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Course Details

Getting Cash Out of Your Business with Tax Analysis (Course Id 206)

Updated / QAS / Registry / EA
  Add to Cart 
Author : Danny C Santucci, JD
Course Length : Pages: 150 ||| Review Questions: 120 ||| Final Exam Questions: 120
CPE Credits : 24.0
IRS Credits : 24
Price : $145.95
Passing Score : 70%
Course Type: NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents
Technical Designation: Technical
Primary Subject-Field Of Study:

Taxes - Taxes for Course Id 206

Description :

This tax preparation course examines the various ideas, methods, and techniques capable of optimizing the overall compensation package for key employees and principals in small to medium-sized businesses. Qualified and non-qualified deferred compensation, benefit targeting, insurance programs, statutory fringe benefits, interest-free loans, and investment planning are investigated. Effective pay plans essential to attract, motivate, and retain key people are defined and evaluated. Consideration is given to indirect compensation in the form of business entertainment, expense accounts, auto use, travel, and transportation. Equity participation is explored through stock sales, repurchase agreements, incentive stock options, ESOTs, stock options, and bonuses. The new field of professional services is probed to provide tax, financial, and estate planning to the key executive.

Usage Rank : 16667
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 : 21-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 - 206

Keywords : Taxes, Getting, Cash, Out, Your, Business, Tax, Analysis, 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                Tax Economics

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

    * Financial fundamentals
    * Tax planning elements
    * Taxable income
    * Tax-free income
    * Tax-deferred income
    * Tax-sheltered income
    * Budgeting
    * Cash
    * Acquisition
    * Assets
    * Management
Learning Objectives:

       After reading Chapter 1, participants will be able to:
    1. Identify financial and tax income types and how cash management is used to acquire and operate assets, specify changes recently made to taxable income, determine how the passive loss rules categorize income, and identify income splitting formats that can reduce tax.
    2. Recognize basic cash management techniques and how to generate tax-free income, identify ways to defer income, and specify techniques to shelter income.
    3. Determine the importance of budgeting and rules to budget effectively, specify several cash usages, recognize financial acquisition guidelines for tax-advantaged investments, and specify multiple asset management rules.
Chapter 2                Business Planning

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

    * Financial and compensation planning
    * Periodic review & goal setting
    * Team concept
    * Individual and corporate income tax rates
    * Capital gains & personal exemptions
    * Passive loss rules
    * Deferral of income
    * Acceleration of deductions
    * Avoiding taxable income
    * Unreasonable compensation
Learning Objectives:

       After reading Chapter 2, participants will be able to:
    1. Recognize compensation strategies citing employer vs. employee perspectives, identifying parties’ goals and objectives, and selecting compensation techniques to accomplish such goals.
    2. Identify economic and tax trends particularly recent capital gain complexity and rate “baskets” and their varying taxation, and recognize the §469 “buckets” of income and loss that influence what a taxpayer can deduct against other income.
    3. Specify several ways to defer income and accelerate deductions, and thereby expand business cash flow and planning opportunities.
    4. Recognize the dangers of unreasonable compensation and its impact on deductions and distributions, and identify ways to avoid unreasonable compensation.
Chapter 3                Deferred Compensation Plans

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

    * Types of deferred compensation
    * Advantages of nonqualified deferred compensation
    * Economic benefit of nonqualified deferred compensation
    * Tax consequences
    * Qualified deferred compensation – retirement plans
    * Basic requirements of a qualified pension plan
    * Basic types of corporate plans
    * Self-employed plans - Keogh
    * Individual plans - IRAs
    * SEPs and SIMPLE plans
Learning Objectives:

       After reading Chapter 3, participants will be able to:
    1. Determine the meaning of “deferred compensation plan”, cite questions for assessing deferral usage, and recognize multiple deferred compensation types so clients may properly structure compensation.
    2. Identify client compensation decisions by specifying qualified deferred compensation restrictions, recalling the purposes, benefit formulas, and necessary contractual provisions for nonqualified plans., recognize the IRS’s position on nonqualified compensation, determine “constructive receipt” and “economic benefit”, and identify the differences among unfunded bare contractual promise plans, funded company account plans, and segregated asset plans.
    3. Recognize qualified deferred compensation plans and nonqualified plans, the major benefit of the qualified deferred plans, and the basis of the benefits and contributions and, identify the current and deferred advantages and the disadvantages of corporate plans and fiduciary responsibilities and prohibited transactions.
    4. Cite the requirements of the basic forms of qualified pension plans permitting clients to elect among such plans.
    5. Identify defined contribution and defined benefit plans, specify the differences among the types of defined contribution plans, and recognize their effect on retirement benefits.
    6. Determine the differences between self-employed and qualified plans identifying key choice of entity factors.
    7. Cite the requirements of IRAs, SEPs, and SIMPLEs, and recognize tax-free Roth IRA distributions and where changes may be necessary to maximize plan benefits.
Chapter 4                Basic Fringe Benefits

       At the start of Chapter 4, 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 4, participants will be able to:
    1. Recognize basic fringe benefit planning by determining “income” under §61, and identify the differences between former nonstatutory and current statutory fringe benefits created by recent cases, rulings, and tax law changes.
    2. Specify the 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 identify the general accounting rule and the special two-month pour-over accounting rule.
    3. Identify an “employee achievement award” under §274, and recognize the rules for group term life insurance under §79 and how to implement proper coverage.
    4. Determine the mechanics of self-insured medical reimbursement plans under §105, and specify the requirements of medical insurance under §106 specifying differences.
    5. Identify the rules for excluding the value of meals and lodging under §119, and “cafeteria plans” and how they operate.
    6. Recognize the requirements and limits of employee educational assistance programs and dependent care assistance and how to obtain each type of assistance.
    7. Identify “no-additional-cost services” and determine 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. Determine the requirements for qualified transportation fringe benefits under §132(f), specify valuation methods for employer-provided automobiles, and identify the qualifications for the popular physical fitness exclusion, and the requirements and benefits of adoption assistance programs.
    9. Recognize planning services available under §§132, 212, and 67, determine interest-free and below-market loans, identify child care benefits and corporate-funded educational savings accounts, specify S corporation fringe benefits, and identify ERISA compliance requirements.
Chapter 5                Business Entertainment

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

    * Tests for pre-2018 entertainment expenses
    * Statutory exceptions
    * Former ticket purchase rules
    * Percentage reduction for meals & entertainment
    * 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. Identify tax definition of entertainment, recognize the former tests for pre-2018 entertainment expenses to be deducted, determine the importance of the statutory exceptions and the percentage reduction restriction for meals and entertainment, and specify the former 2% floor on miscellaneous itemized deductions.
    2. Determine what constitutes an “entertainment facility,” identify substantiation, recordkeeping, reimbursement, reporting requirements, and variations in methods, specify how to itemize non-reimbursed employee expenses, and identify the special reporting rules for self-employed persons and employers.
Chapter 6                Business Travel & Transportation

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

    * Transportation & travel distinguished
    * Definition of “tax home”
    * Temporary & indefinite assignments
    * Away from home requirement
    * Business purpose requirement for business travel
    * Convention & meetings
    * Cruises & luxury water travel
    * Automobiles
    * Actual cost method
    * Standard mileage method
Learning Objectives:

       After reading Chapter 6, participants will be able to:
    1. Identify business travel and transportation concepts by specifying the differences between transportation and “tax home” sensitive travel to maximize deductible expenses.
    2. Recognize how time acts as a critical factor in distinguishing a temporary from an indefinite job assignment, cite the “away from home” requirement, and determine the factors associated with the business purpose requirement.
    3. Identify deductible meals, lodging, conventions, and meetings and related necessary compliance issues, specify the special requirements for cruises, determine the treatment of luxury water travel, recognize auto usage as a component of travel, cite the requirements for family member travel expenses and recognize the interplay of the "no additional cost" rule to ensure taxpayer compliance with §274.
Chapter 7                Insurance

       At the start of Chapter 7, participants should identify the following topics for study:

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

       After reading Chapter 7, participants will be able to:
    1. Recognize the business and tax importance of available business insurance including the broad spectrum of company paid insurance, §79 group term life, retired lives reserve, split-dollar, former death benefit plans, business travel, disability, medical, and dental specifying permitted coverage and tax treatment.
    2. Determine the requirements and restrictions pertaining to the interest limitation on policy loans under §264, the interest limitation for tax-exempt interest income under §265, the conditions under which business owners may fully deduct amounts paid for medical and dental insurance and qualified long-term care insurance, recognize the application of the uniform capitalization rules, and identify the basic mechanics of health savings accounts.
Chapter 8                Equity Participation

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

    * Stock plans
    * Section 83
    * Stock appreciation rights plan
    * Qualified incentive stock options
    * Golden parachute agreements
    * Buy-sell agreements
    * Entity & cross-purchase agreements
    * Estate tax valuation
    * Funding the buy-sell agreement
    * Purchase price & terms
Learning Objectives:

       After reading Chapter 8, participants will be able to:
    1. Recognize equity participation by specifying factors that determine the benefits of stock options, determine how to transfer an equity position, identify controlled sales, and cite programs to provide executives with an equity ownership interest in a business.
    2. Identify the taxation and use of nonqualified stock options under §83 and the mechanism for stock appreciation rights (SARs) plans.
    3. Recognize the requirements of §422A which ensure that a qualified incentive stock option is available, and recall changes the TRA ’86 made to the golden parachute rules and their effect on what constitutes a parachute payment.
    4. Determine tax-advantaged entity purchase and cross-purchase agreements, recognize the importance of funding a buy-sell agreement, and determine the value of closely held stock.
Chapter 9                Estate Planning

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

    * Unlimited marital deduction
    * Applicable exclusion amount
    * Stepped-up basis
    * Basic estate planning goals
    * Simple will
    * Types of trusts
    * Charitable trusts
    * Insurance trusts
    * Family documents
    * Private annuities
Learning Objectives:

       After reading Chapter 9, participants will be able to:
    1. Identify estate planning for business clients and the elements of estate tax planning that have remained unchanged by recent legislation, recognize the unlimited marital deduction including its effect on the gross estate of the value of property, and specify the applicable exclusion amounts for various years of death.
    2. Determine a “stepped-up basis” comparing the former “modified carryover basis” rules for estate tax purposes and identify the basis increase for certain business property.
    3. Specify several basic estate planning goals and identify the benefits and drawbacks of the primary dispositive plans.
    4. Recognize the various types of trusts and items necessary in business estate planning, specify multiple family estate documents that every taxpayer should consider, and identify the advantages and disadvantages of private annuities for the transferor and the transferee.
Course Contents :

Chapter 1 - Tax Economics

Financial Fundamentals

Tax Planning Elements

Assets, Income, & Cash



Income Splitting/Matching


Fringe Benefits


Section 1034 Sale or Exchange of Residence - Repealed

Section 1031 “Like-Kind” Exchanges


Deferred Compensation

Qualified Corporate Retirement Plans

Self-employed Plans

Individual Retirement Accounts

Installment Sales


Age 55 Exclusion - Repealed

Home Sale Exclusion - §121

Municipal Bonds

Gifts & Inheritances

Life Insurance


Rule #1: Expenses - 60%

Rule #2: Taxes - 20%

Rule #3: Savings - 10%

Rule #4: Education - 10%





Chapter 2 - Business Planning


Financial Planning

Overall Compensation Planning

Periodic Review & Goal Setting

Employer Objectives


Employee Objectives

Common Objectives

Small Companies

Larger Companies

Team Concept

Leader of the Pack

General Tax Strategies

Income Tax Rates

Individual Rates

Corporate Tax Rates

Current Rate - 21%

Capital Gains & Dividends - §1(h)

Rates - §1

Exemptions & Phaseout (Suspended)

Phase-Out of Exemptions

Standard Deduction

W-4 Forms

Passive Loss Rules

Categories of Income & Loss

Exclusion of Personal Service Income

Deferral of Income

Equivalent To an “Interest-free” Loan

Tax Bracket Straddle

Tax Savings v. Loss of Buying Power

Protecting Deferred Amounts

Tax Deferral Is Not Elimination

Bottom Line

Acceleration of Deductions

Time Value of Deductions

Special Treatment of Fringe Benefits

Avoiding Taxable Income

Excluded Statutory Fringe Benefits

Foreign Earned Income

Housing Exclusion


Worker’s Compensation

Personal Injury

Employee Death Benefits - Repealed

Unreasonable Compensation

Overall Limitation

Scope of Examination


Employee’s Qualifications

Size of the Business

Employee’s Compensation History

Services Performed by the Employee

Miscellaneous Factors


Chapter 3 - Deferred Compensation Plans

Can You Afford The Deferral?

Mandatory v. Voluntary Plans

Types of Deferred Compensation







Nonqualified Deferred Compensation

Postponement of Income


IRS Scrutiny & Approval




No Immediate Cash Outlay

Annual Report

Notice Requirement


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 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


Qualified Deferred Compensation - Retirement Plans

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


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

Life Annuity Exemption

Minimum Distributions

Required Minimum Distribution


Required Minimum Distributions during Owner’s Lifetime

Sole Beneficiary Spouse Who Is More Than 10 Years Younger

Required Minimum Distributions in Year of the Owner's Death

Beneficiaries - Distributions after the 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

SIMPLE Plans 3


Employee Limit

Other Qualified Plan

Set up

Contribution Limits

Salary Reduction Contributions

Employer Matching Contributions

Deduction of Contributions


SIMPLE §401(k) Plan

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

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

Same-Sex Marriage

Types of Benefits

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


Definition of Employee Achievement Awards

Tangible Personal Property

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


Permanent Benefits

Discriminatory Plan


Type & Amount of Benefits

Key Employee

Self-Insured Medical Reimbursement Plans - §105

Allowable Expenses





Medical Insurance - §106

Group Health Plan Restrictions - COBRA

Coverage Requirement

Continuation Requirement

American Recovery & Reinvestment Act


Continuation Period


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


Qualified Benefits

Non-Qualified Benefits

Controlled Group Rules

Salary Reduction Plans


Highly Compensated Participants

Key Employees


Reporting Requirements

Employee Educational Assistance Programs - §127


Educational Assistance

Dependent Care Assistance - §129

Amount of Assistance


55% Test


Conflict with Dependent Care

No-Additional-Cost Services - §132(b)

Covered Employees

Line of Business Requirement


Reciprocal Agreements


Highly Compensated Employee

Qualified Employee Discounts - §132(c)

Manner of Discount

Real Estate & Investment Property Exclusion

Amount of Discount


Working Condition Fringes - §132(d)

Covered Employees

Additions to Exclusion



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

Subsidized Eating Facilities

Qualified Transportation Disallowed- §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

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

Adoption Assistance Program - §137

Employment Taxes

Conflict with Adoption Credit

Eligible Child

Children with Special Needs

Limits on the Exclusion

Dollar Limit

Income Limit


Employer-Provided Retirement Advice & Planning - §132

Financial Planning - §212 & §67



Tax Planning - §212 & §67


Estate Planning - §212 & §67

Moving Expense Reimbursement Suspended- §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


25% Credit Allowed For Employer Child Care Facilities

Corporate Funded Educational Savings Accounts

Family & Medical Leave - §45S

Employer-Provided Cell Phones - §132(a)

Noncompensatory Business Purposes

Fringe Benefit Plans for S Corporations

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 - Business Travel & Transportation


Transportation and Travel Distinguished

Travel Expenses

Transportation Expenses

Definition of “Tax Home”

Circuit Court Test

IRS Test

Employment Area

No Tax Home

Itinerant Worker

Two Work Locations

Temporary & Indefinite Assignments

Temporary Assignment

Indefinite Assignment


Prior Law Presumptions

One-Year IRS Presumption

Less than Two-Year Exception

Regular Home

Temporary Job That Became Permanent

Current Law - One-Year Rigid Time Rule

Away From Home Requirement

Sleep & Rest Rule

Correll Case

Business Purpose Requirement

All or Nothing

Primarily for Business Test


Other Factors

Existing Trade or Business

51/49 Percent Test

Domestic Business Travel

Foreign Business Travel

Personal Pleasure

Primarily Business

Full Deduction

Definition of Business Day

Meals & Lodging

50% Deduction Limitation

Conventions and Meetings

Agenda Test

Foreign Conventions


North American Area

Allowable Expenses


Deduction Limitation

Reporting Statements

Luxury Water Travel


Family Member Travel Expenses


Apportionment of Personal & Business Use

Actual Cost Method

Deduction Limitations

Definition of Car

Depreciation and Expensing

Placed in Service

MACRS - 5 (Actually 6) Years

200% Double Declining Balance  Method

Depreciation (“Caps”) Limits - §280F(a)

Deduction in Years after the Recovery Period

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

Expensing Limits - §179

Investment Tax Credit – Gone, Gone, Gone

Predominate Business (More Than 50%) Use Rule

Qualified Business Use

More Than 50% Use Test



ITC Recapture - Highly Unlikely

Excess Depreciation Recapture

Leasing Restrictions

Cars Leased After 1986

Standard Mileage Method

Limitations on Standard Mileage Method

Must be an Individual

Alternating Use

Husband & Wife

Switching Methods

Charitable Transportation

Medical Transportation

Chapter 7 - Insurance

Company Paid Insurance


Types of Life Insurance

Group Term Life - §79


Cost Of Group-term Life Insurance

“Key Employee” Defined

Retired Lives Reserve

Revenue Ruling 68-577


Split-Dollar Life

Low-Cost Term Insurance

Regulatory Requirements


Death Benefit Only Plan - Repealed

Business Travel Accident Insurance

Medical & Dental Insurance


Disability Income Insurance

Interest Limitation on Policy Loans - §264

Deductibility of Premiums & Interest on Life Insurance

Exclusion Of Inside Buildup & Amounts Received

Premium Deduction Limitation

Interest Deduction Disallowance With Respect To Life Insurance

Prorata Disallowance of Interest on Debt to Fund Life Insurance

Interest Limitation for Tax-Exempt Interest Income

Other Selected Insurances

Self-Employed Health Insurance Deduction

Long-Term Care Premiums

Capitalized Insurance

Health Savings Accounts

Small Business Health Insurance Expense Tax Credit - §45R

Chapter 8 - Equity Participation


Stock Sales or Unrestricted Stock Plan

Stock Plans

Stock Bonus


Phantom Stock


Comparison with Profit-Sharing Plans

Repurchase or Restricted Stock Agreement

Stock Options

Section 83

Risk of Forfeiture


Stock Appreciation Rights Plans

Tandem Plans

Qualified Incentive Stock Option


Golden Parachute Agreements

Small Business

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

Arm’s Length Bargain

Enforcement of Contract Price


Joint ownership

Funding the Buy-Sell Agreement

Life Insurance Funding

Term vs. Whole Life

Policy Ownership

Premium Payment

Purchase Price & Terms


Chapter 9 - Estate Planning

Unlimited Marital Deduction

Outright To Spouse

Marital Deduction Trust

Qualified Terminable Interest Property (QTIP) Trust

Applicable Exclusion Amount

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

Stepped-up Basis - §1014

Former Modified Carryover Basis Rules - §1022

Property to Which the Former  Modified Carryover Basis Rules Applied

Limited Basis Increase for Certain Property

2010 Special Election

Basic Estate Planning Goals

Primary Dispositive Plans

Simple Will

Danger for Larger Estates


Assets Not Subject to a Will

Assets Subject to a Will


Types of Trusts

Living Trusts

Testamentary Trusts

Revocable & Irrevocable

Living “A-B” Revocable Trust

Living “A-B-C” (QTIP) Trust

Impact of Spousal Portability on Trust B under TUIRJCA

Charitable Trusts

Charitable Remainder Trusts

Charitable Income Trusts

Insurance Trusts

Family Documents

Living Will

Property Agreement & Inventory

Durable Power Of Attorney

Power of Attorney for Health Care


Funeral Arrangements

Anatomical Gifts

Private Annuity?

Advantages to the Transferor

Disadvantages to the Transferor

Advantages to the Transferee

Disadvantages to the Transferee

Regulations Restrict Private Annuity Income



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