Status

Service’s Position


Congressional Moratorium

No Ruling or Regulation Policy

Constructive Receipt

Beyond Actual Receipt

Simple Set-Asides Are Not Possible

Revenue Ruling 60-31


Time & Control Concept



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


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


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

Employer Deduction Traps

Income Tax on Employer Held Assets

Inclusion in Income Under §409A

State Tax Issues


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 & IRAs

Other Payroll Taxes

Social Security Benefits


Chapter 9 - S Corporations





Passthrough Entities - 20% Deduction

Becoming an S Corporation

S Corporation Status

Number of Shareholders

Individuals Only


Grantor Trusts

Voting Trusts

Testamentary Trust

Qualifying Simple Trusts

Electing Small Business Trusts


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


S Corporation Termination

Revoking the Election


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


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




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



Adjustments to Debt Basis

Restoring Basis of Loans

Loan Repayments


At-Risk Rules - §465

Reasonable Compensation

Related Party Rules

Definition of Related Party

Stock Attribution Rules

Business Expenses & Interest


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


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 10 - Business Dispositions & Reorganizations

Starting a New Business

Organization Costs

Start-up Costs

Syndication Costs

Buying an Existing Business

Finding a Business for Sale

Tax Considerations

Stock Acquisitions

Section 338 Election

Asset Acquisitions

Allocation of Purchase Price to Assets

Allocation Regulations

Practical Considerations

Reorganizations - §368

Types of Reorganizations

Type 1 Reorganizations

Benefits and Considerations



Type 2 Reorganizations

80% Control Requirement

Voting Stock as Sole Consideration

Shareholder Action

Type 3 Reorganizations


Transfer of Assets

90/70 Test

Liquidation of Acquired Corporation

Type 4 Reorganizations

Asset Distributions

Continuity of Business


Type 5 Reorganizations

Type 6 Reorganizations

Type 7 Reorganizations

Bona Fide Business Purpose


Carryover of Corporate Tax Attributes

Mandatory Carry-Over

Effect of Carry-Over on Acquisition

Application of Rules to Subsidiary Liquidations

Loss or Tax Credit Carryovers



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