Business Taxation - 24 CPE Credit Hours
Americans who want to be their own boss are not entirely on their own. They have a rich uncle - Uncle Sam - who is there to help, as well as to make demands. The nation's tax laws are intended to encourage people to start new businesses and are chock full of incentives and tax breaks, as well as sometimes onerous reporting requirements.
This course is a fast-paced and entertaining guide through tax issues affecting business entities and their owners. The focus of this class is on tax devices and techniques available to the small-business owner. Emphasis will be given to operational deductions, fringe benefits, compensation, family income splitting, retirement plans, and estate planning.
Completion Deadline & Exam: This course, including the examination, must be completed within one year of the date of purchase. In addition, unless otherwise indicated, no correct or incorrect feedback for any exam question will be provided.
Course Level: Overview. This program is appropriate for professionals at all organizational levels.
Field of Study: Taxes
Prerequisite: General understanding of federal income taxation.
Advanced Preparation: None
Learning Assignments & Objectives
As a result of studying each assignment, you should be able to meet the objectives listed below each assignment.
Chapter 1 Structure, Reporting & Accounting
At the start of Chapter 1, participants should identify the following topics for study:
* Sole proprietorships
* Regular corporations
* Record keeping
* Kinds of records to keep
* Business transactions
* Bookkeeping systems
* How long to keep records
* Accounting periods & methods
After reading Chapter 1, participants will be able to:
1. Recognize sole proprietorships, partnerships, and corporations as organizational formats for new and existing businesses.
2. Identify how choice of entity relates to the type of records to keep, noting issues related to substantiation and documentation.
3. Outline available accounting periods and methods and the methods for identifying and valuing inventory items.
After studying the materials in Chapter 1, answer the exam questions 1 to 11.
Chapter 2 Business Income, Credits & Assets
At the start of Chapter 2, participants should identify the following topics for study:
* Rental income
* Discharge of debt income
* Recapture of depreciation
* Partnership income
* Business & investment credits
* Asset types
* Like-kind exchanges
After reading Chapter 2, participants will be able to:
1. Define the various types of income and their implications, including the hidden income tax dangers of cancellation of indebtedness income, tax recoveries, and recapture of depreciation.
2. List the existing basic business and investment tax credits, noting their tax requirements, and business asset types that affect the character of gain or loss, and recognize the tax treatment of the disposition of business assets, such as the availability of like-kind exchange treatment in the transfer of business assets and the tax treatment of Section 1231 assets.
After studying the materials in Chapter 2, answer the exam questions 12 to 18.
Chapter 3 Selected Business Expenses
At the start of Chapter 3, participants should identify the following topics for study:
* Section 162
* Expenses of not-for-profit activities
* Rent expenses
* Interest expense
* Deductible taxes
* Other selected deductible costs
* Depletion -§613
* Business bad debts
After reading Chapter 3, participants will be able to:
1. Recognize the central importance of §162 in deducting and substantiating business expenses and costs and state the implications of the deduction timing and limits noting the reporting of deductions for not-for-profit activities.
2. Identify conditional sales contracts, leveraged leases, and true leases, and show how to qualify for rent expense deductions including through leasehold improvements.
3. List the various forms of interest expense under §163(a) noting related reporting and filing issues, and state the distinctions between deductible and nondeductible interest.
4. Recognize deductions for real estate, state, and local taxes and list deductions for home office use, research and experimentation costs, barrier removal, and mine development.
5. Identify the various forms of tax treatment under the concepts of depreciation and amortization, including the effect on amortization of §197.
6. State the differences between the concepts of cost depletion and percentage depletion as a means of accounting for the reduction of a product’s reserves.
7. List the types of bad debt and state their effect on accounting and the various methods for dealing with bad debt.
8. Name MACRS classifications, state the recapture provisions and exceptions, and define the alternative depreciation system.
After studying the materials in Chapter 3, answer the exam questions 19 to 51.
Chapter 4 Employee Compensation & Benefits
At the start of Chapter 4, participants should identify the following topics for study:
* Wages, salary & pay
* Tests for deducting pay to employees
* Selected types of compensation
* Payroll taxes
* Selected fringe benefits
* Interest-free & below-market loans
* Equity participation
* Advantages of nonqualified deferred compensation
* Funded company account plans
* Segregated asset plans
After reading Chapter 4, participants will be able to:
1. Name the common-law rules used by the IRS to determine whether a person is an employee for purposes of FICA, FUTA and federal income tax withholding.
2. Identify the tests for wages to be deductible and state how excluded fringe benefits can result in more employer deductions and incentive based compensation to employees.
3. Recognize the use of deferred compensation agreements including the basic types of nonqualified deferred compensation, and the tax consequences related to these plans.
After studying the materials in Chapter 4, answer the exam questions 52 to 64.
Chapter 5 Automobiles
At the start of Chapter 5, participants should identify the following topics for study:
* Apportionment of personal & business use
* Deduction limitations using actual cost method
* Expensing - §179
* Predominate business use rule
* Auto leasing
* Standard mileage method
* Auto trade-in vs. sale
* Employer-provided automobile
* Nonpersonal use vehicle