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| Author : | Danny C Santucci, JD |
| Course Length : | Pages: 331 ||| Word Count: 17,2553 ||| Review Questions: 200 ||| Final Exam Questions: 163 |
| CPE Credits : | 32.5 |
| IRS Credits : | 32 |
| Price : | $161.95 |
| 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 2370 |
| Description : | Designed to make the practitioner comfortable with “high traffic” issues, this program enables participants to discuss and handle business/personal tax essentials. The course examines and explains the practical aspects of individual & corporate planning, bridging the gap between theory and application. Significant new developments are summarized with an emphasis on tax savings ideas. 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. |
| Usage Rank : | 10000 |
| Release : | 2024 |
| Version : | 1.0 |
| Prerequisites : | General understanding of federal income taxation. |
| Experience Level : | Overview |
| Additional Contents : | Complete, no additional material needed. |
| Additional Links : |
What Is Income Tax and How Are Different Types Calculated?
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| Advance Preparation : | None. |
| Delivery Method : | QAS Self Study |
| Intended Participants : | Anyone needing Continuing Professional Education (CPE). |
| Revision Date : | 19-Sep-2024 |
| 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 - 2370 |
| Keywords : | Taxes, Guide, Federal, Corporate, Individual, Taxation, v14, cpe, cpa, online course |
| Learning Objectives : |
As a result of studying each assignment, you should be able to meet the objectives listed below each assignment. ASSIGNMENT SUBJECTChapter 1 Individual Tax Elements At the start of Chapter 1, participants should identify the following topics for study:
* Filing status * Gross income * Dividends and distributions * Discharge of debt income * Exclusions from income * Nonbusiness and personal deductions * Education and medical expenses * Casualty and theft losses * Tax credits After reading Chapter 1, participants will be able to:
2. Determine what constitutes gross income under §61 stating the tax treatment of fringe benefits, rental income, prizes, and awards, and specify how debt discharge and foreclosure can result in taxable income. 3. Identify the mechanics of income exclusions such as education-related exclusions, insurance, personal injury awards, and foreign earned income. 4. Recognize income tax deductions and their use to reduce tax liability by identifying interest related to businesses. investments, qualified residences, and deductions for medical expenses, charitable contributions, casualty losses, and moving expenses. 5. Determine distinctions among several types of tax credits for children and education identifying amounts and eligibility requirements. Chapter 2 Property Transfers & Retirement Plans At the start of Chapter 2, participants should identify the following topics for study:
* Installment sales * Repossession * Involuntary conversions * At-risk rules * Like-kind exchanges * Qualified deferred compensation * Basic requirements of a qualified pension plan * Basic types of corporate plans * IRAs and SIMPLE plans After reading Chapter 2, participants will be able to:
2. Identify the elements necessary for a §1038 repossession, the different rules for real property and personal property repossessions, and calculating basis and gain on repossession. 3. Specify the tax treatment of a §1033 involuntary conversion on condemnation or threat of condemnation; differentiate between condemnation awards and severance damages; and identify replacement periods needed to postpone gain. 4. Recognize the scope of the §465 at-risk rules and their effect on property depreciation, and identify the requirements, taxation, and types of §1031 like-kind exchanges. 5. Identify planning considerations for benefit planning and funding a qualified retirement plan; determine the compensation base used for funding calculations and the impact of PBGC insurance in assuring benefits. 6. Identify the requirements of the basic qualified retirement plans, recognize the permissible and required contribution limits for retirement plans, and specify the requirements of IRAs and the Roth IRAs recognizing their contribution, rollover, and RMD requirements and restrictions. Chapter 3 Losses, AMT & Compliance At the start of Chapter 3, participants should identify the following topics for study:
* Suspension of disallowed losses under §469 * Computing the alternative minimum tax * Minimum AMT tax credit * Reporting compliance rules and provisions * Accuracy related penalties * Information reporting penalty final regulations * Penalty for unrealistic position * Statute of limitations for assessments * Examination of returns After reading Chapter 3, participants will be able to:
2. Specify differences between the regular and alternative minimum tax recognizing the impact of tax preferences and adjustments. 3. Identify the reporting requirements for employers, real estate transactions, independent contractors, and cash reporting. 4. Recognize types of accuracy-related and valuation overstatement penalties, and specify the IRS's applicable statute of limitations. Chapter 4 Business Forms & Characteristics At the start of Chapter 4, participants should identify the following topics for study:
* Partnerships * Estates & trusts * Unincorporated associations * Corporation defined * Subchapter S corporations * Ordinary “C” corporations * Personal service corporations * Corporate tax rates * Alternative minimum tax After reading Chapter 4, participants will be able to:
2. Recognize the definition of a corporation and its taxation including the application of the “check the box” regulations and passive loss limitations. Chapter 5 Corporate Formation & Capitalization At the start of Chapter 5, participants should identify the following topics for study:
* 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 After reading Chapter 5, participants will be able to:
2. Specify the requirements for corporate charitable contributions, determine how to avoid § 541 and §531 status and identify accounting periods and methods available to corporations. 3 Specify methods for identifying inventory items and identify multiple corporation tax advantages including consolidated returns. Chapter 6 Corporate Principals & Employees At the start of Chapter 6, participants should identify the following topics for study:
* FICA & FUTA * Employee labor laws * Employee v. contractor status * Unreasonable compensation * Income splitting * Buy-sell agreements * Entity & cross-purchase agreements * Sole shareholder planning * Recapitalization After reading Chapter 6, participants will be able to:
2. Recognize common-law rules used to determine employee status for federal income tax purposes, specify the dangers of unreasonable compensation stating how to avoid them, and identify income-splitting devices. 3. Identify a buy-sell agreement distinguishing an entity purchase from a cross-purchase agreement and recognize business recapitalizations and their potential uses. Chapter 7 Basic Fringe Benefits At the start of Chapter 7, participants should identify the following topics for study:
* 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 After reading Chapter 7, participants will be able to:
2. Recognize the income exclusion provided for §132 de minimis fringe benefits, §79 group term life insurance, §125 “cafeteria plans”, and§105 self-insured medical reimbursement plans and specify employer-provided automobiles valuation methods, and determine ERISA compliance requirements. Chapter 8 Business Entertainment At the start of Chapter 8, participants should identify the following topics for study:
* Statutory exceptions * Former quiet business meals & drinks * Pre-2018 ticket purchases * Percentage reduction for meals & entertainment * Entertainment facilities * Substantiation & record keeping * Employee expense reimbursement & reporting * Self-employed persons * Employers After reading Chapter 8, participants will be able to:
2. Identify substantiation, recordkeeping, reimbursement, and reporting requirements. Chapter 9 Insurance At the start of Chapter 9, participants should identify the following topics for study:
* Group term life insurance * Regulations * Retired lives reserve * Split-dollar life insurance * Medical & dental insurance * Interest limitation on policy loans * Key person life insurance * COBRA * VEBAs - §501(c)(9) Trusts After reading Chapter 9, participants will be able to:
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, cite the requirements of COBRA, and determine what constitutes a Voluntary Employee Benefit Association under §501(c)(9). Chapter 10 Nonqualified Deferred Compensation At the start of Chapter 10, participants should identify the following topics for study:
* Purposes & benefits * Constructive receipt * Economic benefit * Funded company account plan * Segregated asset plan * Tax consequences * Accounting * Estate planning considerations * Withholding, Social Security & IRAs After reading Chapter 10, participants will be able to:
2. Identify the tax consequences of establishing a nonqualified plan and rules for the preparation of related income tax returns. Chapter 11 S Corporations At the start of Chapter 11, participants should identify the following topics for study:
* S corporation status * Termination * Income & expense * Built-in gain * Passive income * Basis of stocks & debts * Distributions * Form 1120S * Fringe benefits After reading Chapter 11, participants will be able to:
2. Recognize the taxation of S corporations as compared to other entities including pass-through items, built-in gain, and fringe benefits, and specify when the Form 1120S must be filed. Chapter 12 Business Dispositions & Reorganizations At the start of Chapter 12, participants should identify the following topics for study:
* Buying an existing business * Type 1 reorganization * Type 2 reorganization * Type 3 reorganization * Type 4 reorganization * Type 5 reorganization * Type 6 reorganization * Type 7 reorganization * Carryover of corporate tax attributes After reading Chapter 12, participants will be able to:
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| Course Contents : | Chapter 1 - Individual Tax Elements Federal Income Taxes: A Description Application of U.S. Individual Income Tax Gross Income Adjusted Gross Income (AGI) Taxable Income Standard Deduction Itemized Deduction Personal Exemptions Filing Status Rates & Tax Liability Tax Credits Rates, Tables, & Statutory Amounts Income Tax Rates - §1 Marriage Penalty - Mostly Gone Standard Deduction - §63 Dependent Limit - §63(c)(5) Exemptions & Phaseout (Suspended) - §151 Itemized Deductions Subject to 2% AGI Limit - §68 Earned Income Tax Credit - §32 Disqualified (Excessive Investment) Income - §32(i) Means-Tested Programs Social Security & Self-Employment Earnings Base Standard Mileage Rate Qualified Transportation Fringes Passenger Automobile Depreciation Limits (“CAPS”) Expensing Deduction - §179 Self-Employed Health Insurance Deduction Corporate Income Tax Rates 1993 Through 2017: 2018 & Later: 21% Withholding & Estimated Tax Estimated Tax - §6654 Social Security, Medicare & FUTA (or Payroll) Taxes FICA - §3101, §3111 & §3121 SECA - §1401 Wage Base Additional Hospital Insurance Tax On Certain High-Income Individuals FUTA - §3301 & §3306 Employee Retention Credit Moratorium - §3111 Filing Status Marital Status Single Taxpayers Divorced Persons Sham Divorce Annulled Marriages Married Taxpayers Spouse’s Death Married Persons Living Apart Filing Jointly Joint Liability Innocent Spouse Exception Nonresident Alien Filing Separately Special Rules Joint Return after Separate Returns Separate Returns after Joint Return Exception Head of Household Advantages Requirements of §2(b) Considered Unmarried Keeping Up a Home Qualifying Person Summary Qualifying Widow(er) With Dependent Child Gross Income Compensation Fringe Benefits Rental Income Advance Rent Security Deposits Payment for Canceling a Lease Social Security Benefits Taxability of Benefits – Old & New Blended Application Alimony & Spousal Support Alimony Restrictions & Requirements Pre 2019 Decrees 2019 & Later Decrees Pre-2019 Recapture Child Support Prizes & Awards - §74 & §274 Dividends & Distributions Ordinary Dividends Money Market Funds Dividends on Capital Stock Dividends Used to Buy More Stock Qualified Dividends Capital Gain Distributions Undistributed Capital Gains Form 2439 Basis Adjustment Real Estate Investment Trusts (REITs) Nontaxable Distributions Return of Capital Basis Adjustment Liquidating Distributions Distributions of Stock and Stock Rights Taxable Stock Dividends and Stock Rights Discharge of Debt Income Exceptions from Income Inclusion Reduction of Tax Attributes Order of Reductions Foreclosure Nonrecourse Indebtedness Recourse Indebtedness Residential Mortgage Debt Relief - §108 Bartering Barter Exchange Backup Withholding Recoveries Itemized Deduction Recoveries Recovery Limited to Deduction Recoveries Included in Income Non-Itemized Deduction Recoveries Amounts Recovered for Credits Tax Benefit Rule Children's Income - §63, §73 & §6012 Earned Income - §73 Unearned Income "Kiddie" Tax - §1(g) Application, Threshold & Impact Election to Report on Parents’ Return - §1(g)(7)(A) [Form 8814] Election Situations Definitions AMT Exemption for Children - §59(j) Exclusions from Income Educational Savings Bonds - §135 Income Exclusion Limitation MAGI Notice 90-7 Education Expenses Excludable Interest Forms 8818 & 8815 Scholarships & Fellowships - §117 Definitions Work Learning Service Programs - §117(c)(2)(C) Scholarship Prizes Education Expenses Education Assistance Programs - §127 Employer Educational Trusts - §83 Qualified Tuition Programs (QTP) - §529 Gift & Inheritance Exclusion - §2503 Subsequent Income - §61 Divorce - §1041 Business Gifts - §274(b)(1) Nominal Transfers to Employees - §132(e) Insurance - §101(a) Exceptions Purchase for Value Inclusion - §101(a)(2) Installment Payments - §61 Specified Number of Installments Specified Amount Payable Installments for Life Personal Injury Awards - §104 Personal Injury Emotional Distress or Mental Anguish Lost Wages or Lost Profits Punitive Damages Interest on a Personal Injury Award Tax Benefit Rule - §111 Interest State & Local Obligations - §103 Foreign Earned Income Exclusion - §911 Nonbusiness & Personal Deductions Itemized Deductions Limitation on Itemized Deductions Suspended - §68 Personal & Dependency Exemptions Suspended - §151 Former Personal Exemptions Former Dependency Exemptions Former Phaseout of Exemptions Interest Expense - §163 Personal Interest - §163(h)(1) Definition Deductibility Investment Interest - §163(d) Definitions Net Investment Income Limitation Qualified Residence (or Mortgage) Interest - §163(h)(3) [Form 8598] Definitions Limitations Acquisition Indebtedness Modified Home Equity Loan Refinancing Home Improvements Timing – 24 Months or 90 Days Alternative Minimum Tax Co-ordination - §55 Points - §461 Home Purchase & Improvement Exception Refinancing Huntsman Case Mortgage Interest Statement – Form 1098 Business Interest - §163(j) Allocation of Interest Expense Education Expenses Work-Related Education Educator Expenses - §62 Medical Expense Deductions - §213 [Schedule A] Items Deductible Items Not Deductible Medical Insurance Premiums Medicare Part A Medicare Part B Medicare Part D Prepaid Insurance Premiums Meals & Lodging Transportation Expenses Permanent Improvements Spouses, Dependents & Others Reimbursement of Expenses Long-Term Care Provisions Long-Term Care Payments - §7702B(d)(4) Long-Term Care Premiums - §213(d)(10) IRA Withdrawals for Certain Medical Expenses – 72(t)(2)(B) ABLE Accounts - §529A Eligible Individual Qualified ABLE Program Contributions Investment Direction Distributions Charitable Contributions - §170 [Schedule A] Requirements for Deductibility Qualified Organizations Limitations on Contributions Five-year Carryover Contributions of Cash Benefits Received Benefit Performances Athletic Event Seating Rights Raffle Tickets, Bingo, Etc. Dues, Fees, or Assessments Contribution of Property Clothing & Household Goods Ordinary Income or Short-Term Capital Gain Type Property Exception Capital Gain Type Property Exceptions Conservation Easements - §170(b) Loss Type Property Vehicle Donations Fractional Interests Other Types of Contributions Qualified Charitable Distributions from IRAs - §408(d)(8)(A) Substantiation - §170 Cash Contributions Contributions Less Than $250 - §170 Contributions of $250 or More - §170(f)(8)(A) Payroll Deduction Records Noncash Contributions Deductions of Less Than $250 Additional Records Deductions of At Least $250 But Not More Than $500 Deductions Over $500 But Not Over $5,000 Deductions over $5,000 Contributions over $75 Made Partly for Goods or Services State and Local Tax (SALT) Deduction - §164 [Schedule A] Income Taxes Real Property Tax Accrual Method Taxpayers State & Local Sales Tax Deduction - §164 Personal Property Tax Other Deductible Taxes Examples of Non-Deductible Taxes Casualty & Theft Losses Suspended - §165 [Schedule A] Definitions Proof of Loss Amount of Loss Insurance & Other Reimbursements Limitations Allocation for Mixed Use Property 2% Itemized Deductions Suspended - §67 [Schedule A] Moving Expense Deduction Suspended - §217 Credits Child or Dependent Care Tax Credit - §21 [Form 2441] Eligibility Employment Related Expenses Qualifying Out-of-the-home Expenses Payments to Relatives Allowable Amount Dependent Care Assistance - §129 Reporting Earned Income Tax Credit - §32 [Form 1040] Adoption Credit - §23 & §137 Qualified Adoption Expenses Exclusion from Income for Employer Reimbursements - §137 Child Tax Credit - §24 Credit Amount Qualifying Child Phase-out Refundable Child Care Credit Amount AMT & Child Tax Credit $500 Credit for Certain Dependents - §24(h)(4)(A) American Opportunity Tax (former Hope) & Lifetime Learning Credits - §25A American Opportunity Tax Credit - §25A(b)(1) Phase Out - §25A(d)(2) Refundable Portion Lifetime Learning Credit - §25A(a)(1) Phase Out - §25A(d)(2) Ministers & Military - §107 Clergy Rental Value of a Home Members of Religious Orders Military & Veterans Wages - §61 Nontaxable Income - §134 Veterans’ Benefits - §134 Chapter 2 - Property Transfers & Retirement Plans Sales & Exchanges of Property Conditional Sales Contract or Lease Easements Capital Gains & Losses Capital Assets - §1221 Capital Gains & Qualified Dividends Rate – §1(h) Holding Periods - (§1222 & §1223) Capital Losses - §1211 Business Property - §1231 Basis of Property Adjusted Basis Property Received as a Gift Property Received by Inheritance Changes in Property Usage Stocks & Bonds Sale of Personal Residence - §121 Two-Year Ownership & Use Requirements Prorata Exception Limitations & Criteria on Exclusion Reduced Home Sale Exclusion for Periods of Nonqualified Use Computation Nonqualified Use Post-May 6, 1997 Depreciation Surviving Spouse Home Sale Exclusion Installment Sales - §453 General Rules Dealer Sales Unstated Interest Related Party Two-Year Rule - §453(e) Disposition of Installment Notes - §453B Determining Installment Income Pledging Rule Escrow Account Depreciation Recapture Like-Kind Exchange Repossessions - §1038 Personal Property Non- Installment Method Sales Basis of Installment Obligation Gain or Loss on Repossession Installment Method Sales - §453 Basis of Installment Obligation Gain or Loss on Repossession Basis of Repossessed Personal Property Bad Debt Real Property Conditions Figuring Gain on Repossession Limit on Taxable Gain Repossession Costs Indefinite Selling Price Character of Gain Basis of Repossessed Real Property Holding Period for Resales Bad Debt Seller’s Former Home Exception Involuntary Conversions - §1033 Condemnations Threat of Condemnation Reports of Condemnation Property Voluntarily Sold Easements Condemnation Award Amounts Withheld From Award Net Condemnation Award Interest on Award Payments to Relocate Severance Damages Treatment of Severance Damages Expenses of Obtaining an Award Special Assessment Withheld from Award Severance Damages Included in Award Gain or Loss from Condemnations How to Figure Gain or Loss Part Business or Part Rental Postponement of Gain Choosing to Postpone Gain Cost Test Replacement Period Condemnation Replacement Property Acquired Before the Condemnation Extension Time for assessing a deficiency At Risk Limits for Real Estate - §465 - §465 [Form 6198] Amount At Risk Qualified Nonrecourse Financing Qualified Person Taxpayers Affected Closely Held Corporation Qualified Corporation Exception Partner & S Corporation Shareholders Partner S Corporation Shareholder Like-Kind Exchanges - §1031 [Form 8824] Statutory Requirements & Definitions Qualified Transaction - Exchanges v. Sales Held for Productive Use or investment Statutory Exclusions from §1031 Like-Kind Property The Concept of “Boot” Realized Gain Recognized Gain Limitation on Recognition of Gain under §1031 The Definition of “Boot” The Rules of “Boot” Property Boot Mortgage Boot Netting “Boot” - The Rules of Offset Property Boot Given Offsets Any Boot Received Mortgage Boot Given Offsets Mortgage Boot Received Mortgage Boot Given Does Not Offset Property Boot Received Gain or Loss on Boot Basis on Tax-Deferred Exchange Allocation of Basis Installment Reporting of Boot - §453(f)(6) Exchanges Between Related Parties Reporting an Exchange Types of Exchanges Two-Party Exchanges Multiple-Party Exchanges Delayed (or Deferred) Exchanges Time Requirements Qualified Intermediary Disqualified Person Retirement Plans Qualified Deferred Compensation Qualified v. Nonqualified Plans Major Benefit Current Deduction Timing of Deductions Part of Total Compensation Compensation Base ERISA Regulatory Requirements & PBGC Insurance Basic ERISA Provisions Fiduciary Responsibilities Bonding Requirement Prohibited Transactions Additional Restrictions Loans Employer Securities Excise Penalty Tax PBGC Insurance Sixty-Month Requirement Plans Exempt from PBGC Coverage Basic Requirements for a Qualified Retirement Plan Written Plan Trust Permanency Exclusive Benefit of Employees Reversion of Trust Assets to Employer Participation & Coverage Age & Service Coverage Vesting Minimum Vesting 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 Types of Qualified Retirement Plans Defined Benefit Plans Defined Contribution Plans Types of Defined Contribution Plans Profit-sharing Money Purchase Pension Section 401(k) Plans Self-Employed or HR10 Plan Self-Employed Rate Determining the Deduction Individual Retirement Accounts - IRAs Employer IRA 10% Distribution Penalty Simplified Employee Pension Plans (SEPs) SIMPLE Plans SIMPLE IRA Plan SIMPLE §401(k) Plan Roth IRA - §408A Required Minimum Distributions (RMDs) Calculating RMDs Designated Beneficiary Date the Designated Beneficiary Is Determined 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 Distributions after Owner’s Death to Beneficiaries – “10-year Rule” Stretching Required Distributions Beneficiary Is an Individual - Designated Beneficiary Exists Multiple Individual Beneficiaries Surviving Spouse Sole Designated Beneficiary Non-Spouse Beneficiary Beneficiary Is Not an Individual - No Designated Beneficiary Trust as Beneficiary Conduit Trusts Accumulation Trusts Estate Tax Deduction Post-Retirement Tax Treatment of Distributions Divorce Losses on IRA Investments Estate Tax Consequences Income In Respect of a Decedent Tax-Free Rollovers Penalty Tax on Premature Distributions Prohibited Rollovers - §402(c) Waiting Period Between Rollovers Partial Rollovers Withholding Requirement Conduit IRAs Miscellaneous Rollovers Contribution Limits Defined Benefit Plans - §415(b)(1)(A) Defined Contribution Plans - § 415(c)(1)(A) Compensation Limit - §401, §404 & §408 IRA Contribution Limit - §219 Catch-up Contribution - §219(b)(5)(B) IRA AGI Phaseout Limits - §219 Individual Taxpayer is an Active Plan Participant Spouse is an Active Plan Participant Roth Contribution Limit - §408A(c)(2) & §219 Roth AGI Phaseout Limits - §408A(c)(3) §401(k), §403(b) & §457 Elective Deferral & Catch-up Limits Roth Treatment of Catch-up Contributions – Secure Act §603 “Rothification” Rules SIMPLE Plans Simplified Employee Pensions (SEPs) Contribution Limit Compensation Limit Chapter 3 - Losses, AMT & Compliance Passive Losses Prior Law Passive Loss Rules - §469 Application Active Losses Credits - §469(a)(1)(B) Calculating Passive Loss Categories of Income & Loss Passive - §469(c) Portfolio - §§469(e)(1)(A) & (B) Material Participation - §469(h)(1) Self-Charged Interest Regulations?*** Passive Deduction - Portfolio Income Regulations Suspension of Disallowed Losses - §§469(g) & (b) Fully Taxable Disposition Abandonment & Worthlessness Related Party Transactions - §469(g)(1)(B) Credits Disallowance Increase Basis Election - §469(j)(9) Entire Interest Partnership Grantor Trust Other Transfers Transfer By Reason Of Death - §469(g)(2) Transfer by Gift - §469(j)(6) Installment Sale - §469(g)(3) Activity No Longer Treated As Passive Activity - §469(f)(1) Closely Held To Nonclosely Held Corporation - §469(f)(2) Nontaxable Transfer Ordering of Losses on Disposition of an Entire Interest - §469(g) Capital Loss Limitation - §1211 Carryforwards - §469(b) Allocation of Suspended Losses - §469(j)(4) Taxpayers Affected - §469(a)(2) Noncorporate Taxpayers Regular Closely Held Corporations Personal Service Corporations Definition Real Estate Professionals - §469(c)(7) Activities – Reg. §1.469-4 Facts & Circumstances Test – Reg. §1.469-4(c)(2) Relevant Factors Rental Activities - Reg. §1.469-4(d)(1) Limited Partnership Activities - Reg. §1.469-4(d)(3) Partnership & S Corporation Activities - Reg. §1.469-4(d)(5) Consistency - Reg. §1.469-4(e) Regrouping - Reg. §1.469-4(e)(2) Partial Dispositions - Reg. §1.469-4(g) Alternative Minimum Tax - §55 Computation Tentative Minimum Tax AMT Exemption Amounts - §55(d) AMT Exemption Phaseout - §55(d) & §59(j) Regular Tax Deduction - §55(c) Tax Preferences & Adjustments - §§56 & 57 Preferences & Adjustments for All Taxpayers Preferences & Adjustments for Noncorporate Taxpayers Only Preferences & Adjustments for Corporations Only Prior to 2018 Adjustments - §56 Itemized Deductions Medical Expenses Taxes Interest Depreciation Adjustment Alternative Depreciation System (ADS) ADS Recovery Periods AMT Recovery Periods Conformed to Regular Recovery Periods Mining Exploration and Development Costs - §56(a)(2) Basis Long-Term Contracts - §56(a)(3) Home Construction Contracts Pollution Control Facilities - §56(a)(5) Installment Sales Circulation Expenditures - §56(b)(2) Research & Experimental Expenditures - §56(b)(2) Incentive Stock Options - §56(b)(3) Passive Farm Losses - §58(a)(2) Definition Loss Disallowance Allocation Same Activity Suspension Passive Activity Losses Former Corporate Untaxed Reported Profits & ACE Adjustments Tax Preferences - §57 Depletion - §57(a)(1) Intangible Drilling Costs- §57(a)(2) Excess Drilling Costs Private Activity Bond Interest- §57(a)(5)(C) Alternative Tax NOL Deduction - §56(a)(4) Carrybacks & Carryovers - §172 Alternative Minimum Foreign Tax Credit - §59 Foreign Tax Credit Carryback or Carryover - §904(c) Tentative Minimum Tax Minimum Tax Credit - §53 Regular Income Tax Reduced Carryforward of Credit Other Credits AMT for Large Corporations - §55 Adjusted Financial Statement Income Application of Tax Compliance Reporting Requirements Real Estate Transactions [Form - 1099S] Sales of a Principal Residence Wage and Tax Statement [Form W-2] Nonemployee Compensation [1099-NEC] Employee Status Miscellaneous Information [Form 1099-MISC] Payment Card & Third Party Network Transactions [Form 1099-K] Interest Income [Form 1099-INT] Dividends and Distributions [Form 1099-DIV] Payments from Qualified Education Programs [Form 1099-Q] Distributions From Retirement Plans [Form 1099-R] Mortgage Interest Statement [Form 1098] Cash Reporting – §6050I [Form 8300] Notification Statement Definitions Exceptions Recipient’s Knowledge Cash Reporting Rules - Attorneys Sale of Certain Partnership Interests - §751(a) [Form 8308] Tax Shelter Registration Number - §6111 [Form 8271] Asset Acquisition Statement - §1060 [Form 8594] Accuracy-Related Penalties - §6662 Negligence or Disregard - §6662(b)(1) Adequate Disclosure Penalty Substantial Understatement of Income Tax - §6662(d) Adequate Disclosure Penalty Substantial Valuation Misstatement - §6662(e) Penalty Substantial Overstatement of Pension Liabilities - §6662(f) Penalty Substantial Estate & Gift Tax Valuation Understatement - §6662(g) Penalty Understatement Due to Unreasonable Position - §6694(a) Reasonable Position – “More Likely Than Not Standard” - §6694(a)(2)(C) Reasonable Position - Substantial Authority Standard - §6694(a)(2)(A) Adequate Disclosure - §6694(a)(2)(B) Form 8275-R Information Reporting & Penalties - §6721 et al Corrections Resulting in Reduced Penalties Small Businesses Reasonable Cause Failures Failure to Furnish Copy of Return to Taxpayer - §6695(a) Failure to Sign Return - §6695(b) Failure to Furnish Identifying Number - §6695(c) Failure to Retain Copy or List - §6695(d) Failure to File Partnership Return - §6698 Failure to File S Corporation Return - §6699 Disclosure or Use of Information - §6713 Statute of Limitations for Assessments Three-Year Assessment Periods Six-Year Assessment Period No Statute Of Limitations Extension of Statute Of Limitations Examination of Returns How Returns Are Selected Arranging the Examination Transfers Representation Recordings Repeat Examinations Changes to Return Appealing Examination Findings Appeals Office Appeals to the Courts Court Decisions Recovering Litigation Expenses Other Remedies Claims for Refund Cancellation of Penalties Reduction of Interest Chapter 4 - Business Forms & Characteristics Sole Proprietorships Advantages Disadvantages Self-Employment Taxes Incorporation “S” Solution Estimated Tax Payments 20% Deduction Partnerships Conduit Entity Advantages Disadvantages Husband-Wife Partnerships General Tax Aspects Limited Partnerships Passive Presumption At-Risk Rules - §465 Financing 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 Advantages Disadvantages Personal Service Corporations - §441, §448, §469 Testing Period Personal Services Principal Activity & Substantial Performance Employee-Owner Independent Contractor Passive Loss Limitations - §469(a)(2) Qualified Personal Service Corporation - §448 Federal Corporate Income Taxation Overview Taxable Income Allowable Deductions Tax Credits Corporate Tax Rates Tax Tables Current Rate - 21% Capital Gains & Losses Tax Return & Filing Affiliated Group Corporate Estimated Tax Alternative Minimum Tax Reinstatement of AMT for Larger Corporations - §55(b)(2) Chapter 5 - Corporate Formation & Capitalization Incorporation - §351 Basic Requirements Corporate Nonrecognition Property Stock Solely For Services Impact on Recipient Impact on Other Shareholders Stock for Debt Stock Notes Control Property Basis Stock Basis Liabilities Miscellaneous Trade & Technical Corrections Act - §351 Recourse Liability Nonrecourse Liability Basis 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 Amortization Organizational Expenses Definition Stock Issuance & Syndication Expenses Amortization 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 Goodwill 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 Ownership Limitation Denial of Deduction Debt-Financed Portfolio Stock Property Dividends Holding Period Focus Charitable Contributions - §170 Timing of Deduction Limitation Carryover of Excess Contribution Personal Holding Companies - §541 Penalty Tax Professional Corporations Named Professionals Avoidance of PHC Status Accumulated Earnings Tax Trap - §531 Imposition of Penalty Tax Computation Accumulated Earnings Credit Application of Credit to Controlled Groups Reasonable Accumulations Working Capital Service Corporations Minority Stock Redemptions Majority Stock Redemptions Stockholder Harmony Tax Exempt Income Accounting Periods & Methods Accounting Periods Section 444 Election Business Purpose Tax Year 25% Test Length of Accounting Period Short Tax Year Not in Existence Entire Year Change in Accounting Period Election of Accounting Period Changing Accounting Periods Changes Without IRS Consent Accounting Methods Methods Available Cash Method Limitation Accrual Method Economic Performance Rule Special Methods Combination (Hybrid) Method Accounting for Long-term Contracts Changing the Accounting Method Inventories Identification Methods Specific Identification Method FIFO Method LIFO Method Valuation Methods Cost Method Uniform Capitalization Rules - §263A Lower of Cost or Market Method Multiple Corporations Controlled Group Restrictions Definition Parent-Subsidiary Groups Brother-Sister Groups Consolidated Returns Definition Corporate Liquidations & Distributions The Old General Utilities Doctrine Loss Limitations Chapter 6 - 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 Form W-2 Form W-3 Social Security’s Payroll Tax or FICA - §3111 & §3121 Rates Federal Unemployment (FUTA) Tax - §3301 & 3306 Form 940 Employee Labor Laws Minimum Wage Requirement Overtime Fair Employment Laws Child Labor Laws Immigration Law Workers’ Compensation Insurance State Disability Insurance (SDI) OSHA Employee vs. Contractor Status Factors Unreasonable Compensation Overall Limitation Allowance of Deduction Publicly Traded Corporation Limitation Limitation on Accrual Deduction Employment Contracts Scope of Examination Officer’s Compensation Factors 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 Definition 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 Recapitalization In General Valuation of Stock Estate Freeze Provisions Stock Dividends Section 306 Tainted Stocks §306 Exceptions Chapter 7 - Basic Fringe Benefits Concept Definition of Income - §61 Deductions without Taxable Income Benefit Mechanics Discrimination No-Additional-Cost Services - §132(b) Covered Employees Line of Business Requirement Definition Qualified Employee Discounts - §132(c) Manner of Discount Real Estate & Investment Property Exclusion Amount of Discount Working Condition Fringes - §132(d) Covered Employees Exceptions Substantiation De Minimis Fringes - §132(e) Subsidized Eating Facilities Employee Achievement Awards - §74(c) & §274(j) Exclusion Definition of Employee Achievement Awards Qualified Plan Award Employer Deduction Limits Aggregation Limit Special Partnership Rule Employee Impact Group Term Life Insurance - §79 Dependent Care Assistance - §129 Amount of Assistance Requirements Conflict with Dependent Care Cafeteria Plans - §125 Definition Qualified Benefits Non-Qualified Benefits Controlled Group Rules Salary Reduction Plans Nondiscrimination Meals & Lodging - §119 Income Exclusion Convenience of Employer Self-Insured Medical Reimbursement Plans - §105 Allowable Expenses Requirements Benefits Exposure Employee Educational Assistance Programs - §127 Employer-Provided Automobile - §61 & §132 General Valuation Method Annual Lease Value Method Computation 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 Summary Moving Expenses - §217 Employer-Provided Retirement Advice & Planning - §132 Financial Planning - §67 & §212 Popularity Taxation Tax Planning - §67 & §212 Taxation Estate Planning - §67 & §212 On-premises Athletic Facility - §132(j)(4)(B) Home Office - §280A Carryforward Renting Space to Employer Fringe Benefit Plans for S Corporations Insurance Basis Permanent Policies Effect of Premium Payment Key Employee Insurance Medical Insurance Retirement Plans Summary ERISA Compliance Welfare Plans Additional Requirements Chapter 8 - Business Entertainment 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 Business Meals Percentage Reduction for Meals - §274(n)(1) Application of Reduction Rule Eating Facilities Exceptions - §274(n)(2) Entertainment Facilities Exceptions Covered Expenses Club Dues Sales Incentive Awards Substantiation & Record Keeping - §274(d) Travel Expense Items to be Substantiated Meal Expense Items to be Substantiated Business Gifts Expense Substantiation Substantiation Methods Adequate Records Exceptions to Documentary Evidence Requirement Sufficiently Corroborated Statements Exceptional Circumstances Retention of Records Exceptions to Substantiation Requirements Payback Agreements Employee Expense Reimbursement & Reporting Unreimbursed Employee Expenses Reimbursed Employee Expenses Accountable Plans Business Connection 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 per Employee 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 Reimbursement & Reporting Expenses Related to the Self-Employed's Business Reimbursed Expenses Incurred on Behalf of a Client With Adequate Accounting Without Adequate Accounting Employers When Can an Expense Be Deducted? Economic Performance Rule Nondeductible Meals Employer-Provided Auto Chapter 9 - Insurance Company Paid Insurance Popularity Types of Life Insurance Group Term Life - §79 Requirements “Key Employee” Defined Popularity and Application Coverage & Premiums Medical Examination Regulations Spouse & Dependent Insurance Computation Tax Liability Reporting Discrimination Eligibility & Benefits Excluded Employees Policy Requirements Ten Employee Rule Less Than Ten Employees Permanent Benefits Nondiscrimination Requirements Retired Lives Reserve Revenue Ruling 68-577 Taxation Advantages Comparison With Other Programs Executive Bonus Split-Dollar Disadvantages 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 Taxation Revenue Ruling 64-328 Johnson Case Business Travel Accident Insurance Medical & Dental Insurance Premiums Disability Income Insurance Interest Limitation on Policy Loans - §264A Disallowance of Interest Deduction Impact Limit on Deductibility of Premiums & Interest Key Person Life Insurance Closely Held Corporations Sole Shareholder Applications COBRA 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 Termination Disqualified Benefits Conclusion Chapter 10 - Nonqualified Deferred Compensation Postponement of Income Advantages IRS Scrutiny & Approval Nondiscrimination ERISA Funding No Immediate Cash Outlay Annual Report Notice Requirement Purposes & Benefits Benefit Formula Incentive Deferred Bonuses Contractual Arrangement Necessary Provisions Tax Status Service’s Position Rationale Congressional Moratorium No Ruling or Regulation Policy Constructive Receipt Beyond Actual Receipt Simple Set-Asides Are Not Possible Revenue Ruling 60-31 Regulations Time & Control Concept Control Timing After-the-Fact Contract Amendment to Existing Contract Economic Benefit Has Something of Value Been Transferred? Insurance Coverage Has a Calculable Value Segregated Funds Have Immediate Economic Value Value v. Control Revenue Ruling 60-31 Situation 1 Situation 2 Situation 3 Situation 4 Situation 5 General Principles Unfunded Bare Contractual Promise Plan - Type I Risk Funded Company Account Plan - Type II Ownership & Segregation Bookkeeping Reserve or Separate Account Employee Still Bears Economic Risk Limited Protection Investment of Deferred Amounts Life Insurance Premiums Third Party Guarantees Segregated Asset Plan - Type III Section 83 Approach Tight Rope Format Transferable or Not Subject To A Risk of Substantial Forfeiture Substantial Restrictions Redemption or Forfeiture Condition Related to a Purpose of the Transfer Noncompetition Consultation Time Alone is Not Enough Realization & Taxation 30-Day Election Period Deduction Allowed Timing Withholding Tax Consequences Reciprocal Taxation/Deduction Rule No Difference 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 Accounting Two Sets of Rules Financial Accounting Rules IRS Rules Estate Planning Considerations Death During Deferral Income Tax Consequences Estate Tax Consequences Gift Tax Consequences Withholding, Social Security & IRAs Other Payroll Taxes Social Security Benefits IRAs Chapter 11 - S Corporations Introduction Advantages Planning Disadvantages Passthrough Entities - 20% Deduction Becoming an S Corporation S Corporation Status Number of Shareholders Individuals Only Estates Grantor Trusts Voting Trusts Testamentary Trust Qualifying Simple Trusts Electing Small Business Trusts Aliens C Corporations Tax-Exempt Entities Exception for S Corporation ESOP - §512 One Class of Stock Affiliated Groups & Subsidiaries Prior Law Current Law Domestic Corporation Election Requirement Making the Election Form 2553 Invalid S Elections Extension S Corporation Termination Revoking the Election Procedure Effective Date Ceasing to Qualify Effective Date Passive Income - §1362 Effective Date S Termination Year Pro-Rata Allocation Allocation Based On Normal Accounting Rules Annualization of 1120 Short Year Taxation of S Corporations S Corporation Income & Expense Separately Stated Items Nonseparately Stated Items Interest Expense on Debt-Financed Distributions Tax Exempt Income Net Operation Losses Carryover of C Corporation NOLs Reduction of Pass-Thru Items Built-In Gain - §1374 Net Recognized Built-In Gain Recognized Built-In Gains Recognized Built-In Loss Deduction Items Amount of Tax Credits Net Operating Loss Carryovers Treatment of Certain Property Transfer of Assets Passive Income - §1375 Gross Receipts Sales or Exchanges of Stock or Securities Passive Investment Income Royalties Rents Interest Figuring the Tax on Excess Net Passive Income Net Passive Income Excess Net Passive Income Special Provisions Waiver of Tax Tax Preference Items LIFO Recapture Tax Capital Gains Tax Reducing Corporate Capital Gains Figuring Corporate Taxable Income Recapture of Investment Credit Estimated Corporate Tax Payments Basis of Stock & Debts Adjustments to Basis Limitation on Loss Deductions Basis Limit Adjustments to Stock Basis Increases Decreases Adjustments to Debt Basis Restoring Basis of Loans Loan Repayments Guarantees At-Risk Rules - §465 Reasonable Compensation Related Party Rules Definition of Related Party Stock Attribution Rules Business Expenses & Interest Distributions Earnings & Profits Accumulated Adjustments Account (AAA) Dividend Election Post-Termination Distributions Transition Period Order of Distribution No Earnings & Profits Appreciated Property Distributions Taxable Year Business Purpose Change of Tax Year Form 1120S Extension Late Filing Reasonable Cause Schedule K-1 Shareholder’s Treatment Of S Corporation Items Pro Rata Share Optional 10-year Write-Off of Tax Preferences Fringe Benefits Health Insurance Premiums Reporting Requirements Medical Deduction Entity Tax Comparison Chapter 12 - 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 Boot Limitation Type 2 Reorganizations 80% Control Requirement Voting Stock as Sole Consideration Shareholder Action Type 3 Reorganizations Consideration Transfer of Assets 90/70 Test Liquidation of Acquired Corporation Type 4 Reorganizations Asset Distributions Continuity of Business Boot Type 5 Reorganizations Type 6 Reorganizations Type 7 Reorganizations Bona Fide Business Purpose Test 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 Glossary |
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The Charitable Payraise- A Strategy for Better Retirements and Lasting Legacies (Video) (1 Hrs)