Dealing with Debt and Interest 2021

  • Credits: 18
  • Format: Self-Study eBook
  • Field of Study: Federal Tax Law
  • Author/Speaker: Danny Santucci, CPA
Course ID: Advanced Preparation: Experience Level:
EWTFM-T-01827-21-S | 6233-CE-0545 None Overview
Published Date: Program Prerequisites: Other Course Formats:
© June 2021 Basic Understanding of Taxes Self-Study eBook

This course brings the practitioner up-to-date information on tax issues affecting interest and debt. It covers the definition of bona fide debt, the avoidance of equity and lease treatment, imputed interest rates, and debt modification.

The various types of interest and their required allocation are explored and reviewed. For the economically troubled client, special attention is devoted to debt cancellation, repossession, discounts, and foreclosure.

The program also discusses installment sales, equity participation debt, taxable interest, and bad debts.

Topics include:
  • Indebtedness
  • Deductible interest & mortgage interest
  • Investment interest
  • Nondeductible interest
  • Personal interest & capitalized interest
  • At-risk rules
  • Passive activity limitations
  • Below-market interest rate loans
  • Imputed interest in sales
  • Original issue discount (OID)

Learning Objectives:

After reading the course material, you will be able to:

  • Identifying what constitutes bona fide debt considering economic substance and purpose and specifying how transactions with family members and controlled corporations can recharacterize alleged indebtedness into gift or business equity and the factors used in this recharacterization; and
  • Specify the incentives to use corporate debt instead of equity, recognizing the special treatment of failed equity investment under §1244, and determining the differences among debt from installment sales, long-term and leveraged leases, and annuities.
  • Recognizing the allocation of interest based on the debt’s purpose, the application of any carryover rules and determining net investment income and its relationship to the investment interest deduction; and
  • Identifying the special tax treatment given to student loans, margin accounts, and market discount bonds specifying what happens to any disallowed interest expense and the timing considerations in interest reporting including interest paid in advance.

Who Should Attend:
  • All Certified Public Accountants (CPAs)
  • Enrolled Agents (EAs)
  • Other Tax Return Preparers (OTRPs)