The Ultimate Guide to Retirement Planning from a Tax Perspective (Course Id 200)

Taxes - Taxation for Course Id 200

We are all (including tax practitioners) getting older, and the need for effective retirement planning has never been greater. This course is essential for participants who wish to attain a comfortable retirement for themselves and their clients by maximizing tax saving strategies. This presentation integrates federal taxation with retirement planning. The course will examine tax and savings strategies related to determining retirement income needs, wealth building, capital preservation, and estate distribution. The result is a unified explanation of tax-economics that will permit the tax professional to locate, analyze, and solve financial aspects of retirement. Designed to improve the quality of services to clients and the profitability of engagements, this program projects the accountant into the world of retirement planning. This course will give the participant practice in analyzing problems, developing solutions, and presenting final personal retirement plans to clients. The emphasis is on practical simplicity in dealing with the self-employed and highly compensated individual. Retirement income needs are calculated; net after tax Social Security benefits are determined; and distribution options from IRAs and retirement plans are explored. Special consideration is given to the tax treatment of the home and business on retirement. Buy-sell agreements are discussed and eldercare planning is examined.

NASBA QAS - NASBA Registry - IRS Enrolled Agents - 200

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

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

* Goals v. purposes
* Investment purposes
* Myths of retirement
* Investment goals
* Investment needs of five critical decades
* Investment vehicles & entities
* Retirement - the ultimate objective
* Basic planning elements

1. Identify short-term financial goals and investment purposes, recognize the importance of defining prioritized realistic goals noting how investing allocation changes with age.
2. Determine the tax consequences of title holding methods by:
a. Specifying ways to hold title to assets starting with the simplest and most direct way to hold property;
b. Cite the tax benefits and drawbacks of co-tenancies, corporations (both C & S), partnerships, qualified retirement plans, and trusts particularly as they relate to a client's after-tax investment return; and
c. Identifying custodianship under the uniform acts and determining how an estate can be tax beneficial to taxpayers.

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

* Types of income
* Information reporting on taxable income
* Rules of budgeting
* Cash
* Acquisition
* Assets
* Rules of management
* Managing risk
* Taxes & investment economics
* Leverage

1. Identify money management noting income types, recognize causes of increased taxable income for itemizing taxpayers, and specify taxable income types and their proper reporting.
2. Determine the distinctions between tax-free municipal bonds from fringe benefits in generating tax-free income, cite the benefits of tax deferral, and identify tax-deferred investments.
3. Specify ways to shelter income noting how income sheltering amplifies investment return.
4. Recognize the budgeting of income into cash by containing expenditures with the author's step process and discretionary income development, identify a client’s negative outlook on budgeting and counter strategies, determine how to convert income into assets by purchasing investments, and specify asset acquisition rules.
5. Specify tax-advantage investments noting management rules, and determine the economic impact of accelerating deductions, postponing tax liability, and leveraging.

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

* Obstacles to preservation
* Tracking spending
* Building savings
* Designing a budget
* Determining worth
* Analyzing net worth
* Ignorance
* Inflation
* Taxes
* Tax planning tactics

1. Identify spending habits noting how to design a budget to increase discretionary income, determine net worth using a balance sheet, and select assets and liabilities for an inventory on which to base financial goals.
2. Specify why individuals should take primary responsibility for the investment planning including necessary self-education, determine the allocation of financial resources among investments to maximize return, and recognize the impact of inflation, risk versus return, and basic income tax planning tactics.

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

* Elements of like-kind exchanges
* Related party exchanges
* Personal & multiple property regulations
* Delayed (deferred) exchange regulations
* Actual & constructive receipt rule
* Qualified contribution plans
* Tax-deferred annuities
* Installment sales
* At-risk rule
* Deferred compensation and options

1. Identify the benefits of tax deferral, recall the former use of tax deferral under §1034, and cite the tax deferral advantage under §1031 noting its elements.
2. Specify the related party §1031 restrictions identifying prohibited parties or entities and permissible disposition exceptions, cite recommendations for the protection of exchange participants, and recognize the history of the personal and multiple property regulations noting the unique personal property like-kind and netting requirements for multiple asset exchanges.
3. Recall the evolution of delayed exchanges noting allowable transfers, determine how to select qualified replacement property, specify constructive receipt safe harbors & methods to secure exchange party performance, cite the §1031 partnership underlying asset rule, identify retirement plan design, identify popular methods for providing for retirement, and select near retirement investments.
4. Specify the requirements for an installment sale, determine how to elect out of the installment method, identify the variables affecting §453 availability, and determine how to use a property option to receive income and postpone tax.

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

* Work Opportunity Credit & Rehabilitation Credit
* Low Income Housing Credit & Child & Dependent Care Credit
* Estimated taxes
* Interest
* Automobile deductions
* Business entertainment deductions
* Depreciation & cost recovery
* Net operating losses
* Tax breaks for nonitemizers
* Amended returns

1. Identify tax credits noting qualified computational expenses, limitations and restrictions.
2. Recognize the estimated tax rules and procedures including payment deadlines, underpayment penalties and the economics of overpaying estimated taxes, and specify the nondeductible interest types.
3. Determine the deductibility of investment interest, prepaid interest, points, and prepayment penalties noting the offset of passive income with rental property mortgage interest.
4. Identify business vehicle operating costs using (or switching between) the actual cost method or the standard mileage rate, recognize the importance of expense and mileage records, and specify depreciation traps when purchasing a vehicle.
5. Recall the requirements for business expenses to meet the directly related test, cite the elements of the associated test, identify the business expense statutory exceptions, and recognize the application of R.R. 90-23 and R.R. 99-7 to the deduction of transportation costs to a temporary work location.
6. Determine business asset depreciation using both ACRS and MACRS recovery classes, identify sources of §172 net operating losses (NOLs) noting carryback and carryover rules, specify tax breaks for nonitemizing taxpayers, recognize the advisability of filing an amended return, determine how to avoid audits by claiming refunds for provable items noting which return amendments are safest.

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

* Using progressive tax rates
* Deductible business expenses
* Home-office deduction
* C or regular corporations
* S corporations
* Family partnerships
* Kiddie tax trap
* Child care & education
* Gifts
* Interest-free loans

1. Recognize formats for income splitting, determine the tax treatment of employee and self-employed business expenses particularly home-office expenses noting the two non-exclusive use exceptions and the income limitation, cite changes made to home office deduction under TRA ’97, and recognize the ability of self-employeds to make annual deductible contributions to a Keogh plan.
2. Identify the tax opportunities available to an unincorporated business including retirement plans, the hiring of family members, travel expenses, casualty losses, bad debts, and self-employment tax.
3. Determine the uses and tax characteristics of regular and S corporations by:
a. Citing circumstances when incorporation is desirable,
b. Recognizing the taxation of these entities including their ability to split income; and
c. Specifying initial §351 formation and capitalization issues and identifying appropriate tax form filings for each entity.
4. Recognize the use of partnerships to split income among partners including the use of §704(e) family partnerships and the consequences of gifting a partnership interest to a child or to another family member.
5. Identify the use of a custodianship to split income and contain the “kiddie tax” noting initial planning considerations and good investments for children, recognize deductions and credits for childcare, education, children, and §7872 loans, and specify the income and later estate tax benefits of gifts.

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

* $500,000 home sale exclusion
* Municipal bonds
* Divorce & separation settlements
* Gifts & inheritances
* Life insurance
* Fringe benefits
* Taxation & valuation of benefits
* Employee expense reimbursement & reporting
* Fixed & variable rate allowances
* Social Security

1. Identify tax elimination techniques by:
a. Recognizing the current §121 home sale exclusion noting its differences with prior tax law;
b. Determining qualifications for tax-free state or local obligations including private activity bonds; and
c. Specifying the tax elimination aspects of family transactions such as gifts, bequests, inheritances, life insurance, and even divorce.
2. Recognize employer deductions as a means to increase tax-free incentive-based compensation for employees by:
a. Specifying rules for excluding fringe benefits under §132 and their proper reporting on the W-2; and
b. Identifying popular employee fringe benefits including employer paid accident & health coverage, meals or lodging, cafeteria plan benefits, §127 education assistance, achievement awards, group life insurance and dependent care assistance.
3. Determine how to value fringe benefits according to IRS regulations, identify how to comply with ERISA requirements, specify the proper reporting of reimbursed and unreimbursed business expenses under accountable and nonaccountable plans, determine the substantiation of auto expenses using a fixed and variable rate, and specify eligible retirement benefits exempt from social security taxes.

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

* Need for asset protection
* Types of creditors
* Fraudulent transfers
* Preparation for asset protection
* Types of insurance
* Buy-sell agreements
* Individual ownership and corporate ownership
* Asset protection aspects of trusts
* Co-tenancy and partnerships
* Divorce

1. Identify the goals and purposes of asset protection noting the objections some people have about shielding assets from creditors by:
a. Citing reasons for asset protection and situations that can unexpectedly put assets and financial security at stake;
b. Specifying sources of lawsuits and the author's concept of exploding and imploding liability; and
c. Determining asset protection using the primary concepts of insurance, asset placement and statutory protections.
2. Recognize the importance of creditor types associated with asset protection and fraudulent transfers.
3. Specify fraudulent transfer laws noting badges of fraud, define statutes of limitation, criminal penalties, and permissible asset transfers.
4. Recognize the degree and necessity of asset protection using net worth and asset values under a balance sheet.
5. Identify the ways that insurance and buy-sell agreements can offer asset protection by:
a. Citing the asset protection elements of homeowner's, automobile and disability insurance;
b. Specifying the parties under a life insurance contract noting potential reasons for establishing an irrevocable life insurance trust; and
c. Determining what constitutes entity purchase and cross purchase buy sell agreements.
6. Recognize the asset protection advantages and disadvantages of ownership formats and entities by:
a. Determining the use of individual ownership and corporate ownership in an asset protection plan including the importance of S corporations and their estate tax planning advantages;
b. Identifying testamentary trusts, living trusts and subcategories of trusts noting asset protection elements;
c. Specifying the various types of co-tenancy, noting their asset protection dangers, and several types of partnerships citing their variation from limited liability companies; and
d. Recognizing the unique asset protection qualities of retirement plans, custodianship, and estates as asset protection tools.
7. Identify the formats that courts typically follow if a couple does not have an enforceable premarital agreement, and determine what constitutes post-nuptial and premarital agreements noting how they relate to divorce settlements and divisions.

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

* Mapping mechanics
* Common pitfalls
* Popular retirement myths
* Defining retirement
* Developing a plan
* Savings
* Assets

1. Recognize the importance of personal retirement maps to suit client objectives & lifestyles and summarize the basic guidelines of retirement planning, including common pitfalls and misconceptions of retirement.
2. Determine retirement using the major levels of retirement and key questions that have financial and personal ramifications.
3. Identify retirement costs and income needs of clients based on their current budget, recognize tax savings strategies and identify guidelines when purchasing investment assets.

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

* Will Social Security be there?
* How Social Security works
* Social Security participants
* Social Security benefits
* Retirement benefits
* Direct deposit
* Social security tax
* Total disability benefits
* Survivors’ benefits
* Medicare

1. Determine how Social Security funds are assessed and then paid, specify the system’s mechanics, and select qualified Social Security participants noting their benefit eligibility.
2. Identify the requirements to receive Social Security retirement benefits, and determine clients’ retirement benefits following a multi-step calculation process.
3. Recognize Social Security taxes, their tax rates and covered earnings allowing better retirement planning.
4. Specify the eligibility requirements of Social Security disability benefits and survivors’ benefits, and determine what constitutes Medicare Part A and Medicare Part B noting qualifications.

       At the start of Chapter 10, 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

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

       At the start of Chapter 11, participants should identify the following topics for study:

* Prior law for annuity payments
* Mandatory basis rule for annuity payments
* Nonqualifying lump-sum distributions
* Treatment options for lump-sum distributions
* Eligible rollover distributions
* 20% withholding
* Rollover period
* Premature distributions
* Minimum distribution rules
* Making charitable gifts with plan balances

1. Identify popular ways to receive distributions from a retirement plan or an IRA, specify types of annuities noting their effect on how and when participants receive payments and determine the tax on annuity payments under the general rule or the simplified general rule.
2. Determine what constitutes a lump-sum distribution permitting clients to receive special tax treatment on such distributions.
3. Recognize the key components of rollovers that can be used to reinvest cash or other assets without including the amount in income.
4. Specify the tax consequences of taking premature distributions noting how to avoid the 10% penalty.
5. Identify the minimum distribution rules and ways to avoid the 50% penalty associated with either taking smaller distributions than required or with taking distributions after the required beginning date for minimum distributions.

       At the start of Chapter 13, participants should identify the following topics for study:

* Postponement of income
* Purposes & benefits
* Constructive receipt
* Economic benefit
* Funded company account plan
* Segregated asset plan
* Tax consequences
* Accounting
* Estate planning considerations
* Withholding, Social Security & IRAs

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 noting the impact of constructive receipt and economic benefit concepts;
b. Specifying deferred compensation patterns set forth in R.R. 60-31 noting the taxability of each; and
c. Determining unfunded and funded plans noting the use of company assets or bookkeeping accounts to avoid employee taxation.
2. Identify the set up 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.

       At the start of Chapter 14, participants should identify the following topics for study:

* Taxes * Types of life insurance
* Life insurance trusts
* Annuities
* Buy-sell agreements
* Purchase price & terms
* Community property
* Professional corporations
* S corporations
* Sole shareholder planning

1. Specify reasons to purchase life insurance and the parties with rights in a life insurance policy.
2. Recognize the tax treatment of life insurance proceeds by:
a. Identifying the tax treatment of premiums and lifetime benefits noting several exceptions to the transfer for value rule and specifying variables that influence whether life insurance is taxable for federal estate tax purposes; and
b. Determining the gift tax associated with transfers of life insurance policies.
3. Identify the pros and cons of types of life insurance policies to help clients choose a suitable policy.
4. Specify the reasons for using an irrevocable life insurance trust in an estate plan identifying trust considerations and the differences between deferred and private annuities.
5. Determine what constitutes entity purchase and cross purchase buy-sell agreements noting tax and legal advantages.

       At the start of Chapter 15, participants should identify the following topics for study:

* Capital gains rates
* Rate groups
* AMT
* Home sales under §121
* Special rules for ownership & use requirements
* Prorata exception
* 1099-S reporting
* Distance & time tests for moving expenses
* Deductible moving expenses
* Reporting moving expenses

1. Determine the relationship between home sales and the capital gains rates and specify the rate “baskets” created by the capital gain provisions noting the tax treatment of capital assets in each category.
2. Recognize the key elements and application of the §121 home sale exclusion and identify safe harbor regulations associated with the home sale exclusion.
3. Identify when a taxpayer meets distance and time tests for deductible moving expenses under §217.

       At the start of Chapter 16, 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

1. Determine what constitutes estate planning for clients by:
a. Identifying elements of estate tax planning that have remained unchanged by recent legislation;
b. Recognizing the unlimited marital deduction and its effect on the gross estate of the value of property; and
c. Specifying the applicable exclusion amounts for various years of death.
2. Identify the concepts of “stepped-up basis” and “modified carryover basis” for estate tax purposes.
3. Specify basic estate-planning goals, and recognize the benefits and drawbacks of the primary dispositive plans.
4. Identify various types of estate trusts and family documents that every taxpayer should consider, and determine the advantages and disadvantages of the former private annuity format.

Chapter 1 - Financial Tax Planning

Comparing Goals & Purposes

Investment Purposes

Purpose #1 - Comfortable Retirement

Myths of Retirement

Plan For 10 to 15 Retirement Years

Stay With One Company to Retire With the Best Benefits

Preserve Capital

Retirees Are Taxed Less

Housing Costs Are Less

Just the Spouse and Me

Company Insurance & Medicare Will Cover Medical Bills

Retirees End Up In a Nursing Home

Purpose #2 - Education

Purpose #3 - Family & Personal Stability

Purpose #4 - Enjoyment of Life

Purpose #5 - Commitment

Investment Goals

Find Your Place in Time

“Know Thy Investment Self”

Investment Vehicles & Entities

Individual

Corporate

Trusts

Co-Tenancy

Partnership

Retirement Plan

Custodianship

Estate

Retirement Now - The Ultimate Objective

Basic Planning Elements

Chapter 2 - Building an Estate

Assets, Income & Cash

Income

Type #1 - Taxable

Information Reporting on Taxable Income

Payments

Salary & Wages

Interest Income

Dividends

Tax-refunds

Gambling Winnings

Other Income Known to the IRS

Real Estate Transactions

Type #2 - Tax-free

Type #3 - Tax-Deferred

Type #4 - Tax-sheltered

Gifts

Borrowed Money

Gain on Home Sales

IRA Rollovers

Inheritances

Life Insurance Proceeds

Property Settlements

Child Support Payments

Money Recovered For Personal Injuries

Workers Compensation Payments

Disability Payments

Tax Refunds

Municipal Bond Interest

Vacation Home Rental

Children’s Wages

Children’s Investment Income

Scholarships

Budgeting

Rule #1: Expenses - 60%

Rule #2: Taxes - 20%

Rule #3: Savings - 10%

Rule #4: Education - 10%

Rule #5: Keep Your Benefits

Cash

Lifestyle

Emergency Funds

Savings as Deferred Investing

How To Save

Programmed Savings

Tax Savings

Joint vs. Separate Returns

Purchase of Assets

Acquisition

Stay Liquid - Be Able To Get Your Money Back

Grow - Make Money on Your Money

Shelter - Get Tax Benefits

Build - Don’t Spend Your Benefits

Avoid Linking - Each Investment Must Stand On Its Own

Analyze - Investigate the Investment

Assets

Management

Rule #1 - Develop Cash Flow

Rule #2 - Learn To Negotiate

Rule #3 - Manage Risk

Investment Loss

Liability

Poor Health

Premature Death

Rule #4 - Diversify

Rule #5 - Monitor Assets

Rule #6 - Use Systems

Taxes & Investment Economics

Deductions Now, Taxes Later or Maybe Never

Accelerate Deductions

Taxes

Charitable Contributions

Medical Expenses

Miscellaneous Expenses

Business Expenses

Leverage

Chapter 3 - Preservation of Wealth

Four Obstacles to Preservation

Spending Habits

Track Your Spending

Income

Expenditures

Living Expenses

Fixed

Variable

Credit Card Payments

The Bottom Line

Converting a Minus into a Plus

Build in Savings

Adjustments

Designing a Budget

What Are You Worth?

Inventory Assets

Cash

Personal Property

Investments

List Liabilities

Analyze Net Worth

Wasting Assets

Liquidity

Diversification

Cash Reserve

Ignorance

Taking Control

Planning Responsibility

Delegation

Asset Allocation - Risk & Return

Inflation

Taxes

Tax Planning Tactics

Chapter 4 - Deferral

Former §1034 - Repealed

Section 1031 “Like Kind” Exchanges

Exchange Advantage

Importance of Deferral

Three Elements

Exchange Requirement

Two-Party Exchanges

Multi-Party Exchanges

Alderson

Baird

Delayed Exchanges

Qualified Property Requirement

Like-Kind Requirement

Rules of Boot

Related Party Exchanges

Definition of Related Party

Exceptions to the Two-Year Rule

Contractual Protection

Transactions Between A Partner & Partnership

Foreign Real Property Exchanges

Personal & Multiple Property Regulations

Effective Date

General Rule for Netting Liabilities

Abandonment of Anticipatory (Re)Financing Proposal

Like-Kind Requirement for Personal Property

Like-Kind

Like Class

Five vs. Four Digits

Miscellaneous Category

SIC Replaced by NAICS System

Property Held for Investment

Class Priority

Other Personal Property

Goodwill Prohibition

Multiple Asset Exchanges

Definition

Exchange Groups

Aggregation & Allocation

Residual Group

Liabilities

Delayed (Deferred) Exchange Regulations

Effective Date

Deferred (Delayed) Exchange Definition

“Reverse-Starker” Transactions

Identification Requirements

Identification & Exchange Periods

Application of §7503

Method of Identification

Property Description

Incidental Property - 15% Rule

Revocation

Substantial Receipt

Multiple Replacement Properties

Actual & Constructive Receipt Rule

Four Safe Harbors

Safe Harbor #1 - Security

Safe Harbor #2 - Escrow Accounts & Trusts

Disqualified Person

Who Is An Agent?

Safe Harbor #3 - Qualified Intermediary

Who Is A Qualified Intermediary?

Direct Deeding

Assignment

Simultaneous Exchanges

Safe Harbor #4 - Interest

Interest Reporting - §468B(g)

Restrictions On Rights to Money & Other Property - “g(6)” Limitations

Outside Transfers of Money or Other Property

Exchanges of Partnership Interests

Effective Date of Partnership Provisions

Retirement Plans

Designing Your Retirement

Sources of Retirement Income

Qualified Corporate Programs

Defined Contribution Plans

Profit Sharing Plan

Money Purchase Pension Plan

Stock Bonus Plan

Employee Stock Ownership Plan

401(k) Plan

Defined Benefit

Defined Benefit Pension

Annuity Plan

SIMPLE Plans

Self-Employed Plans

Individual Retirement Accounts

Penalty-Free Withdrawals

Roth IRA - §408A

Tax-Deferred Annuities

Mechanics

Types of Deferred Annuity

Fixed Annuity

Variable Annuity

Minimum Investment & Charges

Simplified Employee Pension (SEP) Plan

Investment Assets

Matching Income to Expenditures

Participant Loan Regulations

Additional Loan Requirements

DOL Regulations

Installment Sales

Requirements

Late Election Out of Installment Method

Formula

Mortgage in Excess of Basis

Recapture

Dealers

At Risk Rule

Application

Nonrecourse Financing

Qualified Nonrecourse Financing

Qualified Persons

Deferred Compensation

Options

Chapter 5 - Reduction

Tax Credits

Work Opportunity Tax Credit (WOTC) – §51

Computation

Welfare-to-Work & Work Opportunity Credits Merged

Certification Trap

Research Tax Credit - §41

Alternative Simplified Credit

Relation to §174

Rehabilitation Tax Credit - §47

Credit Rates

Residential vs. Nonresidential

External Wall Requirement

Basis Reduction

Low Income Housing Credit - §42

Amount of Expenditure

Set Aside Requirement

Qualifying Units

Gross Rent Limitation - 30%

Section 8 Assistance Exclusion

Recapture of Credit

30-Year Rule

State Credit Ceiling

AGI Limitation

Child & Dependent Care Credit - §21

Eligibility

Employment Related Expenses

Qualifying Out-of-the-home Expenses

Payments to Relatives

Allowable Amount

Identification of Provider

Estimated Taxes

General Rule

Annualized Method

Cash-Saving Strategies

Underpayment Cautions

Tax Refund Trap

Basic Deductions

Interest

Personal Interest – Repealed (Gone Long Ago)

Investment Interest

Prepaid Interest

Points

Huntsman Case

Prepayment Penalty

Interest on Real Estate

Rental Property

Home Owners

Automobile Deductions

Employee Automobile Deductions

Business/Personal Proration

Actual Cost Method

Standard Mileage Rate

Limitations on Standard Mileage Method

Must Be an Individual

Switching Methods

Claiming Deductions

Records

Mileage Records

Depreciation Traps

Percentage Test

Depreciation “Recapture”

Depreciation Limits for Autos

Leasing Restrictions

Mileage Allowance for Leased Autos

First-year Expensing - §179

Commuting - Local Business Transportation

Revenue Ruling 90-23 - Superseded

Temporary Work Site Definition

Reserve Units

Reimbursements

Revenue Ruling 99-7

Business Entertainment

Directly Related Test

Associated Test

Statutory Exceptions

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 Public

Entertainment Sold to Customers

Expenses Includible in Income of Non-employees

Depreciation & Cost Recovery - §167 & §168

Personal Property

ACRS - §168

Applicable Percentage

Straight-line Election

MACRS

Recovery Classes

MACRS Elections

Straight-line

150% Declining Balance

Bonus (or Additional First-year) Depreciation - §168(k) 5-29

Initial 50% Additional First-year Depreciation  5-29

Temporary 100% Additional First-year Depreciation  5-29

Back to 50% Additional First-year Depreciation  5-29

PATH Act Extensions & Modifications

Qualified Property - §168(k)(2) 5-30

Nonqualified Property - §168(k)(2)

Coordination with §179  5-30

MACRS Conventions

Election to Expense Assets - §179

Income Limitation

Carryover

Deduction Reduction

Employee Restriction

Recapture - §1245

Net Operating Losses - §172

Creation of a NOL

Individual NOLs

Carrybacks & Carryovers

Temporary 5 Year Carryback - Expired

Further Limitations

Corporate NOLs

Tax Breaks for Nonitemizers

Adjustments

Credits

Amended Returns

Audit Avoidance

Safest Amendments

Not-So-Safe Amendments

Chapter 6 - Income Splitting

Using Progressive Tax Rates

Splitting Income among Group Members

Wealth Allocation

Major Formats

Unincorporated Business

Deductible Business Expenses

Home-Office Deduction

Requirements - §280A

Non-Exclusive Use Exceptions

Income Limitation

Home Office Deduction Expansion

Analysis

Square Footage Safe Harbor - R.P. 2013-13

Retirement Plans

Hiring Your Children

Hiring Your Spouse

Travel Expenses

Casualty Losses

Bad Debts

Self-Employment Tax

Incorporation

“C” or Regular Corporation

Planning Considerations

When to Incorporate

Formation

Cash for Stock

Property for Stock

Stock for Services

Stock for Debt

Repeal of the “General Utilities” Doctrine

Corporate Assets

Leasing

Lessor

Gift & Leaseback

Sale & Leaseback

“S” Corporation

Single Taxation

S Corporation Return

Planning Considerations

Tax Advantages

Formation

Corporations That Qualify

Income-Splitting

Estimated Tax Payments

Family Partnership

Partner’s Distributive Share

Partnership Return

Schedule K-1 (Form 1065)

Family Partnerships

Family Members

Capital

Children as Partners

Earned Income

Gift of Capital Interest

Custodianship & Children

Taxation

Kiddie Tax Trap

Planning Points

Income-Shifting Investments

US Savings Bonds

Municipal Bonds

Growth Stock

Real Estate

Child Care & Education

Nursery School & Day Care - §21

Special Schools

Credit Plus Special School Expenses

Employer Dependent Care Program - §129

Education Savings Bonds - §135

Notice 90-7

Interest on Education Loans - §221

Buying an Off-campus House

Status as Second Home

Status as Rental Property

Gifting Gain for Education Expenses

Gifts

Gifts by Check

Facts

Holding

Interest Free Loans

De Minimis Exception

Special Rule for Gift Loans

Chapter 7 - Elimination

Former Age 55 Exclusion - Repealed

$500,000 Home Sale Exclusion - §121

Two-Year Ownership & Use Requirements

Tacking of Prior Holding Period

Vacant Land

Mixed Business & Residence Use

Prorata Exception

Safe Harbor Regulations

Change in Place of Employment

Health

Unforeseen Circumstances

Use of Old §1034 & §121 - Gone Long Ago

Limitations on Exclusion

Renting to Parents

Parent’s Benefits

Children’s Benefits

Municipal Bonds

Tax-Exempt Interest on Qualified State or Local Obligations

Reporting

Private Activity Bonds

Divorce & Separation Settlements

Alimony

Child Support

Property Division

Dependency Exemption

Gifts & Inheritances

Basis of Gift

FMV Less Than Donor’s Adjusted Basis

FMV More Than Donor’s Adjusted Basis

Holding Period

Income from Property Given to a Child

Life Insurance

Proceeds Not Received in Installments

Proceeds Received in Installments

Fringe Benefits

Prizes & Awards - §74(b)

Group Life Insurance Premiums - §79

Table I

Accident and Health Plans - §106 & §105

Meals & Lodging - §119

Cafeteria Plans - §125

Educational Assistance Program - §127

Dependent Care Assistance - §129

Reporting Requirements for Dependent Care Programs

Cash Reimbursement Plans

In-kind Assistance

Section 132

No Additional Cost Services - §132(a) & (b)

Qualified Employee Discounts - §132(c)

Services - §132(c)(1)

Property - §132(c)(2) & (4)

Working Condition Fringe Benefits - §132(d)

De Minimis Fringe Benefits - §132(e)

Spousal Insurance

Transportation Fringe Benefits - §132(f)

Moving Expense Reimbursements - §132(a)(6)

Retirement Planning Services - §132(a)(7)

Athletic Facilities - §132(j)

Nondiscrimination Under §132

Taxation & Valuation of Benefits

Valuation Provisions

Leased Cars

Purchased Cars

Fleet-Average Rule

Cents-Per-Mile Valuation

Commuting Valuation Rule

Chauffeur Services

Eating Facilities

Meal Subsidy Rule

ERISA Compliance

Welfare Plans

Additional Requirements

Employee Expense Reimbursement & Reporting

Family Support Act of 1988

Remaining Above-The-Line Deduction

Accountable Plans

Reasonable Period of Time

Fixed Date Safe Harbor

Period Statement Safe Harbor

Adequate Accounting

Per Diem Allowance Arrangements

Federal Per Diem Rate

Related Employer

Meal Break Out

Partial Days of Travel

Usage & Consistency

Unproven or Unspent Per Diem Allowances

Travel Advance

Reporting Per Diem Allowances

Reimbursement Not More Than Federal Rate

Reimbursement More Than Federal Rate

Nonaccountable Plans

Fixed & Variable Rate (FAVR) Allowances - R.P. 90-34

Elements

Periodic Fixed Payment

Periodic Variable Payment

Limitations

Record keeping

Social Security

Earnings Record

Payments Exempt from Social Security

Social Security Checkup

Form SSA-7004

Form SSA-7050

Chapter 8 - Asset Protection

Why Asset Protection?

Situations That Create Danger

Sources of Lawsuits

Types of Liability

Basic Protection Concepts

Types of Creditors

Evading Creditors

Fraudulent Transfers

Badges of Fraud

Statute of Limitations

Criminal Penalties

Permissible Asset Transfers

Asset Protection Goals

Preparation

Insurance

Homeowners Insurance

Automobile Insurance

Disability Insurance

Life Insurance

Life Insurance Trust

Buy-Sell Agreements

Definition

Asset Protection Aspects of Common Entities

Individual Ownership

Sole Proprietorship

Corporate

C Corporation

No Pass Through

The S Corporation - §1361

Trusts

Types of Trusts

Revocable Trust

Land Trusts

Irrevocable Trusts

Testamentary Trust

Business Trusts

Foreign Trusts - §679

Asset Protection Trusts - APTs

Foreign Jurisdictions

Alternatives

Income Taxation

Estate & Gift Tax

Creditor Protection

Family Trusts

Medicaid Trust

Grantor Retained Income Trust

Co-Tenancy

Tenancy in Common

Varying Percentages

No Survivorship

Joint Tenancy with Right of Survivorship

Equal Percentages

Tenants by the Entirety

Right of Partition

Partnership

Family Partnerships

Charging Orders

Phantom Income to Creditor

Tax Issues

Estate Savings

Income Tax Savings

Limited Liability Company

Retirement Plan

Retirement Fund Protection in Bankruptcy

Custodianship

Estate

Divorce

Premarital Agreements

Uniform Premarital Act - The California Example

Permitted Items of Agreement

Unenforceable Items

Retirement Equity Act of 1984

Benefits of a Premarital Agreement

Post-Nuptial Agreements

Chapter 9 - How Much Do You Need To Retire?

Mapping Mechanics

Pitfalls & Myths

Common Pitfalls

Popular Retirement Myths

Plan For 10 to 15 Retirement Years

Stay With One Company to Retire With the Best Benefits

Pension Benefits Are Guaranteed by the Government

Preserve Capital

Retirees Are Taxed Less

Housing Costs Are Less

Just the Spouse and Me

Social Security Will Gap Any Savings or Pension Benefits Shortfall

Company Insurance & Medicare Will Cover Medical Bills

Retirees End Up In a Nursing Home

Defining Retirement

When Do I Want To Retire?

What Kind Of Lifestyle Do I Want?

Do I Want To Move?

Determining Retirement Costs & Income Needs

Developing a Plan

Savings

Strategies for Savings

Assets

Stay Liquid - Be Able To Get Your Money Back

Grow - Make Money on Your Money

Shelter - Get Tax Benefits

Build - Don’t Spend Your Benefits

Avoid Linking - Each Investment Must Stand On Its Own

Analyze - Investigate the Investment

Chapter 10 - Social Security Benefits & Retirement Planning

Will Social Security Be There?

How Social Security Works

Social Security Participants

Social Security Benefits

Retirement Benefits

Qualification

Calculation

Average Indexed Monthly Earnings (AIME)

Primary Insurance Amount (PIA)

Cost of Living Adjustment Using Dollar Bend Points

Adjustment for Retirement Date

Early Retirement

Effect of Late Retirement

Earnings Reduction Formula

Annual Report of Earnings

Special Monthly Rule

Personalized Benefit Estimate

Impact of Private Pension

Direct Deposit

Social Security’s Payroll Tax or FICA

Rates

Covered Earnings

Multiple Employers

Covered Employment

Self-Employment

Tax after Retirement

Social Security as a Retirement Planning Element

Total Disability Benefits

Family Members

HIV & AIDS

Children

Qualification

Survivors Benefits

Divorce

Medicare

Who Is Eligible For Hospital Insurance (Part A)?

Who Can Get Medical Insurance (Part B)?

Prescription Drug Coverage (Part D)

How Do You Get Medicare?

What Does Medicare Pay For?

What Medicare Does Not Pay For?

Medigap Insurance

Chapter 11 - Retirement Plans

Deferred Compensation

Qualified Deferred Compensation

Qualified v. Nonqualified Plans

Major Benefit

Current Deduction

Timing of Deductions

Part of Total Compensation

Compensation Base

Salary Reduction Amounts

Benefit Planning

Corporate Plans

Advantages

Current

Deferred

Disadvantages

Employee Costs

Comparison with IRAs & Keoghs

Basic ERISA Provisions

ERISA Reporting Requirements

Fiduciary Responsibilities

Bonding Requirement

Prohibited Transactions

Additional Restrictions

Fiduciary Exceptions

Loans

Employer Securities

Excise Penalty Tax

PBGC Insurance

Sixty-Month Requirement

Recovery Against Employer

Termination Proceedings

Plans Exempt from PBGC Coverage

Basic Requirements of a Qualified Pension Plan

Written Plan

Communication

Trust

Requirements

Permanency

Exclusive Benefit of Employees

Highly Compensated Employees

Reversion of Trust Assets to Employer

Participation & Coverage

Age & Service

Coverage

Percentage Test

Ratio Test

Average Benefits Test

Numerical Coverage

Related Employers

Vesting

Full & Immediate Vesting

Minimum Vesting

Nondiscrimination Compliance

Contribution & Benefit Limits

Defined Benefit Plans (Annual Benefits Limitation) - §415

Defined Contribution Plans (Annual Addition Limitation) - §415

Limits on Deductible Contributions - §404

Assignment & Alienation

Miscellaneous Requirements

Basic Types of Corporate Plans

Defined Benefit

Mechanics

Defined Benefit Pension

Defined Contribution

Mechanics

Discretion

Favorable Circumstances

Types of Defined Contribution Plans

Profit Sharing

Requirements for a Qualified Profit Sharing Plan

Written Plan

Eligibility

Deductible Contribution Limit

Substantial & Recurrent Rule

Money Purchase Pension

Cafeteria Compensation Plan

Thrift Plan

Section 401(k) Plans

Death Benefits

Defined Benefit Plans

Money Purchase Pension & Target Benefit Plans

Employee Contributions

Non-Deductible

Life Insurance in the Qualified Plan

Return

Universal Life

Compare

Plan Terminations & Corporate Liquidations

10-Year Rule

Lump-Sum Distributions

Asset Dispositions

IRA Limitations

Self-Employed Plans - Keogh

Contribution Timing

Controlled Business

General Limitations

Effect of Incorporation

Mechanics

Parity with Corporate Plans

Figuring Retirement Plan Deductions For Self-Employed

Self-Employed Rate

Determining the Deduction

Individual Plans - IRA’s

Deemed IRA

Mechanics

Phase-out

Special Spousal Participation Rule - §219(g)(1)

Spousal IRA

Eligibility

Contributions & Deductions

Employer Contributions

Retirement Vehicles

Distribution & Settlement Options

Life Annuity Exemption

Minimum Distributions

Required Minimum Distribution

2009 Waiver of Required Minimum Distribution Rules (Expired)

Definitions

Distributions during Owner’s Lifetime & Year of Death after RBD

Sole Beneficiary Spouse Who Is More Than 10 Years Younger

Distributions after Owner’s Death

Inherited IRAs

Estate Tax Deduction

Post-Retirement Tax Treatment of IRA Distributions

Income In Respect of a Decedent

Estate Tax Consequences

Losses on IRA Investments

Prohibited Transactions

Effect of Disqualification

Penalties

Borrowing on an Annuity Contract

Tax-Free Rollovers

Rollover from One IRA to Another

Waiting Period between Rollovers

Partial Rollovers

Rollovers from Traditional IRAs into Qualified Plans

Rollovers of Distributions from Employer Plans

Withholding Requirement

Waiting Period between Rollovers

Conduit IRAs

Keogh Rollovers

Direct Rollovers From Retirement Plans to Roth IRAs

Rollovers of §457 Plans into Traditional IRAs

Rollovers of Traditional IRAs into §457 Plans

Rollovers of Traditional IRAs into §403(B) Plans

Rollovers from SIMPLE IRAs

Roth IRA - §408A

Eligibility

Contribution Limitation

Roth IRAs Only

Roth IRAs & Traditional IRAs

Conversions

Recharacterizations

Reconversions

Taxation of Distributions

No Required Minimum Distributions

Simplified Employee Pension Plans (SEPs)

Contribution Limits & Taxation

SIMPLE Plans

SIMPLE IRA Plan

Employee Limit

Other Qualified Plan

Set up

Contribution Limits

Salary Reduction Contributions

Employer Matching Contributions

Deduction of Contributions

Distributions

SIMPLE §401(k) Plan

Chapter 12 - Distributions from Retirement Plans

Annuity Payments - §72

General Rule - Prior Law

Exclusion Ratio

Investment in Contract (Cost)

Expected Return

Simplified Alternative Rule - Prior Law

Mandatory Basis Rule - Current Law

Annuity Benefits Paid Over Two Lives

Withholding & Estimated Tax

Lump-Sum Distributions

Nonqualifying Distributions

Treatment Options

5-Year Averaging - Repealed

Employer Securities - Net Unrealized Appreciation (NUA)

Capital Gain Treatment

“Grandfather” or Transition Rules

Rollovers

Eligible Rollover Distributions

20% Withholding

Exceptions

Direct Rollover

Rollover Period

Annual Usage

Rollover of Noncash Distributions

Qualified Domestic Relations Order Rollover

Surviving Spouse Rollover

Premature Distributions - 10% Penalty

Exemptions

Death

Disability

Equal Periodic Payments

Total Value & Aggregation Requirement

Five-Year Requirement

Medical Expenses

Qualified Domestic Relations Order

Recapture Tax

Minimum Distribution Rules

2009 Waiver of Required Minimum Distribution Rules (Expired)

Required Beginning Date for Minimum Distributions

Minimum Distribution

Making Charitable Gifts with Plan Balances

Chapter 13 - Nonqualified Plans

Postponement of Income

Advantages

IRS Scrutiny & Approval

Nondiscrimination

ERISA

Funding

No Immediate Cash Outlay

Annual Report

Notice Requirement

Purposes & Benefits

Benefit Formula

Incentive

Deferred Bonuses

Contractual Arrangement

Necessary Provisions

Tax Status

Service’s Position

Rationale

Congressional Moratorium

No Ruling or Regulation Policy

Constructive Receipt

Beyond Actual Receipt

Simple Set-Asides Are Not Possible

Revenue Ruling 60-31

Regulations

Time & Control Concept

Control

Timing

After-the-Fact Contract

Amendment to Existing Contract

Economic Benefit

Has Something of Value Been Transferred?

Insurance Coverage Has a Calculable Value

Segregated Funds Have Immediate Economic Value

Value v. Control

Revenue Ruling 60-31

Situation 1

Situation 2

Situation 3

Situation 4

Situation 5

General Principles

Unfunded Bare Contractual Promise Plan - Type I

Risk

Funded Company Account Plan - Type II

Ownership & Segregation

Bookkeeping Reserve or Separate Account

Employee Still Bears Economic Risk

Limited Protection

Investment of Deferred Amounts

Life Insurance

Premiums

Third Party Guarantees

Segregated Asset Plan - Type III

Section 83 Approach

Tight Rope Format

Transferable or Not Subject To A Risk of Substantial Forfeiture

Substantial Restrictions

Redemption or Forfeiture

Condition Related to a Purpose of the Transfer

Noncompetition

Consultation

Time Alone is Not Enough

Realization & Taxation

30-Day Election Period

Deduction Allowed

Timing

Withholding

Tax Consequences

Reciprocal Taxation/Deduction Rule

No Difference for Cash or Accrual

Separate Accounts for Two or More Participants

Employer Deduction Traps

Income Tax on Employer Held Assets

Inclusion in Income Under §409A

State Tax Issues

Accounting

Two Sets of Rules

Financial Accounting Rules

IRS Rules

Estate Planning Considerations

Death During Deferral

Income Tax Consequences

Estate Tax Consequences

Gift Tax Consequences

Withholding, Social Security & IRA’s

Other Payroll Taxes

Social Security Benefits

IRA’s

Chapter 14 - Life Insurance, Annuities & Buy-Sell Agreements

Purpose

Tax Overview

Income Tax

Transfer-for-Value Rule

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

Premiums

Lifetime Benefits

Section 72

Estate Taxes - §2042 & §2035(a)

Ownership

Gift Taxes

Community Property Gift Danger

Types of Life Insurance

Term Insurance