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. Contrast short-term financial goals with the four generic investment purposes explaining the planning purpose of this distinction, discuss the importance of defining, listing and prioritizing realistic goals, and point out to clients how investing allocation changes with age.
2. Evaluate the tax consequences of title holding methods by:

a. Listing nine basic ways to hold title to assets starting with the simplest and most direct way to hold property;
b. Identifying 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. Defining custodianship describing the two uniform acts and clarifying 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. Name three goals of money management listing four types of income, identify three causes of increased taxable income for itemizing taxpayers, and appropriately report at least eight types of taxable income.
2. Distinguish tax-free municipal bonds from fringe benefits in generating tax-free income, explain two benefits of tax deferral, and identify at least one tax-deferred investment permitting taxpayers to better invest for retirement.
3. Name several ways to shelter income explaining how income sheltering amplifies investment return.
4. Budget income into cash by containing expenditures with the author's six step process and developing discretionary income using four important variables, diffuse a client’s negative outlook on budgeting with five strategies, convert income into assets by purchasing investments, and apply six important asset acquisition rules or improved investment return.
5. Evaluate at least eight major tax-advantage investments following six basic management rules, and discuss 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. Track spending habits and design a budget to increase discretionary income, analyze net worth using a balance sheet, take an asset inventory listing liabilities, and identify where changes must be made to meet financial goals.
2. Explain why individuals should take primary responsibility for the investment planning including necessary self-education, allocate financial resources among investments to maximize return, and discuss the impact of inflation, risk versus return, and basic income tax planning tactics that can be used by clients to minimize taxes.

       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. Name two benefits of tax deferral, summarize the former use of tax deferral under §1034, and clarify the deferral advantage under §1031 listing its three elements.
2. Explain the related party §1031 restrictions identifying prohibited parties or entities and permissible disposition exceptions, make recommendations for the protection of exchange participants, and summarize the history of the personal and multiple property regulations clarifying the unique personal property like-kind and netting requirements for multiple asset exchanges.
3. Outline the evolution of §1031 delayed exchanges identifying allowable transfers, select replacement property within statutory deadlines, list four constructive receipt safe harbors, explain methods to secure exchange party performance, and summarize the §1031 partnership underlying asset rule. Design retirement plans following four basic steps, identify two of the most popular methods for providing for retirement, and determine near retirement investments.
4. Determine three requirements for an installment, explain how to elect out of the installment method, list at least five variables affecting §453 availability. Illustrate 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. Apply at least six tax saving credits identifying qualified computational expenses and describing their limitations and restrictions.
2. Outline the estimated tax rules and procedures including the four payment deadlines and underpayment penalties, point out the economics of overpaying estimated taxes. Delineate the types of interest that are nondeductible including personal interest under §163(h)(1).
3. Determine the deductibility of investment interest, prepaid interest, points, and prepayment penalties, and offset passive income with rental property mortgage interest.
4. Deduct business vehicle operating costs using (or switching between) the actual cost method or the standard mileage rate and allocating expenses based on §162 usage, retain substantiatable expense and mileage records, and explain five depreciation traps when purchasing a vehicle.
5. List three requirements for business expenses to meet the directly related test, explain the elements of the associated test, identify the nine business expense statutory exceptions, and summarize the application of R.R. 90-23 and R.R. 99-7 to the deduction of transportation costs to a temporary work location.
6. Apply business asset depreciation using both ACRS and MACRS recovery classes, identify three sources of §172 net operating losses (NOLs) explaining carryback and carryover rules, name several tax breaks for nonitemizing taxpayers, evaluate the advisability of filing an amended return, avoid audits by claiming refunds for provable items, and determine 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. List six formats for income splitting, compare 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, summarize changes made to home office deduction under TRA ’97, and determine the ability of self-employeds to make annual deductible contributions to a Keogh plan.
2. Maximize the tax opportunities available to an unincorporated business by specifically discussing retirement plans, hiring family members, travel expenses, casualty losses, bad debts, and self-employment tax.
3. Summarize the uses and tax characteristics of regular and S corporations by:

a. naming at least six circumstances when incorporation is desirable,
b. comparing the taxation of these entities including their ability to split income; and
c. listing initial §351 formation and capitalization issues discussing appropriate tax form filings for each entity.

4. Explain the use of partnerships to split income among partners specifically 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. Set up a custodianship to split income and contain the “kiddie tax” listing three initial planning considerations and four examples of good investments for children, summarize deductions and credits for childcare, education, children, and §7872 loans, and explain 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. Apply selected tax elimination techniques by:

a. explaining the current §121 home sale exclusion contrasting it with the former provision;
b. determining qualifications for tax-free state or local obligations specifically discussing private activity bonds; and
c. identifying the tax elimination aspects of family transactions such as gifts, bequests, inheritances, life insurance, and even divorce.

2. Maximize employer deductions and increase tax-free incentive-based compensation for employees by:

a. explaining at least eight rules for excluding fringe benefits under §132 and their proper reporting on the W-2; and
b. adopting 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. Value fringe benefits according to IRS regulations, comply with ERISA requirements, properly report reimbursed and unreimbursed business expenses under accountable and nonaccountable plans, substantiate auto expenses using a fixed and variable rate, and determine eligible for 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. Point out the goals and purposes of asset protection and describe the objections some people have about shielding assets from creditors by:

a. Listing at least six reasons for asset protection and identifying sixteen situations that can unexpectedly put assets and financial security at stake;
b. Isolating eighteen common sources of lawsuits and analyzing the author's concept of exploding and imploding liability; and
c. Implementing asset protection using the primary concepts of insurance, asset placement and statutory protections.

2. Advise clients on the importance of the three types of creditors associated with asset protection and fraudulent transfers.
3. Summarize the fraudulent transfer laws listing several badges of fraud, clarify statute of limitations and criminal penalties, and differentiate permissible asset transfers.
4. Determine the degree and necessity of asset protection by figuring net worth using a balance sheet, determining asset values, and preparing a balance sheet.
5. Identify the ways that insurance and buy-sell agreements can offer asset protection by:

a. Clarifying the asset protection elements of homeowner's, automobile and disability insurance;
b. Differentiating the four parties under a life insurance contract giving potential reasons for establishing an irrevocable life insurance trust; and
c. Compare entity purchase and cross purchase buy sell agreements.

6. Analyze and contrast the asset protection advantages and disadvantages of ownership formats and entities by:

a. Comparing the use of individual ownership and corporate ownership in an asset protection plan and including the importance of S corporations and their estate tax planning advantages;
b. Discussing testamentary trusts, living trusts and at least eight subcategories of trusts pointing out asset protection elements;
c. Distinguishing among the various types of co-tenancy listing their asset protection dangers, describing several types of partnerships and comparing them to limited liability companies; and
d. Demonstrating the unique asset protection qualities of retirement plans, custodianship, and estates as asset protection tools.

7. Identify three formats that courts typically follow if a couple does not have an enforceable premarital agreement, and explain post-nuptial and premarital agreements and 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. Analyze personal retirement maps with clients to suit their objectives & lifestyles and summarize the basic guidelines of retirement planning, including the four common pitfalls and the ten misconceptions of retirement.
2. Define retirement using three major levels of retirement and three key questions that have financial and personal ramifications.
3. Determine retirement costs and income needs of clients based on their current budget, apply tax savings strategies and exercise six basic 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. Explain how Social Security funds are assessed and then paid, outline the system’s mechanics, and identify qualified Social Security participants including their eligibility for benefits.
2. List the requirements to receive Social Security retirement benefits, and estimate clients’ retirement benefits following a four-step calculation process.
3. Identify two Social Security taxes, their tax rates and covered earnings allowing better retirement planning.
4. Explain the eligibility requirements of Social Security disability benefits and survivors’ benefits, and distinguish Medicare Part A from Medicare Part B noting what is needed to qualify.

       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. Differentiate nonqualified and qualified deferred compensation plans identifying their benefits and contributions limits and list the current and deferred advantages and disadvantages of corporate plans pointing out fiduciary responsibilities and prohibited transactions.
2. Describe the requirements of three basic forms of qualified pension plans enabling clients to compare and contrast such plans.
3. Distinguish defined contribution from defined benefit retirement plans and differentiate among five types of defined contribution plans describing their impact on retirement benefits.
4. Contrast self-employed plans from qualified plans for other business types and owners identifying key choice of entity factors. Outline the requirements of IRAs, SEPs, and SIMPLEs, and explain 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. Name two popular ways to receive distributions from a retirement plan or an IRA, list four types of annuities and their effect on how and when participants receive payments and estimate the tax on annuity payments using either the general rule or the simplified general rule.
2. Advise clients on lump-sum distributions permitting them to receive special tax treatment on the distribution.
3. Outline key components of rollovers that can be used to reinvest cash or other assets without including the amount in income.
4. List the tax consequences of taking premature distributions and assist clients in avoiding the 10% penalty.
5. Explain the minimum distribution rules and help clients 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. Analyze the postponement of income with a nonqualified plan by:

a. Identifying nonqualified plan advantages including five ways to design the plans and discussing the IRS’s position on such arrangements explaining the impact of constructive receipt and economic benefit concepts;
b. Listing five deferred compensation patterns set forth in R.R. 60-31 analyzing the taxability of each; and
c. Contrasting unfunded with funded plans explaining the use of company assets or bookkeeping accounts to avoid employee taxation.

2. Outline 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 list 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. List at least five reasons to purchase life insurance and name four parties with rights in a life insurance policy.
2. Describe the tax treatment of life insurance proceeds by:

a. Explaining the tax treatment of premiums and lifetime benefits listing several exceptions to the transfer for value rule and naming at least three variables that influence whether life insurance is taxable for federal estate tax purposes; and
b. Discussing the gift tax associated with transfers of life insurance policies.

3. Compare and contrast the pros and cons of seven types of life insurance policies (and their variations) to help clients choose a suitable policy.
4. List reasons for using an irrevocable life insurance trust in an estate plan identifying eight trust considerations and differentiate deferred from private annuities. 5. Distinguish an entity purchase from a cross purchase buy-sell agreement maximizing 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. Explain the relationship between home sales and the capital gains rates and list four current rate baskets created by the capital gain provisions noting how to treat capital assets in each category.
2. Outline the key elements and application of the §121 home sale exclusion and apply the three safe harbor regulations associated with the home sale exclusion.
3. Determine whether 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. Simplify estate planning for business clients by:

a. Explaining at least three elements of estate tax planning that have remained unchanged by recent legislation;
b. Analyzing the unlimited marital deduction and its effect on the gross estate of the value of property; and
c. Determining the applicable exclusion amounts for various years of death.

2. Define for a business owner “stepped-up basis” and potential “modified carryover basis” for estate tax purposes.
3. List five basic estate-planning goals, and outlining the benefits and drawbacks of the three primary dispositive plans.
4. Differentiate various types of estate trusts, identify six family documents that every taxpayer should consider, and name 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 Credit - §51

Computation

Combo Credit

Certification Trap

Welfare-to-Work Tax Credit - §51A

Research & Development Credit - §41

Enhancements for 2007

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 

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 

Temporary Bonus Depreciation 

Qualifying Property 

Coordination with §179 

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 

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 After 1998

Analysis

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 A Longtime 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 Tax 

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 

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