This presentation integrates federal taxation with overall financial planning. The course will explore tax strategies relating to the central financial tactics of 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 concerns. Designed to improve the quality of services to clients and the profitability of engagements, this program projects the accountant into the world of financial planning. This course will give the participant practice in analyzing problems, developing solutions, and presenting final personal financial plans to clients.
The course surveys wills, living trusts, gifts, marital property, and probate avoidance. Will and trust forms are explored along with living wills, durable powers of attorney, and nominations of conservators. Designed to eliminate estate problems and death taxes, the emphasis is on practical, cost-effective solutions.
- CHAPTER 1 - FINANCIAL TAX PLANNING
- CHAPTER 2 - BUILDING AN ESTATE
- CHAPTER 3 - PRESERVATION OF WEALTH
- CHAPTER 4 - DEFERRAL
- CHAPTER 5 - REDUCTION
- CHAPTER 6 - INCOME SPLITTING
- CHAPTER 7 - ELIMINATION
- CHAPTER 8 - ASSET PROTECTION
- CHAPTER 9 - Estate Planning
- CHAPTER 10 - Estate & Gift Taxes
- CHAPTER 11 - Wills & Probate
- CHAPTER 12 - Trust
- CHAPTER 13 - Entities & Title
- CHAPTER 14 - Life Insurance, Annuities & Buy-Sell Agreements
- CHAPTER 15 - Special Business Issues
- CHAPTER 16 - Estate Freeze Rules
- CHAPTER 17 - Elderly & Disabled Planning
- CHAPTER 18 - Post-Mortem Planning & Tax Return Requirements
After reading the course material, you will be able to:
- Identify short-term financial goals and investment purposes, recognize the importance of defining, listing, and prioritizing realistic goals specifying how investing allocation changes with age.
- Determine the tax consequences of title holding methods by:
Recognize the impact of retirement planning postponement identifying the importance of early planning using the author's suggested step process, specify a balance sheet method to plan retirement, determine how to diversify portfolios by balancing liquid and nonliquid assets, and identify the purpose of savings and strategies to save.
Identify money management specifying income types, recognize causes of increased taxable income for itemizing taxpayers, and specify taxable income types and their proper reporting.
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.
Specify ways to shelter income stating how income sheltering amplifies investment return.
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.
Specify tax-advantaged investments citing management rules, and determine the economic impact of accelerating deductions, postponing tax liability, and leveraging.
Identify spending habits stating 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
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.
Identify the benefits of tax deferral, recall the former use of tax deferral under §1034, and cite the tax deferral advantage under §1031 listing its elements
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 multiple property regulations stating the unique netting requirements for multiple asset exchanges.
Recall the evolution of delayed exchanges naming allowable transfers, determine how to select qualified replacement property, specify constructive receipt safe harbors and 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.
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
Identify tax credits specifying qualified computational expenses, limitations, and restrictions
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.
Determine the deductibility of investment interest, prepaid interest, points, and prepayment penalties recognizing the offset of passive income with rental property mortgage interest.
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.
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.
Determine business asset depreciation using both ACRS and MACRS recovery classes, identify sources of §172 net operating losses (NOLs) recognizing carryback and carryover rules, specify tax breaks for non-itemizing taxpayers, recognize the advisability of filing an amended return, determine how to avoid audits by claiming refunds for provable items stating which return amendments are safest.
Recognize formats for income splitting, determine the tax treatment of employee and self-employed business expenses particularly home-office expenses stating the two non-exclusive use exceptions and the income limitation, citing changes made to home office deduction under TRA ’97, and recognize the ability of self-employees to make annual deductible contributions to a Keogh plan.
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.
Determine the uses and tax characteristics of regular and S corporations by:
- Specifying ways to hold title to assets starting with the simplest and most direct way to hold property;
- 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
- Identifying custodianship under the uniform acts and determining how an estate can be tax beneficial to taxpayers.
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 another family member.
Identify the use of custodianship to split income specifying 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
Identify tax elimination techniques by:
- Citing circumstances when incorporation is desirable,
- Recognizing the taxation of these entities including their ability to split income; and
- Specifying initial §351 formation and capitalization issues and identifying appropriate tax form filings for each entity.
Recognize employer deductions as a means to increase tax-free incentive-based compensation for employees by:
- Recognizing the current §121 home sale exclusion citing its differences with prior tax law
- Determining qualifications for tax-free state or local obligations including private activity bonds; and
- Specifying the tax elimination aspects of family transactions such as gifts, bequests, inheritances, life insurance, and even divorce.
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.
Identify the goals and purposes of asset protection recognizing the objections some people have about shielding assets from creditors by:
- Specifying rules for excluding fringe benefits under §132 and their proper reporting on the W-2; and
- Identifying popular employee fringe benefits including employer-paid accident and health coverage, meals or lodging, cafeteria plan benefits, §127 education assistance, achievement awards, group life insurance, and dependent care assistance.
Recognize the importance of creditor types associated with asset protection and fraudulent transfers.
Specify fraudulent transfer laws listing badges of fraud, define statutes of limitation, criminal penalties, and permissible asset transfers.
Recognize the degree and necessity of asset protection using net worth and asset values on a balance sheet.
Identify the ways that insurance and buy-sell agreements can offer asset protection by:
- Citing reasons for asset protection and situations that can unexpectedly put assets and financial security at stake;
- Specifying sources of lawsuits and the author's concept of exploding and imploding liability; and
- Determining asset protection using the primary concepts of insurance, asset placement, and statutory protections.
Identify basic estate planning elements recognizing the importance of well-drafted legal documents and specify the key team participants including their roles in the estate planning process.
Determine the major steps in the probate process, identify ways to make transfers outside the probate system including the use of a trust, specify estate tax techniques that save death taxes while retaining maximum control, and identify estate-planning facts.
Identify potential death taxes including federal estate tax as it applies to various size estates, specify the principal taxes that impact death taxation, and determine the expiration of the death tax credit.
Determine what constitutes a taxable estate under §2501 specifying what assets are included in a gross estate using basic categories of property and transfers
Determine the value of a decedent’s assets using permitted elections, recognize the use of Form 706 to pay any estate tax due, select the tax basis of estate assets stating how common transactions affect property basis under §1014
Identify the various gift tax exclusions, specify the tax treatment of below-market loans, recall the gift tax marital deduction requirements, determine the tax consequences of giving various assets specifying factors to consider when gifting, and recognize the use of Form 709 to compute and pay federal gift tax.
Specify types of wills citing the functions a will can perform, identify types of bequests, determine the duties of executors and guardians, and recall ways to hold title and their tax ramifications.
Identify advantages of a properly drafted will, determine the distribution flow of simple wills, and specify the pros and cons of probate proceedings
Identify the relationship of parties in a trust, reasons to establish a trust, and types of trusts specifying their estate planning function.
Specify recommended living trust provisions, identify the application of gift and the income tax including the use of a grantor trust and an unlimited marital deduction, and determine what constitutes an “A-B” and “A-B-C” trust format.
Identify the title-holding benefits of trusts, co-tenancy, partnerships, and limited liability companies and the tax characteristics of each, recognize the types of retirement plans used to provide lifetime benefits to a business owner and employees, and specify the tax treatment of custodianships and a probate estate.
Identify the tax treatment of life insurance proceeds by:
- Citing the asset protection elements of homeowner's, automobile, and disability insurance;
- Specifying the parties under a life insurance contract stating potential reasons for establishing an irrevocable life insurance trust, and
- Determining what constitutes entity purchase and cross-purchase buy-sell agreements.
Determine the pros and cons of life insurance policy types and specify estate tax planning reasons for establishing an irrevocable life insurance trust.
Identify reasons why a business interest must be valued in an estate that is subject to federal estate tax, specify factors used to determine the net value of a business under the regulations, and recall the valuation factors in R.R. 59-60 specifying their impact.
Determine the tax consequences in leaving an estate to a surviving spouse, specify the elements of buy-sell agreements, stock redemptions, and stock recapitalizations to dispose of business interests before death, and identify deferred compensation agreements recognizing their estate planning impact.
Determine the benefits of an estate freeze and its ability to reduce the value of a business interest, identify transactions to which Chapter 14 rules apply and terminology used in the Chapter 14 valuation rule that applies to corporations and partnerships, and specify exceptions to §2701.
Recall the terms used in §2702 concerning transfers of interests in a trust, identify the application of the zero value rule to a transfer of an interest in a trust, and specify exceptions to §2702, determine the transfer of an interest in the property when there are one or more term interests as a transfer of an interest in a trust, and specify the treatment of joint purchases.
Recognize the requirements and exceptions of §2703 to ensure the property is valued appropriately, identify lapses as a transfer by gift or as includible in the decedent’s gross estate under §2704, recall the key terminology of §2704 under the evaluation rules, specify the amount of the transfer stating which lapses or restrictions qualify as an applicable restriction.
Identify tools that can allow patients to refuse treatment even when incompetent, determine Supplemental Security Income specifying how it relates to the elderly, and disability planning specifies the requirements that must be met to receive disability benefits
Determine post-mortem estate planning action in the face of funeral and administrative expenses using elections and disclaimers
Cite the due dates of post-mortem federal forms, specify the filing requirements of a decedent’s estate tax return, and identify exceptions to the general rule of estate tax payment.
Determine the processes and procedures necessary in the preparation and filing of Form 706
Identify the filing requirements for estate income tax and decedent’s final income tax returns by:
- Determining the treatment of premiums for personally owned life insurance and related benefits and specifying exceptions to this treatment including the transfer for value rule;
- Select variables that influence whether life insurance is taxable for federal estate tax purposes; and
- Recalling the gift tax associated with the transfer of life insurance policies.
Identify how to avoid penalties when filing a gift tax return, recognize gift splitting to reduce gift taxes, and recall special gift applications and traps stating ways to avoid their tax consequences.
- Determining the estate income tax under available tax accounting methods and tax years; and
- Specify the use of Form 1310 for a decedent or a joint return for a decedent and his or her surviving spouse.
Who Should Attend:
- All Certified Public Accountants (CPAs)
- Enrolled Agents (EAs)
- Tax Return Preparers (TRPs)