At the start of the chapter, 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
* Retirement costs & income needs
* Retirement plan development
* 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.

3. Criticize the postponement of retirement planning stressing the importance of early planning using the author's suggested five step process, employ a balance sheet method to plan retirement, assist clients in diversifying their portfolios by balancing liquid and nonliquid assets, and explain the purpose of savings naming ten strategies to save.

       At the start of the chapter, 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
* 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 the chapter, 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 the chapter, 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 the chapter, 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. Determine the deductibility of personal interest, investment interest, prepaid interest, points, and prepayment penalties, and offset passive income with rental property mortgage interest.
3. 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.
4. 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.
5. 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 the chapter, 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 the chapter, 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 the chapter, 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 the chapter, participants should identify the following topics for study:

* Build, preserve & distribute
* Legal documents
* Estate planning team
* Estate administration
* Transfers within probate
* Transfers outside probate
* Transfers using a trust
* Special planning tools
* Facts

1. List the three basic elements of estate planning and discuss with clients where changes may be necessary in designing such a plan, and explain the importance of well-drafted legal documents and how to go about drafting them. Clarify the key participants in an estate planning team and in estate administration and their roles in estate planning.
2. Outline the probate process to guide clients through an average probate, and identify ways to transfer property or money outside the probate system or by using a trust. Discuss at least sixteen estate planning techniques and devices that can be used to pass more wealth to survivors and save death taxes while retaining maximum control where possible. Categorize estate-planning facts into three categories in order to develop the foundation of an estate plan.

       At the start of the chapter, participants should identify the following topics for study:

* Taxable estate
* IRS valuation
* Estate tax return & payment
* Tax basis for estate assets
* Generation-skipping transfer tax
* Application of gift taxes and valuation
* Gift tax annual exclusion
* Gift tax marital and charitable deductions
* Gift tax advantages and disadvantages
* Shifting income & gain

1. List the eight potential death taxes differentiating federal estate tax as it applies to various size estates, identify and distinguish two principal taxes that impact how individuals are taxed at death, and explain the expiration of the state death tax credit.
2. Define taxable estate under §2501 and determine what assets are included in a gross estate by examining and differentiating among four basic categories of property and transfers.
3. Name and clarify four estate deductions allowed under federal estate tax law and list their tax advantages and disadvantages.
4. Value a decedent’s assets taking advantage of permitted elections, describe the use of the Form 706 to pay any estate tax due, figure the tax basis of estate assets and explain how common transactions affect property basis under §1014.
5. Advise clients on the advantages of gift planning including estate reduction but warning as to the GST, track the steps to compute gift tax identifying the gift tax exclusion amount, and determine the value of different types of gifts including split gifting for spouses.
6. Identify the various gift tax exclusions, clarify the treatment of below-market loans, list the gift tax marital deduction requirements, compare the tax consequences of giving various assets listing five factors to consider when gifting, and describe the use of the Form 709 to compute and pay federal gift tax.

       At the start of the chapter, participants should identify the following topics for study:

* Provisions of wills
* Requirements of wills
* Executors and guardians
* Types of wills
* Title implications
* Changes to a will
* Advantages of a will
* Simple will
* Probate pros and cons
* Probate avoidance

1. Define four types of wills listing at least five functions a will can perform, identify at least four types of bequests, compare the duties of executors and guardians, and name four ways to hold title describing their tax ramifications.
2. Point out several advantages of a properly drafted will, discuss the distribution flow of simple wills, and compare the pros and cons of probate proceedings.

       At the start of the chapter, participants should identify the following topics for study:

* Purpose of trusts
* Common elements of trusts
* Types of trusts
* Living trusts
* Income tax & trusts
* Gift tax & trusts
* Estate tax & trusts
* Identification, recital & property transfer clauses
* Income and principal & revocation and amendment clauses
* Trustee and trust termination clauses

1. Describe the four party relationship of a trust, give at least eight reasons to establish a trust, and differentiate among eight types of trusts analyzing their estate planning function.
2. Point out seven recommended living trust provisions analyzing the application of gift and income tax considering the grantor trust and unlimited marital deduction rules, and contrast “A-B” with “A-B-C” trust formats.

       At the start of the chapter, participants should identify the following topics for study:

* Individual ownership & sole proprietorships
* Corporations
* Trusts holding title & business trusts
* Co-tenancy taxation, percentage interests & partition
* Partnership taxation & recapitalization
* Family partnerships
* Limited liability companies
* Retirement plans
* Custodianship
* Estate

1. List nine basic tax and legal title formats, showing the advantages and disadvantages of holding property in a sole proprietorship, a corporation, or an S corporation, and how to avoid associated title pitfalls.
2. Compare the title holding benefits of trusts, co-tenancy, partnerships, and limited liability companies and the tax characteristics of each. Distinguish among three types of retirement plans used to provide lifetime benefits to a business owner and to employees, and explain the tax treatment of custodianships and a probate estate.

       At the start of the chapter, participants should identify the following topics for study:

* Types of life insurance
* Life insurance trusts
* Deferred annuities
* Private annuities
* Buy-sell agreements
* Purchase price & terms
* Community property
* Professional corporations
* S corporations
* Sole shareholder planning

1. Name the four different persons in which rights are placed by life insurance and list at least five reasons to purchase life insurance.
2. Describe the tax treatment of life insurance proceeds by:

a. Identifying their normal tax treatment including premiums for personally owned life insurance and lifetime benefits and listing several exceptions particularly the transfer for value rule;
b. Naming at least three variables that influence whether life insurance is taxable for federal estate tax purposes; and c. Discussing the gift tax associated with transfers of life insurance policies.

3. Compare the pros and cons of seven types of life insurance policies (and their variations) to help clients choose a suitable policy. Provide reasons for establishing and eight considerations of establishing an irrevocable life insurance trust in order to achieve several estate tax planning advantages.
4. Differentiate between deferred annuities and private annuities to advise clients in their estate-planning process. Distinguish an entity purchase agreement from a cross purchase agreement and thereby perhaps realize tax and legal advantages.

       At the start of the chapter, participants should identify the following topics for study:

* Business valuation of tangible & intangible assets & goodwill
* Business valuation of qualified family-owned businesses
* Business valuation of land subject to conservation easement
* Business valuation discounts
* Redemptions
* Buy-sell agreements
* Death of spouse
* Stock redemptions
* Stock recapitalization
* Deferred compensation agreements

1. Give three reasons why a business interest must be valued in an estate that is subject to federal estate tax, list eight factors used to determine the net value of a business under the regulations, and discuss the eight valuation factors in R.R. 59-60 and their impact.
2. Describe how tangible assets are normally valued identifying those assets whose valuation is based on values other than book value, and list the four steps in R.R. 68-609’s valuation formula for intangible assets and the effect such amount can have on the total value of a business.
3. Analyze special business valuation issues and redemptions under §303 by:

a. Discussing the repealed qualified family-owned business estate tax deduction;
b. Clarify the terms of the election that allows clients to exclude from their taxable estate 40% of the value of land subject to a qualified conservation easement;
c. Determining the value of a minority stock interest and figure fractional interests in order to obtain applicable valuation discounts, and
d. Describing the §303 exception to the dividend treatment of redemptions and how to qualify.

4. Explain the tax consequences and issues in leaving an estate to a surviving spouse, compare the basic elements of buy sell agreements, stock redemptions, and stock recapitalizations in order to dispose of business interests before death, and describe deferred compensation agreements and their impact on estate planning.

       At the start of the chapter, participants should identify the following topics for study:

* Application of estate tax freeze rules
* Corporations, partnerships & exceptions
* Qualified payment exception to zero value rule
* Minimum valuation of a junior interest
* Capital contributions, redemptions & recapitalizations
* Attribution rules
* Transfers of interests in trust
* Term interests & joint purchases
* Buy-sell agreements & options
* Lapsing rights & restrictions

1. List the benefits of an estate freeze and its ability to reduce the value of a business interest, name four types transactions to which Chapter 14 rules apply, define terminology used in the Chapter 14 valuation rule that applies to corporations and partnerships, and list three exceptions to §2701.
2. Clarify the “zero value” rule under §2701 by:

a. Explaining the qualified payment exception and the consequence of being excepted;
b. Locating at least three variables that impact the application of §2701 and avoiding taxable events when valuing a distribution right;
c. Adjusting the transfer tax when a taxpayer fails to make a qualified payment on time and electing into or out of qualified payment treatment when appropriate; and
d. Valuing a junior equity interest according to §2701 rules and determining the value of other rights held together with an extraordinary payment right

3. Explain other provisions of §2701 by:

a. Identifying the treatment of a capital contribution, a redemption, or a recapitalization under §2701;
b. Determining when an individual is deemed the owner of an interest that is held indirectly through a corporation, partnership, trust or other entity based on the §2701 attribution rules;
c. Clarifying when transfer tax adjustments will be made to transfers or inclusions in the gross estate;
d. Splitting an applicable retained interest to allow value to be given to a participating feature of a participating preferred interest; and
e. Applying a three-step computation using the subtraction method to determine an amount of a gift resulting from a transfer to which §2701 applies.

4. Define the terms used in §2702 concerning transfers of interests in trust, apply the zero value rule to a transfer of interest in trust, and list three exceptions to §2702. Treat a transfer of an interest in property when there is one or more term interests as a transfer of an interest in a trust, and clarify the treatment of joint purchases.
5. Apply the requirements and exceptions of §2703 to insure property is valued appropriately, and treat lapses as a transfer by gift or as includible in the decedent’s gross estate under §2704 when applicable. Define key terminology of §2704 to clarify these valuation rules, identify the amount of the transfer, and note which lapses or restrictions qualify as an applicable restriction.

       At the start of the chapter, participants should identify the following topics for study:

* Managing the estate
* Medicare
* Medicaid & countable assets
* Medicaid & non-countable assets
* Medicaid & inaccessible assets
* Private insurance
* Health care decisions
* Supplemental Security Income
* Income & assets
* Disability benefits

1. Enhance estate management techniques for the elderly and disabled by:

a. Discussing joint tenancy and the benefits and drawbacks of using such a method for asset management;
b. Identifying at least three levels of conservatorship that can influence management and protection of an estate and/or personal care and list five disadvantages of this tool; and
c. Explaining a durable power and naming six advantages of establishing a revocable living trust as a way to manage assets in an estate.

2. Compare and contrast the basic eldercare benefits of Medicare, Medicaid, and Supplemental Security Income, identify several disadvantages of the Medicaid program and how to determine income and to divide assets into three separate groups, note the dangers and benefits of gifting to family members, and identify how individuals can use private insurance as a short-term solution for catastrophic illness.
3. List three tools that can allow patients to refuse treatment even when incompetent, explain Supplemental Security Income and how it relates to elderly and disability planning, and discuss the requirements that must be met in order to receive disability benefits.

       At the start of the chapter, participants should identify the following topics for study:

* After death planning
* Federal returns
* Decedent’s estate tax
* Preparation of the Form 706
* Estate income tax return
* Filing requirements of decedent’s final income tax return
* Included income
* Exemptions & deductions
* Filing the gift tax return
* Special applications & traps of the gift tax return

1. Strengthen post-mortem estate planning in the face of funeral and administrative expenses by using elections and disclaimers.
2. Identify the due dates of three federal forms, clarify the filing requirements of the decedent’s estate tax form, and name three exceptions to the general rule of estate tax payment.
3. Analyze the processes and procedures necessary to the preparation and timely filing of the Form 706.
4. Apply the filing requirements for estate income tax returns and for the decedent’s final income tax return by:

a. Figuring the estate income tax using any of the available tax accounting methods and tax years to reduce tax liability; and
b. Filing Form 1310 for the decedent or a joint return for the decedent and the surviving spouse.

5. Determine the totality of income be included on the decedent’s final income tax return using any available exemptions or deductions.
6. Avoid penalties by timely filing a gift tax return, use gift splitting to reduce gift taxes, and describe eight special gift applications and traps together with ways to avoid their tax consequences.

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 

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 - The 10% Rule 

Selected Strategies for Savings 

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 

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 - Estate Planning

Build, Preserve & Distribute

Legal Documents

Estate Planning Team

Attorney

Accountant

Insurance Agents

Financial Planner

Estate Administration

Probate Court

Executor

Internal Revenue Service (IRS)

Trustee

Family Members

Things to Be Done When Death Occurs

Estate Planning Techniques & Devices 

Transfers within Probate 

Disposition of Property without a Will

Disposition of Property with a Will

Transfers Outside Probate 

Joint Tenancy with Right of Survivorship 

Tenancy in Common 

Retirement Plan & Individual Retirement Accounts 

Life Insurance 

Gifts 

Payable on Death Accounts (POD)

Transfers Using a Trust

Special Planning Tools 

Spending 

Annual Gift Tax Exclusion 

Applicable Exclusion Amount

Unlimited Marital Deduction 

Family Business Deduction - Expired 

Installment Payment of Estate Taxes 

Private Annuities 

Regs Restrict Private Annuity Tax Benefits 

Installment Sale to Family Member

Self-Canceling Installment Notes 

Irrevocable Life Insurance Trust

Special Valuation of Farms and Businesses - §2032A  

Crummey Trusts 

Charitable Remainder Trusts 

Minor Trusts 

Family Limited Partnerships 

Grantor Retained Income Trusts 

Qualified Personal Residence Trusts (QPRTs)

Grantor Retained Annuity Trusts (GRATs)

Grantor Retained Unitrusts (GRUTs)

Buy-Sell Agreements 

Estate Planning Facts 

Family 

Property 

Domicile 

Objectives 

Existing Estate Plan 

CHAPTER 10 - Estate & Gift Taxes 

Federal Estate Tax 

Persons Subject to Federal Estate Tax 

Basic Computation & Rates 

State Inheritance Tax 

Old State Death Tax Credit - Expired 

Taxable Estate - §2051 

Gross Estate - §2031 

Owned Property - §2033

Interests Terminating At Death - Life Estates & Joint Tenancies

Interests Created After Death

Remainder Interests

Dower & Curtsey - §2034

Community Property Comparison

Gifts within Three Years of Death - §2035

Transfers from Revocable Trusts

Retained Life Interest - §2036

Retained Voting Rights

Lifetime Transfers With Reversionary Interests - §2037

Revocable Transfers - §2038

Annuities - §2039

Joint Interests - §2040

Qualified Joint Interests Between Spouses - §2040(b)

Powers of Appointment - §2041

Ascertainable Standard - The Safe Harbor Limitation

5/5 Power

Life Insurance - §2042

Incidents of Ownership

Community Property Issue

Deductions from Gross Estate

Estate Expenses & Claims - §2053

Inclusion of Administrative Expenses on Non Probate Assets

Casualty & Theft Losses during Administration - §2054

Charitable Transfers - §2055 (§170 & §2522)

Immediate Contributions

Split Interest Contributions

Charitable Remainder Trusts

Charitable Lead Trusts

Insurance Related Contributions

Marital Deduction - §2056

Requirements

Net Value Rule

Non-Citizen Spouse

Qualified Domestic Trust

Gifts to Non-Citizen Spouses

Valuation

IRS Valuation Explanation - §7517

Alternative Valuation - §2032

Special Valuation - §2032A

Estate Tax Return & Payment - §6018

Installment Payment of Federal Estate Taxes - §6166

Computation

Eligibility & Court Supervision

Closely Held Business

Acceleration of Payment

Flower Bonds

Tax Basis for Estate Assets - §1014

Community Property Cost Basis

Basis of Property Acquired From a Decedent After 2010

Property to Which the Modified Carryover Basis Rules Would Apply

Basis Increase for Certain Property

Generation-Skipping Transfer Tax - §2601

Predeceased Parent Exception

Exemption

Allocation

Retroactive Allocation

Gift Taxes - §2501 to §2524

Gift Tax Computation

Calculation Steps

Applicable Exclusion

Application

Entity Rule

Valuation

Real Property

Stocks & Bonds

Annuities, Life Estates, Terms for Years, Remainders, & Reversions

Split Gifts - §2513

Community Property States

Annual Exclusion

Per Donee/Per Year

Gifts in Excess of the Annual Exclusion

No Gift Tax

Gifts within 3 Years of Death

Uniform Gifts to Minors Act

Exception for Minor’s Trusts - §2503(b) & (c)

Medical & Tuition Exclusion - §2503(e)

Qualifying Transfers

Interest-Free or Below-Market Loans

Gift Tax Marital Deduction

Nondeductible Terminable Interests

Gift Tax Charitable Deduction

Partial Interests

Selecting Gift Property

Gift Advantages

Gift Disadvantages

Gift Tax Returns

Includibility of Gifts in the Estate

Shifting Income & Gain

Gifts before Sale

Transfers into Trust Prior to Sale

Installment Obligations

Transfer to Obligor at Death

Income in Respect of a Decedent

Reporting of Foreign Gifts 

CHAPTER 11 - Wills & Probate 

What Is A Will? 

Provisions & Requirements 

Specific & General Bequests