Corporate Tax Planning - 25 CPE Credit Hours
Course description and objectives: This course examines and explains the practical aspects of using the closely held corporation to maximize after-tax return on business operations. Recent developments giving corporations a competitive edge over other entities are explored and detailed. Practitioners are alerted to often missed fringe benefits, retirement planning opportunities, corporate business deductions, income splitting possibilities and little known estate planning techniques. The program covers step-by-step tax procedures to form, operate, and ultimately dispose of a closely held corporation. Distinctions between S and C corporations will be unraveled and guidelines for client direction given.
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 & Learning Objectives
As a result of studying each assignment, you should be able to meet the objectives listed below each assignment.
Chapter 1 Business Forms & Characteristics
At the start of Chapter 1, participants should identify the following topics for study:
* Sole proprietorships
* Estates & trusts
* Unincorporated associations
* Corporation defined
* Subchapter S corporations
* Ordinary “C” corporations
* Personal service corporations
* Corporate tax rates
* Alternative minimum tax
After reading Chapter 1, participants will be able to:
1. List the advantages and disadvantages of sole proprietorships including self-employed taxes and payment requirements and identify the characterization sole proprietorship assets upon disposition.
2. Define partnerships identifying the advantages and disadvantages, outline partnerships taxation particularly the application of the passive loss (§469) and at-risk rules (§465), and recognize partnership income or loss reporting including husband and wife partnerships and limited partnerships.
3. State the reporting requirements of estates, trusts and unincorporated associations, define “corporation” differentiating between subchapter S and regular corporations, identify characteristics of a personal service corporation, recognize the alternative minimum tax for such corporations, and identify preferences and adjustments that apply to different types of taxpayers.
After studying the materials in Chapter 1, answer the exam questions 1 to 12.
Chapter 2 Corporate Formation & Capitalization
At the start of Chapter 2, 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
* Multiple corporations
After reading Chapter 2, participants will be able to:
1. Identify the transfer of money, property or both by prospective shareholders and the basic requirements associated with §351.
2. Recognize the requirements of §1244 and the small business stock exclusion, define start-up with organizational expenses, identify the elements of corporate tax recognition including the dangers of corporate ownership, and outline capital gains and losses treatment noting dividends received treatment.
3. List the requirements for corporate charitable contributions, define former §341 collapsible corporations, and state how to avoid §541 status particularly as to personal service contracts.
4. Define §531 status and name the accounting periods and methods available to corporations allowing them to comply with reporting standards.
5. List three methods for identifying inventory items including two common methods of valuing inventory, name six multiple corporation tax advantages, and recognize the tax consequences of corporate liquidations and distributions.
After studying the materials in Chapter 2, answer the exam questions 13 to 29.
Chapter 3 Corporate Principals & Employees
At the start of Chapter 3, participants should identify the following topics for study:
* Payroll taxes
* FICA & FUTA
* Employee labor laws
* Employee v. contractor status
* Unreasonable compensation
* Income splitting
* Buy sell agreements
* Entity & cross purchase agreements
* Sole shareholder planning
After reading Chapter 3, participants will be able to:
1. List payroll taxes identifying the uses of Form 941, Form W-4, Form W-2, and Form W-3, state the application of FICA and FUTA taxes and show how to report them, and name at least eight employee labor laws that affect employees.
2. Name twenty common-law rules used to determine employee status for FICA and federal income tax withholding, summarize the dangers of unreasonable compensation noting how to avoid them, and show how a corporation can be a valuable income-splitting device.
3. Define a buy-sell agreement distinguishing an entity purchase from a cross purchase agreement and recognize business recapitalizations and their potential uses.
After studying the materials in Chapter 3, answer the exam questions 30 to 39.
Chapter 4 Basic Fringe Benefits
At the start of Chapter 4, participants should identify the following topics for study:
* Statutory v. nonstatutory benefits
* No-additional-cost services & qualified employee discounts
* Working condition fringes
* Employee achievement awards
* Dependent care assistance
* Cafeteria plans
* Self-insured medical reimbursement plans
* Employer provided automobile
* Interest-free & below-market loans
* Fringe benefit plans for S corporations
After reading Chapter 4, participants will be able to:
1. Identify basic fringe benefit planning by defining “income” under §61 and showing the differences between former nonstatutory and current statutory fringe benefits.
2. Define “no-additional-cost services” and identify what property or services are excludable from income as qualified employee discounts under §132(c), list examples of and exceptions to working condition fringes and de minimis fringes, recognize a §74 “employee achievement award,” and list the §79 group term life insurance rules.
3. Recognize the requirements and limits of §129 dependent care assistance, define §125 “cafeteria plans” noting how it operates, state the §119 meals and lodging exclusion, outline the mechanics of §105 self-insured medical reimbursement plans, and state the requirements and limits of §127 programs.
4. Name four employer-provided automobiles valuation methods, define interest-free and below-market loans, outline the requirements and limitations on fringe benefits under §§217, 132, 67 212, 132(h)(5) and 280A, identify S corporation fringe benefits, and list ERISA compliance requirements.
After studying the materials in Chapter 4, answer the exam questions 40 to 48.
Chapter 5 Business Entertainment
At the start of Chapter 5, participants should identify the following topics for study:
* Tests for entertainment expenses
* Statutory exceptions
* Quiet business meals & drinks
* Ticket purchases
* Percentage reduction for meals & entertainment